Starting a staffing agency can be a lucrative business venture, but it’s important to ensure you have a clear understanding of what’s involved in the process. This article will explore the step-by-step of how to start a staffing agency and examples of what to expect.
Here are the steps you can take to build your very own staffing agency business.
10 Steps to Launching a New Staffing Agency Business
1. Choose Your Type of Staffing Agency Business
The first step in launching a staffing firm is to identify the type of business you want to launch. You might choose from the following types:
- Contingency: This type of staffing agency is paid by the client only when a placement is made.
- Retained: In this type of staffing agency, the client pays an upfront fee in addition to a percentage of the placed candidate’s first-year salary.
- Contract: A contract staffing agency provides candidates to fill temporary positions at a client company.
- In-house: This type of staffing agency is owned by the client company and provides candidates only to that company.
2. Name Your Staffing Agency Business
Give your staffing agency business an identity, including a name and logo. You can take the name of your staffing agency business from your industry, focus on a geographical location, or use your own name.
The main goal of naming your staffing agency business is to make it sound appealing and trustworthy so that clients will be confident in your ability to provide them with high-quality candidates.
3. Determine Your Staffing Firm Business Model
There are several possible types of business models for a staffing agency, including:
- Full-service: A full-service staffing agency provides end-to-end solutions including candidate sourcing, screening, interviewing, and placement.
- Boutique: A boutique staffing agency focuses on a specific niche or industry and provides personalized services to clients in that area.
- Recruitment process outsourcing (RPO): An RPO staffing agency manages the entire recruitment process for a client company including candidate sourcing, screening, and interviewing.
- Master vendor: A master vendor staffing agency acts as a single point of contact for all of a client company’s staffing needs and manages a team of subcontractors to provide the required services.
No matter which model you choose, make sure that it aligns with your business goals and the services you offer.
4. Choose a Legal Form for Your Business
By incorporating your staffing agency business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.
The business structure you choose for your staffing agency business will determine the amount of taxes you pay and which state or federal tax forms you need to file.
5. Write a Staffing Agency Business Plan
All staffing agency business owners should develop a business plan.
A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team among other things.
Read our article about how to write a staffing agency business plan.
6. Apply for the Necessary Permits and Licenses
There may be required licenses and permits you need to obtain before launching your staffing agency business.
For example, many states require staffing agencies to have a surety bond in order to operate. A surety bond is a type of insurance that protects the client company from losses caused by fraudulent or dishonest acts of the staffing agency. The amount of the bond will vary depending on the state but is typically 1-2% of the estimated annual payroll of the workers you will place.
Other common licenses and permits for staffing agencies include a business license, an employment agency license, and a professional employer organization (PEO) license.
You must also register your staffing agency business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State’s website.
Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website if you plan to hire employees.
7. Determine Your Budget & Apply for Funding as Needed
In developing your staffing agency business plan, you will figure out how much funding you need to start and grow your business.
If you have your own funds to invest in your staffing agency business, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your staffing agency business include traditional bank loans, SBA loans, credit cards, angel investors, and family and friends.
8. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your staffing agency business, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access and accounting software for tracking expenses and revenues.
You may also want to invest in a customer relationship management (CRM) system to help you track your clients, candidates, and job openings. A CRM system can automate many of the tasks associated with staffing agencies such as sending emails, scheduling appointments, and creating reports.
There are a number of different CRM systems available for staffing agencies. Some popular options include Bullhorn, Jobvite, and Zoho Recruit.
You may also want to consider using an applicant tracking system (ATS) to help you manage job postings and applications. An ATS can help you post jobs to multiple job boards with the click of a button, as well as track which candidates have applied for which positions.
9. Market Your Staffing Agency Business to Potential Clients
Before you start selling your services, you have to let the world know you exist. The first step is to create a website so people can learn more about your services and how they benefit them.
After you launch your website, start promoting it through social media channels like Facebook, LinkedIn, and Twitter. Consider networking with other staffing agency professionals through social media and blogs so they can help share your business.
You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. Staffing agency businesses should consider the following promotional strategies for which you should start getting prepared:
- Creating a strong website
- Promoting your website through social media and blogs
- Networking with other staffing agencies and potential clients
- Creating informative and persuasive sales materials, such as brochures, presentations, and proposals
- Developing targeted marketing campaigns to reach specific industries or types of businesses
- Attending industry trade shows and events
10. Get New Clients & Grow Your Business
When you promote your services, you’ll start to get interest from potential clients. Make sure you’re ready to serve these clients. If you let down on guarantees early on, you’ll start to lose trust within the industry.
Establish systems to ensure consistency and reduce costs from the beginning. Document what you do in a day, any training procedures, and projects you solve. When you go to do the same action again, you can refine your process and your documentation accordingly. Each time you’ll be able to improve, and you’ll have a solid foundation to pass on as you begin delegating.
Finally, if you want to scale, you must hire and train the right people to take on different areas of your business, like servicing specific industries. As you expand your client base, you’ll be able to invest back in your business to grow further.
Starting a Staffing Agency Business FAQs
There are a number of reasons why you might want to start a staffing firm. First, it’s a great way to be your own boss and have control over your own career. Second, staffing agencies can be very profitable businesses. And third, you can make a difference in people’s lives by helping them find jobs.
To start a successful staffing agency business, you need to have the right technology in place, a strong marketing strategy, and the right people to help you grow your business.
You can start a staffing agency from home by investing in the right technology, developing a strong marketing strategy, and networking with other people in the staffing industry. Tools like Slack, Zoom, and ClickUp make it easier to collaborate with team members remotely.
You can start a staffing agency business online by developing a strong website and promoting it through social media and blogs. You should also consider networking with other people in the staffing industry so they can help share your business.
For example, you can start a job board or online job-matching website.
Here are some tips for starting a staffing agency business:
- Invest in the right technology
- Develop a strong marketing strategy
- Network with other people in the staffing industry
- Create informative and persuasive sales materials
- Attend industry trade shows and events
- Get new clients and grow your business
- Find and train the right people to help you grow your business
- Establish systems to ensure consistency and reduce costs
- Promote your staffing agency business through social media and blogs
- Consider starting a job board or online job-matching website
A simple checklist to use when starting a staffing agency business is as follows:
- Choose Your Type of Staffing Agency Firm: This should be based on what you are best at and how much experience you have. Remember to keep your interests, skills, and experience in mind at all times.
- Name Your Staffing Agency: This should be done with care, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
- Choose a Legal Form for Your Business: Whether you choose to become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
- Determine Your Staffing Agency Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
- Write a Staffing Agency Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
- Apply for the Necessary Permits and Licenses: In most locations, you will be required to apply for a business license and/or permits before you can begin operations.
- Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
- Get the Technology & Software Needed to Run Your Business Efficiently: You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
- Market Your Staffing Agency Business to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the services they truly need.
- Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your services.
Start Your Staffing Agency
Starting a staffing agency can be a great way to help businesses find the right employees, and it can also be a great way to make money. To start a staffing agency, you’ll need to invest in the right technology, develop a strong marketing strategy, network with other people in the industry, create persuasive sales materials, and attend industry trade shows.