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How to Start and Run a Successful Staffing Agency

Written by Mark Arrow | Feb 12, 2020 1:30:00 AM

Starting a staffing agency can be a lucrative venture in any market. In the rapidly changing job market, many employers need to look beyond the traditional employment model and consider temporary options.

Even in a downward market, staffing agencies can win. When the economy slows down, companies need to do more with less. Talent acquisition and HR often find themselves using staffing agencies as a more cost-effective way to fill in the company's performance gaps and maintain its operations. 

What You Need to Know Before Starting Your Staffing Agency

One of the most exciting things about launching a staffing agency (or any company) is knowing that every new business is a potential Fortune 500 company. However, as with any startup, opening a staffing agency brings its own unique set of considerations and possible vulnerabilities that owners must plan for before opening the company doors. 

Following a few simple guidelines can help distinguish your brand from the competition, remain compliant with existing industry requirements, and eliminate unnecessary time wastes (AKA anything that keeps you away from recruiting). Here are four tips on how to start a staffing agency that's positioned for future success:

Gauge Cash Flow

Cash flow can prove a significant concern for staffing companies, particularly when they are new or growing. One of the biggest issues when it comes to financing a staffing agency is managing the delta between paying temporary employees and waiting for client payment, which can sometimes be on a 30, 60, or even 90-day cycle. Reducing potential cash flow disruptions is mission-critical to avoid finding yourself in a situation where you need money that you simply don't have. Online profit calculators can help you determine competitive rates, profit margins, and payment schedules to help gauge current cash flow.

Manage Payroll

Even if cash flow is not a problem, many start-up staffing firms struggle with managing payroll, simply because they don't have the internal infrastructure needed to oversee what is often an intricate, time-consuming process. Establishing a protocol that both bills clients and pays your temporary employees on time, consistently, and compliantly is essential to protect your agency from unnecessary risk.

Consider Candidate and Client Requirements

Most businesses have to consider client compliance requirements. However, staffing agencies have to maintain specific standards for both clients and candidates. There are a multitude of components, programs, and policies that should be in place before you launch to protect all parties involved in the contract (including you). Some key requirements and benefits include:

-Healthcare, dental, vision
-Workers' compensation
-PTO compliance
-General Liability and Business Insurances
-Long-Short Term Disability

Know You Don't Have to do it All

Perhaps the most significant step in future-proofing your staffing firm? Outsourcing the responsibilities that take you away from your core business and revenue generation. Go into the process with proven partners who can manage the administrative and financial heavy lifting for you. An experienced provider will offer essential services, such as:

-Onboarding
-Timesheet collection
-Client billing
-Back office support
-Payroll funding
-HR capabilities
-Compliance services
-Tax and insurance audits
-Employee benefits
-Automated reporting

A dynamic partner will manage a diverse range of administrative functions, enabling you to differentiate your services from the competition as well as remain focused on what's most important to grow your business.

Contact Headcount Management Today

Are you wondering how to start a staffing agency without excessive risk? To help, we created this handy profit calculator--use it the next time you get a temp job order, so you can price your business effectively, and see how much it's going to cost you before the money starts coming in:

Use our handy Markup Calculator to quickly determine your margins when taking on a new client: