How Do I Start My Own Staffing Agency?

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staffing agencyMany business school programs now feature majors and concentrations in entrepreneurship and human resource management which are likely perfect academic combinations for future staffing agency owners. A staffing company refers qualified employees to companies with open positions for a flat per person fee or a predetermined percentage. Depending on the chosen business model, the staffing company will feature clients working in specific industries or demographic segments of the population. Here are some of the key steps for starting a staffing company.

Determine Staffing Company Business Model

Aspiring staffing company entrepreneurs must decide which part of the labor market they will serve. For instance, a business owner may decide to be the premier staffing company for allied health care professionals. Instead of deciding on a particular industry to target, these entrepreneurs could decide to primarily serve employees who meet certain demographic criteria like being disabled veterans. Establishing a niche within the labor market is often preferable to providing staffing services for all types of employees working in all industries for new, small staffing companies.

Staffing company owners must also decide whether workers will be employees or independent contractors. This important distinction affects taxes, pay scales and benefits offered. For instance, a company with a certain minimum number of employees must register with the government’s tax office for an employer identification number. Business insurance and liability coverage is often needed based on the industry served by the staffing office. Also, staffing agencies with employees must contribute to their social security funds and are often expected to provide certain benefits like medical insurance and sick leave. Independent contractors often get higher per hour rates because they do not receive benefits from the staffing service company.

Staffing company owners must determine their commission or fee structure. They may charge a flat fee per employee matched to a company, or they may choose to take a percentage based upon the employees’ salary. No matter what payment type is chosen, the business owner must enlist the help of a contract attorney to establish agreements among employees, hiring companies and the staffing company.

Advertise to Attract Employees

Staffing companies have numerous ways of getting the attention of prospective employees. One of the most prominent ways that these agencies announce their arrival into the labor market is through participation in heavily promoted job fairs. Prospective employees who attend these events are considered active candidates, and they are often easier to recruit than those elsewhere. Attending industry association networking events also helps staffing companies recruit qualified workers within specific sectors. Placing advertisements in state unemployment offices, online job boards and professional social media outlets such as LinkedIn are some other popular ways to attract talent. Agencies with sufficient marketing budgets can also place advertisements in trade journals and publications that cater to specific demographic groups like the American Association of Retired Persons magazine.

Find Local Business Clients

One of the most challenging things about starting a staffing agency is establishing relationships with reputable companies that are looking to build quality teams. These companies usually partner with experienced staffing agencies, and a start-up agency is at a decided disadvantage. However, new staffing companies can establish credibility by making sure that they have all the necessary business licenses to operate, adequate insurance and thorough background checks on employees. The phone book, online employment directories and the local chamber of commerce are all ways that staffing services owners find local business clients.

Thriving businesses and new start-ups continue hiring even during poor economic times. In fact, hiring decisions often become more important during those times, and many businesses prefer candidates who have fresh skill sets and are pre-screened by a quality staffing agency.

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