How to Start a Staffing Agency

Starting a staffing agency can be a very profitable business— if you do it right. To be successful in this industry, you need to be specific in your targeting strategy and know how to manage the nuances of staffing agency financial fluctuations.

If you’ve been considering starting a staffing agency to get ahead of the hiring rebound, consider these key steps.

Identify Your Niche and Strengths

A one-size-fits-all approach doesn’t work for a staffing agency. To be successful in this business, you need to drill down and find your niche. Choose an industry that makes sense based on your professional experience and position yourself as an expert in that field.

In addition to defining your niche market, you’ll also need to spend time crafting your Unique Selling Position (USP). This statement identifies what sets you apart from the competition. As a staffing agency, you’re in a unique position where you need to appeal to both employees and employers. Conduct a SWOT analysis to get a better understanding of your offerings, and those of your competition.

Figure Out Your Financials

Financial management is the primary challenge for most businesses. However, with a staffing agency, financial management is a little more complex.

First, you’ll need to figure out your startup costs. This should be included in an overall business plan that outlines all the details of your staffing agency. You’ll need to research the tools and software you’ll need to conduct business efficiently, as well as insurance costs to keep you covered.

One unique issue for running a staffing agency is figuring out the cash flow situation. Generally speaking, you’ll be required to pay your employees weekly or bi-weekly. However, the business you’re working with may only pay monthly. This can create inconsistencies in your cash flow, especially if you grow quickly. Payroll funding can help your staffing agency avoid this often devastating situation.

According to, the process is very simple. You submit an invoice to the company using your services with remittance details directing funds to the payroll funding company. The payroll funding company pays you the money immediately (minus their fee and a reserve fund), so you can pay your employees. When they receive payment from the customer, the remaining reserve fund is released to you. This is one of the easiest, most sustainable ways to manage your staffing agency cash flow.

Find the Right Employees

Set policies and protocols surrounding who you will employ and offer out to companies. Remember, these individuals represent your business, so choosing the right employees is essential.

When searching for employees, think outside the box. Everyone uses job boards and LinkedIn. Look for channels that target your niche and see how you can use them to attract top talent.

Find the Right Clients

A marketing strategy should be a part of your business plan. You’ll need to use your USP and expertise to prove to potential clients why they should work with you instead of the competition. Again, you’ll need to get creative and think of ways to stand out in the crowd.

Your approach to finding clients should never be about what you can offer them— it should be what problems you can solve for them. Don’t just solve a common problem; drill down and find their pain point, then offer a solution they can’t ignore.

Create a Sustainable Growth Plan

When you start a business, you should always do so with growth in mind. Creating a sustainable growth plan is essential for long-term success. The previous example of using a payroll funding service is a part of planning for sustainable growth. Other components include having a talent pipeline at the ready, setting goals, and identifying performance metrics.

When it comes to starting a staffing agency, slow and steady wins the race. If you come across a challenge, adapt and find a way around it. It will take time to get established, but with determination and strategic thinking, you can build a profitable business.

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