How to Run a Successful Staffing Agency

staffing employees sitting together

Last Updated March 7, 2023

Running a staffing agency requires some insight and several skills in addition to planning and attention to detail. Each part of the company needs to be fine-tuned to produce positive results and steady growth. The company’s success requires a solid business plan designed to  handle multiple accounts and fluctuation in growth over time effectively.

Although staffing agencies can be moneymakers, they require careful planning and determination to compete in this market. The undertaking won’t happen overnight but rather over the course of a few years of intense focus in the areas we will discuss in this article.

Whether you’re considering starting a staffing agency or want to revamp your current business endeavor, you’ll need to address these areas of concern to make the most out of your efforts.

Starting a Staffing Firm

Starting a temporary staffing agency can be lucrative, but you must know how to do it first. Here is an overview of how to start a temporary staffing business from scratch:

  1. Pick an industry or niche to serve. You can choose an industry based on your past work experience.
  2. Research the industry, and identify any special requirements to provide temporary staffing to relevant companies.
  3. Set a budget for your office space, hiring process, and other aspects of your business.
  4. Create a business plan.
  5. Come up with a marketing strategy.
  6. Hire staff. Recruiters and temporary employees are especially important for staffing agencies, so ensure you choose the most qualified candidates.
  7. Contact potential client companies to offer your services.
  8. Protect your staffing agency by applying for insurance, setting up a business bank account, and securing your company data.

How To Create a Staffing Agency Business Plan

One of your agency’s most important initial building blocks is its business plan. A business plan contains your goals, projected budget, and the various analyses required to run a successful business. You can also use a business plan to shop around for investors.

Here are the most important sections of a staffing business plan:

  • Executive summary: This section briefly summarizes the entire business plan document, typically used to attract a potential investor’s attention.
  • Company overview: This section details your business model, mission statement, and other things related to the staffing agency.
  • Analysis: Many business plans make dedicated sections for industry, customer, and competitive analysis. The objective of this section is to convince investors that you have done the homework, understand the business landscape, and have the tools to succeed.
  • Marketing plan: This section explains how you plan to attract clients to your business.
  • Operations plan: This section covers how your company plans to achieve its goals, such as daily business operations and long-term milestones.
  • Financial plan: This section shows how much money you plan to get and how much is needed to cover initial business costs. The financial plan is especially important because this is how a potential investor decides whether or not to invest in your business.

Why The Demand for Staffing Agencies Is Growing

The demand for staffing agencies keeps growing because talent shortages are still common in the job market. Companies everywhere are vying for workers by providing high pay and benefits, leaving those who cannot offer incentives in the dust. Moreover, companies are warier about direct hiring because they might spend lots of money onboarding employees who will only leave them when another job opportunity arrives.

The staffing industry provides solutions for human resource problems by giving companies access to affordable independent contractors without the many overhead costs of hiring permanent employees.

What Makes A Good Staffing Agency?

A good staffing agency understands the client company’s problems and can provide them with the temp staff necessary to address them. A good staffing agency should:

  • Fully understand the client’s company and industry
  • Build strong and lasting client relationships
  • Have a wide talent pool of temp worker candidates to choose from
  • Perform background checks on potential employees to ensure they are the best for the job
  • Employ experienced recruiters with a proven track record in staffing
  • Help its employees develop personally and professionally
  • Own the necessary insurance policies for employee theft, general liability, and other essential protection

6 Tips To Run A Successful Staffing Agency

Are you looking to run a successful staffing agency? Here are 6 tips to help you do so:

1. Stand Out from the Competition in the Area

The staffing agency market is highly competitive, and chances are, there are several in the area to contend with first. Competitors are attempting to get the same prospective clients you hope to enlist and will likely have a solid plan to achieve this endeavor. That is why it is so important to distinguish your company from the rest.

Have a solid outline of why your company is different, what you have to offer, and how you can be a better match for potential clients. Once you find your selling points, be sure to capitalize on them every chance you get. Some ways to set your company apart from others can include the following:

  • Find a niche and work within it
  • Aim for particular skill sets in staff that are highly marketable
  • Provide top quality for a competitive price, not necessarily the lowest price
  • Offer extras that matter to clients

Take every opportunity to be appealing and set a high standard for your staffing agency to attract more customers and shine the spotlight on your company. Although pricing is easy to adjust, that may not always be the best approach to attract business. Focus on the extras or unique skills available through the company.

Hopefully, your staffing agency will see growth that leads to judicious buyers eyeing your company. Standing out from the rest will help increase your company’s value if you reach the point of considering selling your staffing agency.

2. Track Your Finances Carefully

One of the best ways to ensure stability and steady staffing agency growth is to carefully track finances and spend down to the pennies. Don’t overspend or make purchases that aren’t absolutely necessary, set specific guidelines concerning a common-sense budget, and don’t deviate.

Allow only a few people to access funds or spending accounts and keep a close watch over them. Assign executive managers, HR directors, and business partners special accounts for business spending or have cards tracked through the bank and have statements forwarded to an accountant for review.

It is best to have an accountant keep track and regularly keep you posted about spending, complete with reports. Always review this information thoroughly and make a backup of the report on the company’s cloud account in case of equipment malfunction or a data breach.

There are some instances where you may need to finance your payroll temporarily or over a period of time to avoid straining financial resources while also providing timely payments for workers. This is called payroll funding, or small business invoice factoring, for staffing companies.

3. Stay Organized

Perhaps the most important part of running a successful staffing agency is organization and punctuality. Keep track of time cards daily and weekly and make sure they’re collected and forwarded to the appropriate management for processing and payment. This point is also essential because you can’t bill clients without time cards and appropriate documentation.

Keeping track of taxes and staying compliant with local, state, and government laws is a must. Always double-check that the necessary documentation was sent on time. Don’t rely on someone else to keep track solely.

Many different tasks must be managed within a staffing agency, and keeping them organized and addressed promptly is necessary for a smooth flow of business. Always have a way to track clients, workers, applications, invoices, and expenditures and make sure they are readily accessible at a moment’s notice. Having up-to-date software to handle this type of business is crucial.

4. Know How to Relate to Client and Workers

One of the most important skills to master when running a staffing agency is knowing how to resolve disputes between workers and clients. It is a part of the business that often proves to be the most challenging. However, it is necessary to figure out a method of problem resolution that is satisfactory to both parties and prevents damage to your company’s reputation.

HR relation skills are essential because they will help build referrals through clients and employees, making a huge difference in reputation and inflow of clients and applicants. Don’t be afraid to take some master classes or watch instructional videos on problem resolution and HR practices.

This is also a great approach for employees who may need to help handle certain situations regularly. Keep in mind that an amicable resolution is always the goal, so strive to incorporate a proven strategy that helps make this part of the business less stressful and more effective.

5. Learn How to Match Clients and Workers Effectively

It might seem obvious that matching clients with the right workers is essential, but it tends to be harder than most initially anticipate. You need to have a system in place that helps identify workers with special skills or particular areas of expertise with clients needing those skills and assets.

Before assigning workers to a client, get in-depth information from the client about areas of expertise that are necessary or might prove to be highly beneficial for a well-rounded employee. Taking the time to get to know the client’s needs thoroughly is another way to build a solid reputation in the industry.

Some skill sets or areas of expertise to keep track of applicants include the following:

  • Written and spoken languages
  • Specialty software experience
  • Management experience
  • Special certifications or degrees
  • Security clearance

Incorporate software into the computer system to identify certain applicants with those skills or correlating skill sets with the employers who need them to make good matches. Taking the time to do this research and matchmaking will ensure both parties are satisfied and will refer you to other companies and workers in the area.

6. Be Accessible

To many, this may seem obvious, but the industry is riddled with agencies who neglect to be accessible for support, questions, problem resolution, and emergencies. Ensure that you have the proper workforce or resources on hand to have accessibility around the clock.

One way to be readily available to both workers and clients is to have a universal app for the company able to handle inquiries and track multiple processes. You can also have a special number for employees or for clients to call to get immediate assistance during and after hours. These measures can be taken in conjunction with a standard business line and website interface.

Being highly accessible and responsive will help solidify your reputation in the industry and help you stand out from the area’s competition. When workers and clients see that they can have access to support and assistance when they need it and on short notice, they will be far more likely to want to do business with your company than others with communication and response issues.

Before moving forward with opening and operating a staffing agency, or if you want to make improvements to an existing agency, make sure to address all these points of interest and have solutions ready for each one. Addressing these topics allows you to build trust and respect among both workers and clients and helps prevent issues related to operations and overall client/worker satisfaction.

Key Takeaways

Many companies these days choose to work with staff agencies to avoid paying high overhead costs and spending time onboarding people who might jump ship. To attract clients and get repeat business, you must know what the clients need and address their problems.

To learn more about running a staffing agency, check out our articles on joining staffing associations and the best apps for staffing firms.