Temporary Staffing Agency: How to Start
The temporary staffing industry continues to expand, with
yearly double-digit growth being commonplace. Companies find it
convenient and cost-effective to work with a temporary staffing
agency to fulfill unforeseen demand, fill short-term vacancies,
and assist with changing workloads due to restructuring or
mergers. Additionally, employers are enticed by the idea of
"test driving" new employees to minimize risk and ensure a good
match for permanent positions.
Many a job seeker has reaped great rewards from temporary
staffing. Skilled but yet-inexperienced workers are able to get
a foot in the door at prestigious companies, where a weak resume
would have made it very difficult to be considered. Similarly,
"drifters" (those who tend to rapidly drift from job to job) may
be plagued by an overly-long resume. Temporary staffing services
can be ideal for drifters, as they have the opportunity to work
on short-term projects and move on without the negative
repercussions. Retirees and college students are also very
common candidates. A retired nurse may find enjoyment and extra
income from a temporary medical staffing firm. A computer
science major can gain valuable experience working with a
technical agency.
Only a small number of personnel is required to handle
recruiting and clientele. Even the largest international firms
tend to function with small, mostly-independent branch offices
serving specific regions. This modular structure means it is
quite possible for a one-office temporary staffing agency to
compete effectively with established firms.
Overall, the triple-benefit to clients, associates, and
entrepreneurs has contributed to the phenomenal growth of the
temporary staffing industry. Because of these advantages, it
will remain an integral part of the employment process through
good times and bad.
Start Up Costs and Financing Sources:
$5,000 to $25,000
The startup and operating costs of a temporary staffing agency
are much lower than many other businesses. The basic
requirements are a small office with the typical supplies, a
computer system with general accounting software and database
software for organizing contracts, and the people skills to work
with clientele and associates. It would not be impossible to
start a temporary staffing agency on a shoestring budget of a
few thousand dollars.
The largest business expense is payroll. It is common for
associates to be paid by the agency before the agency is paid by
the client. An account must be maintained with sufficient funds
to cover payroll costs until bills are paid by the clients.
It is difficult - but not impossible - to get help from venture
capitalists in covering part of the costs of setting up a
temporary staffing agency. A well-researched, forward-looking
business plan is essential.
Pricing Guidelines for Service:
Associates are paid by the hour, and the agency covers its costs
by charging a premium to the amount billed to the client. The
exact amount of the premium differs from case to case and can
vary from 5% to 50% or more. Some associates are willing to work
for less and some clients are willing to pay more, which when
properly matched can result in very decent profits for the
temporary staffing agency. The contract usually spells out a
flat fee to be paid to the agency in the event that a client
decides to permanently hire an associate.
Advertising and Marketing:
A competitive hurdle for small startups is that larger agencies
already have established reputations and brand recognition. This
is actually a minor obstacle because of the localized nature of
the business. It is not necessary to wage a national marketing
war to gain exposure for a new agency. An inexpensive and
well-directed marketing campaign can quickly build a valuable
reputation within the local operating region of the startup.
Essential Equipment:
An office (perhaps a home office) should be equipped with the
standard office supplies and at least two telephone lines.
At least one computer system with accounting software and a
database for keeping track of projects is mandatory. A printer
is used for printing invoices and job listings, and a high-speed
Internet connection connects the agency with online job search
sites.
Many temporary staffing services have computers with tutorial
software available to help associates to train their keyboarding
and basic office software skills. These computers are also used
to test the skills of applicants.
Income Potential:
Many billions of dollars are spent on temporary staffing
services each year. A small, single-office agency can earn
profits in the tens of thousands of dollars. The large,
international firms rake in millions every year.
Target Market:
A temporary staffing agency is the middleman between two
distinct markets: clients and associates.
It is usually not a difficult matter to reach hundreds of
applicants with simple help wanted advertisements. More focus
will probably be placed on connecting with client companies and
convincing them that your services will help their businesses.
Certain industries seem more receptive to temporary staffing.
Financial institutions and other office-centric companies are
constantly seeking qualified office support staff. Factories
frequently need labor for light industrial work, product
assembly, and shipping and receiving tasks. Hospitals and
clinics use temporary medical staffing to hire
transcriptionists, certified nursing professionals, and other
support staff. Increasingly, high-technology companies hire
computer programmers, database specialists, and systems
engineers on a temporary basis through agencies specializing in
technical placements.
Tips for Success:
Develop a niche!
In larger markets, providers of temporary staffing services have
found it useful to branch into niches such as temporary medical
staffing, legal, financial, or technical fields. The focused
nature of these agencies allows recruiters to build a pool of
highly-educated, trained, and experienced associates who are
able to provide the best service to clients within a particular
industry.
A hospital executive would feel more comfortable contracting
nurses from an agency dedicated to temporary medical staffing
than from a one-stop-shop that also places welders, janitors,
and filing clerks. This confidence also helps associates to
command better wages than they might otherwise receive through a
general-service temporary staffing agency.
Automate!
Much of the work of running a temporary staffing agency can be
automated by computer software. Well-designed database software
can ease the process of matching qualified associates with
appropriate job openings. Accounting operations can be very
heavily automated (but working closely with a good accountant is
still advised). With these tools in place, just two major tasks
remain: finding clients and finding associates.
Use your own services!
As the business grows, it will become necessary to add staff to
handle the recruitment and marketing. That should never be
difficult, since typically dozens or hundreds of qualified
candidates are already in contact with the agency!
Training, Skills or Experience Needed:
Recruiters are at an advantage with a background in human
resources, business management, and marketing. A degree is not
essential for starting the business, but the knowledge gained
through a business management program is immensely helpful.
People skills are important, and can be learned through
experience and self study. Numerous books have been published,
specifically addressing temporary staffing as a business
opportunity.
Helpful Books or Trade Publications:
The acclaimed book Strategic
Staffing, by Thomas P. Bechet, is
geared toward employers; however, it is also an invaluable
resource for providers of temporary staffing services, who are
frequently consulted in matters of workforce planning. With this
book under your belt, you will be in a position to provide the
best advice to your clients.
A Strategic Model of Temporary
Staffing, by Kay Glasgow, presents
a scientific inquiry into current and future trends involving
the employment of temporary staffing services.
Start Your Own Staffing Service (Startup) (Paperback)