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19 Pro Tips for Starting & Running a Staffing Agency

Whether you are just getting started with your staffing agency or are looking for ways to make it run better, these 19 tips will get you where you need to be.

#1. Define What Makes You Better
When you operate a staffing agency, the same rules of business apply as they do in any other industry. You must find a way to differentiate yourself from the rest of the competition. If your company is like every other one in your community, then finding clients will be a challenging experience.

You’ll need to ask yourself about why you’re different. What will make your staffing agency better than all of the others? Be honest with the answers to these questions. If you wouldn’t buy services from your own organization, it’s unreasonable to expect someone else to do so.

#2. Find the Perfect Clients
A staffing agency becomes successful when you start working with the “perfect” client. You’re not going to start forming relationships with community partners by spamming LinkedIn boards or joining a local industry association. You are going to be picking up the phone, calling people, and having meetings where you can prove that you can help them as much as they can help you.

It is going to take time to develop the relationships you’ll need to be successful. Be patient with this process. Start in the industries where you have the highest levels of familiarity. That will help you to begin on a strong foot.

#3. Get a Good Group of Temps
Employee referrals are often the best way to begin staffing your new agency. It is a time-tested strategy that typically works, especially if you have an established name in your community. When you are just beginning this journey, then there are some channels where you’ll want to be to begin building in this area. Trade shows, job posting websites like Indeed or Monster, and social media are excellent places to begin looking.

#4. Know How to Make Matches
Your job when running a staffing agency is to match the temporary candidates that come your way with a potential employer. It’s arguably the most challenging component of this industry. Ensuring that both parties (the company and the temp worker) are happy with each transaction is a full-time job by itself – and you’ve got to make money while doing it.

The key to success here is to know the preferences and skills of your employees so that there are no surprises. Learn as much as you can through interviews and questionnaires to determine where they can fit in well. Then do the same with your potential employers.

#5. Be Proactive About Personnel Issues
Issues always arise between employers and employees at some point in the relationship. There is no way to get around the issue of human resources and relationships when running a staffing agency. Deal with any complaints you receive immediately. When you strive to find a compromise that is fair and satisfactory, then you can usually salvage the relationship. Mastering this step can help you to earn more referrals, but failing here can cause more challenges to arise during the recruitment phase of your company.

#6. Stay Organized
You must keep everything organized if you want to run a successful staffing agency. Numerous areas of your business must run like clockwork for you to find success. Make sure that you’re collecting all of the timecards in a way that ensures their accuracy before running payroll and invoices. You’ll need to do this every week, which means you must manage any withholding issues accurately. Keep your books up-to-date at all times, even when you’re tired and ready to go home.

The list of things to do is never-ending with a staffing agency. If your focus is to become a task-master who can delegate critical functions to the best people, then you’ll have a successful experience.

#7. Watch Your Cash
Liquidity is more important to a staffing agency than most new owners realized. Growth is a double-edged sword in this field. Your clients will pay invoices on terms that range from Net 15 to Net 60, so it might be five more weeks before you see a check, but payroll needs to go out each week – or every other week at the very latest. Building a cash reserve before you open your doors to clients can help to get through the difficult initial days in this industry.

You might also have the option to apply for payroll financing, but you’ll need to remember that debt is something that must be repaid.

#8. Focus on the Data
You could be the best there is in your community as a staffing agency, but a failure to track your data and key performance indicators can still cause your company to struggle. You’ve got to stay on top of your numbers at all times. Develop meaningful metrics that chart an authentic vision toward the success you want to see. Then make a commitment to deliver on the promises that you make to yourself, your clients, and the temporary employees.

If you can apply these principles to your talent pipeline, then it becomes possible to achieve a degree of scalability.

#9. Invest in Technology
Technology is what drives the staffing agency industry forward today. The companies that are willing to pull the trigger on this investment tend to be the ones that stay in front of the competition. Artificial intelligence, machine learning, and growth analytics are three critical areas to evaluate when you believe that your agency is ready to start growing. Even if you’re unsure of what the ROI will be when you first get started, taking zero risks is a certain recipe for failure. Growth almost always reflects your willingness to spend.

#10. Be Willing to Adapt
If you place all of your efforts in a single industry, then their failure will become an issue that can drive you out of business. There may be times when you must pivot your business model. That means it may be necessary to test a few service offerings in niche areas to see what plays in your community. You must be willing to adapt when circumstances change, even if the problems are outside of your control. If you decide to give up when things get tough, then you won’t get to experience the rewards that come with entrepreneurship.

#11. Stick to Your Guns
If you are willing to grant favors to your friends and family, then that means you’re going to be losing money over time. You must stand firm on your rates, even if that means your next reunion or dinner get-together becomes uncomfortable. Everyone is going to want a discount if word gets out that you’re offering them. That means you’re discounting the value of what you provide.

Put your time and energy on the people and companies that recognize your value. If you help them to start growing, then the favor is typically returned.

#12. Tackle Critical Pain Points
Solving problems will always give your staffing agency value. It only works when you’re passionate about the value that you can bring to the conversation. When you have emotion as part of a recipe for success, then there are higher levels of empathy that will resonate with your client base. It is much easier to win trust and build loyalty when you can bring that type of energy wherever you go.

#13. Stay Humble
It takes time to develop enough skills and resources to create a staffing agency that you can call your own. Some industry experts say that it can take about five years to know if you’ve mastered your skills to the level where independence is possible. Even when you develop high levels of success, it is essential to remember that you’re not invincible. When you get up each morning, take some time to be grateful for the position that you’re in that day. The moment that you feel like you’ve arrived is that second that someone steps over you to claim what should be yours. Always work hard and maintain your humility.

#14. Get Advice on Your Business Plan
Consulting with your loved ones with regard to your staffing agency business plan can help them to know what your reality will be. There are always risks involved in a business. Your work is going to impact the people who care about you. Having honest, frank discussions about money before making choices is critical to your long-term success. It is nice to have a successful business, but it’s better to share the rewards with someone you love. Taking this step will make your plans more effective.

#15. Engage a Side Hustle
During the first days of operating a staffing agency, most owners don’t have enough liquidity to get through 12 to 24 months of upward building. Most companies in this field don’t reach profitability until their third year of operations. Find a part-time job that will help you take care of the bills coming in while you work on building your business. Even online freelancing work can help to get you through the difficult first days.

#16. Use Contractors Strategically
A lot of staffing agencies decide to work with a third-party payroll company because the amount of time and effort to stay in compliance isn’t available to you. Letting someone else process W2s or establish direct deposits will free up a lot of your time to do what you do best. You’ll still need to monitor the activities of the contractors you hire since their actions are a reflection of your company, but that’s much easier than trying to balance everything on a single plate.

#17. Focus on Small Companies
Everyone hopes to land a “big fish” when operating a staffing agency, but it is the relationships you make with the smaller businesses that will drive you toward success. It’s almost impossible to secure a foothold in a Fortune 500 company because they’ve already internalized many of the services you can provide. If you do receive some interest, the large company will expect you to have a significant recruiting team to manage their requests.

That means you’ll want to work with firms that aren’t using vendor management systems. This step might not make you rich, but it will at least keep food on your table.

#18. Minimize Your Expenses
You’ll need to reduce your expenses as much as possible inside and out to give yourself the best chance at success. If that means moving in with your parents or finding a new roommate, then make that happen. Take your clients out to dinner somewhere that doesn’t charge an arm and a leg for an entrée. Use free tools and resources whenever possible, and don’t establish a formal office until you are large enough to need one. Avoid any big-ticket purchases or significant life changes in the first year of your company to maximize the opportunities you are creating.

#19. Never Stop Researching
Talk to the other staffing agencies in your community to see if you can glean some information about their operations or feasibility. You’ll also want to have these conversations with potential clients. Go deep into your personal networks to see if there is an untapped potential there that you could use. Then map out your startup costs to see if moving forward really is the correct decision to make.

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