How to Start a Temporary Staffing Agency

Spring is upon us. Baseball has (finally!) started. Birds are chirping and flowers are blooming. It's a time of renewal. And in this particular year, it also happens to be a great time to consider starting a temporary staffing agency. The industry is growing. Margins are stabilizing. Beyond these “macro” level statistics, however, there are several other great reasons to consider launching your firm right now. When starting a firm, we think there are four key things you must consider: people, technology, insurance, and payroll funding. In each of these areas, starting your staffing firm is easier than perhaps ever before. [more]

In any business, people are the most important asset. Salaries are nowhere near what they once were. Salespeople and recruiters, who will drive your business, are more incentive-driven than ever. There are simply less jobs now yet the same people most likely have more mouths to feed.

How about technology and infrastructure? Like virtually all industries, technology, communications and process improvements have made starting and managing the operation of a startup temporary business much easier. Software prices have dropped precipitously, while features and functionality have improved. For a reasonable monthly fee, you can run your business on a state of the art system with minimal hardware investment.

Various insurance policies will also be required for our new venture and Workers Compensation insurance for temporary staffing firms is many times the most expensive and complex. To make matters worse, Workers Compensation insurance market for temporary agencies has been getting tougher. However, there are specialty firms out there who can help. You can and should also consider utilizing a specialty PEO (Professional Employer Organization), some of whom are fully integrated with funding and other back office services.

Finally, you’ll have to secure the appropriate startup and working capital. The old saying is true – it takes money to make money. Startup temporary staffing businesses have significant and immediate cash flow needs; payroll and related burden are a weekly obligation, while customers may take 4-8 weeks to pay you. Many staffing businesses turn to specialized temp funding companies to cover this cash flow gap.  Some funding companies have evolved to offer more sophisticated services to their clients with more customized and flexible pricing.  Like staffing technology, versus 5 years ago, you now get much more for much less.

So go take that walk in the park, clear out your head from the long winter, and start to visualize your thriving startup staffing agency. Whether you're an executive recruiter considering starting a temp division or an owner building your contract business, we believe that now is the time to either initiate or re-focus this effort.

Have you recently started a temporary staffing business or are you in the process of doing so? Share your thoughts on what is working for you!


For more resources on starting up a staffing agency, visit the Startup Spring section of our website.

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