Key takeaways
- Temporary staffing refers to the practice of hiring employees for a fixed period or as temporary hires on an as-needed basis rather than for permanent roles. The demand for temporary staff is very high.
- Benefits of outsourcing temp staff include: reduced recruitment costs, less admin, flexibility, expertise and specialised knowledge.
- Draw up a business plan, consider target market and marketing strategy, form a client network and recruit employees.
- You must register your business, secure appropriate insurance and decide on the legal structure. Depending on your location, you may need to obtain certain licences or permits in order to operate.
- Consider enlisting professionals to help handle the financial components of your staffing agency.
How To Set Up A Temporary Staffing Agency
Considering launching a temporary staffing agency? Perhaps you like the idea of being your own boss or maybe you’re drawn to how much the industry is growing. Whatever your motivations, starting a temporary staffing agency is an exciting and potentially very rewarding venture. If launched and managed appropriately, temporary staffing agencies have the potential to grow rapidly and become very successful.
Today, the demand for temporary staff is very high. Many organisations are choosing to outsource their staff from a temporary recruitment agency. . This is because staffing agencies offer companies help to find the most suitable candidates in a short time, providing expertise and covering admin.
This guide will equip you with the knowledge you need to navigate the setup process of a temporary staffing agency – from how to understand the market, to the requirements and costs you’ll face. We’ll finish by providing our step-by-step guide to show you how to start a staffing agency successfully.
Here at New Millennia, we specialise in providing back office and finance services for startup staffing agencies. As you embark on this journey, you can be sure we will be there every step of the way to provide the support and solutions you need for success.
What is a temp staffing agency and why are they valuable?
Temporary staffing agencies act as a bridge between businesses and workers seeking temporary work opportunities; they meet the growing demand for flexible staffing solutions in sectors like hospitality and the events industry.
Both parties gain something of value: businesses benefit from streamlining their hiring process, and the workers gain quick and diverse access to employment options. Day-to-day, your staffing agency will create job postings, assess applications and connect qualified candidates with employers.
What is temporary staffing?
Temporary staffing is the hiring of employees for a fixed period or temporary basis rather than for permanent roles. These roles can range from short-term assignments to longer contracts, offering both employers and workers greater adaptability in the workforce.
Why businesses use temporary staffing
Temp staffing provides flexibility to organisations, allowing them to fill urgent gaps without the commitment of permanent hires. For example, in the healthcare sector, this often involves placing healthcare professionals, such as nurses, doctors and allied health staff, into positions where there is a temporary need. This might be due to staff shortages, maternity leave or seasonal demand.
Why should I start a temporary staffing agency?
There are a few reasons why companies might outsource their staff via a temp staffing agency:
Reduced recruitment costs: hiring temporary staff through a temp agency eliminates the need for companies to invest time and resources in advertising open positions, screening resumes, conducting interviews, and handling onboarding processes.
Less admin: a staffing agency will help with sourcing, interviewing and training potential candidates – saving workload and resources.
Flexibility: outsourcing temporary staff allows companies to scale their workforce up or down quickly based on fluctuating needs. This is particularly valuable for seasonal services like a wedding caterer or retail staff during a festive period.
Expertise and specialised knowledge: A temp staffing agency can provide valuable insight into staffing regulations and ensure compliance by ensuring workers are eligible to work.
How do temp staffing agencies make money?
Temporary staffing agencies make money by charging employers a markup on the wages paid to temporary workers. This markup typically covers the agency’s overhead costs including recruitment, screening, training and administrative expenses, as well as providing a profit margin. For example, if a temporary healthcare worker is paid $20 per hour, the agency may charge the employer $30 per hour, with the difference ($10 per hour) being the agency’s profit.
Temporary staffing agencies may also charge additional fees for services such as background checks, training or expedited placements. The exact markup can vary depending on the industry and the agency’s pricing structure. The cost of launching a temporary staffing agency will depend on your chosen scope and specialty so unfortunately there is no one-size-fits-all answer.
However, there are some key costs to keep in mind if you are considering starting a temporary staff agency:
Establishment costs: these include forming a business entity, securing the necessary insurance, leasing a physical space and purchasing hardware like computers.
Software: you’ll also need to invest in software to streamline your workflow, such as payroll processing systems. Alternatively, if you choose to outsource back-office functions for your staffing agency, the accounting firm will have its own software.
Marketing: allocate a substantial portion of your budget for advertising in the initial stages of starting a staffing agency. This will ensure you reach and attract potential clients.
Potential Issues When Starting a Temporary Recruitment Agency
Another key consideration is that temporary staffing agencies face a unique cash flow challenge. You’ll likely pay your temporary workers on a weekly basis, but clients may take longer to settle their invoices, often paying monthly. This delay can disrupt your cash flow but partnering with a specialised recruitment funding and payroll firm is a good way to ensure your staffing agency remains financially healthy.
They will help bridge the gap between your expenses and client payments, ensuring you can pay your employees sufficiently and operate smoothly.
Whilst factoring is an option, an alternative funding solution is a risk-free solution with one fixed cost – no drawdown percentage, setup costs or minimum fees.
How To Set Up A Temporary Staffing Agency
Starting a temporary staffing agency requires careful consideration – before making the decision there are some factors to weigh up.
Goals. Both long-term and short-term, the clearer the goals, the better the execution. Drafting a business plan and taking the time to define your target market and competitive strategy will be highly beneficial for the success of your staffing services.
To guide you through the process, follow our six-step guide to help you set up your staffing agency:
Research And Find The Target Market
Launching a successful staffing agency hinges on thorough market research. Analyse different industries to identify where your company can best fill the gap. The three main staffing industry areas are office, industrial and professional. It’s also worth considering that prior experience in a particular field can be valuable and allow you to offer targeted experience.
Develop A Business Plan
- Agency name
- Your niche
- A marketing plan
- A financial strategy
- Clear business goals.
Requirements To Open A Staffing Agency
There are certain requirements to consider when setting up a temp agency. It’s important to familiarise yourself with the laws applying to temporary staffing agencies – this will be essential to stay compliant with regulations.
Decide on the legal structure for your staffing agency. Common options include sole proprietorship, partnership, limited liability company (LLC) or corporation. Each has advantages and possible disadvantages regarding taxes, liability and ownership. Once you’ve chosen a business structure, you’ll need to check for name availability and register your business name with the appropriate government agency.
Depending on your location, you might then need to obtain specific licences and permits to operate a temporary staffing service. Secure the appropriate business insurance. Consider general liability insurance, professional liability insurance and workers’ compensation insurance.
Finances For Starting A Temporary Staffing Agency
You need to ensure you’re keeping accurate working records, that your payroll is efficient and that you’re compliant with tax law. By delegating financial tasks to professionals, you’ll also free up valuable time to focus on core business activities like building client relationships and making placements – these are essential keys to growing a successful temporary staff agency.
Consider enlisting professionals to help you with the financial components of your temporary staffing agency.
Form A Client Network
Build a website that shows your abilities and the distinct features of your staffing services. Other channels to consider are recruiting networks like LinkedIn, social media, referrals, personal networks etc. You can also find potential clients through advertisements, email marketing, social media and professional networks.
Recruit Employees
While you can certainly launch your temporary staffing agency solo, building a strong team further along the line is crucial for long-term success. As your business grows and you take on more placements, having a dedicated team can help you streamline operations, provide a wider range of expertise, and ultimately, better serve your clients. You can start by hiring for the most critical roles and gradually expand your team as your business needs evolve.
How to Grow Your Temporary Staffing Agency
Once you have established your temporary staffing agency, the next step is to grow it. Building on existing relationships, networking, diversifying, developing expertise or considering ways to expand and market your staffing agency are some ways you can look to grow your business. If you’re looking to grow your temporary staffing agency, start to strategise your expansion plans.
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