Creating a staffing company is an exciting process that takes a lot of hard work and focus. There is undoubtedly a need for these businesses because they save more massive companies money and time by tapping into vast networks of potential candidates. These relationships are crucial in today’s competitive hiring landscape.

With a well-thought-out game plan, you can establish a reliable company that helps add value to other businesses, large and small. In this article, we lay out for you the top five things you need to know about starting a staffing company. As you read through these different points, be mindful of who in your network can help you achieve these different steps in creating your business.

1. There are Different Types of Staffing Services and Sectors

Because the staffing industry is competitive, many companies tend to focus on specific niches and sectors. As you develop your company, take time to think about which industry you might be more interested or adept at succeeding in. Even less common roles can be ripe for a staffing agency. Pharmaceutical sales is big, but executive assistants are not as big. Yet, there are tons of goal orientated executive assistant staffing agencies pulling in big clients. 

Office and clerical staffing sector make up a large part of the industry’s payroll and revenue. This niche includes office clerks, general secretaries, administrative assistance, and office clerks. As businesses grow larger, they will need people to manage their career life and schedule for them. This sector could be an advantageous route for your staffing company.

The industrial sector accounts for an equivalent share of the industry as office and clerical. This sector comprises manual labor professionals, cleaners, assemblers, drivers, food handlers, maintenance workers, tradespeople, and more. These positions have high levels of turnover, so if you can provide quality workers through your staffing company, you can build a positive reputation.

Lastly, the professional and technical sector is complicated, but also very vital for the economy. It includes health care professionals, technical, finance, and marketing. This sector yields people with more built-up skills. Because of the rise of information and online learning, more and more people have capabilities to break into this sector.

2. Evaluate your Startup Costs

Your startup costs will depend on three different variables: size, niche, and geographical location. The size of your first office building will have an impact on your rent and overhead costs, while the size of your staff will influence your payroll costs. Make sure you evaluate the tradeoffs between starting big or small at the onset.

The type of niche you get into will also impact your startup costs. If your company deals with higher-skill job assignments, then the costs will be higher. The salaries of employees will be larger, and you will also need to pay for a more excellent location to establish your brand image. Technical demands will also require more money because you will need to train and test the candidates.

Lastly, geographical location plays a significant role in startup costs. Depending on where you establish your office in the country, your employee pay, office rent, marketing costs, insurance rates, and tax rates will come into play. Overall, startup costs average between $60,000 and $130,000 for a staffing company.

3. Income Generation and Billing Processes

So, how do staffing companies make a profit and generate income? This profit derives from the markup that your company will add to the value of an employee’s labor. Depending on the sector, location, and company experience, markup rates differ. The markup rates can stay higher even in struggling economies because the quality of labor is lower.

The competition levels, sector, local regulations, and client relationships are all things you must consider before setting your markup rate. As you gain credibility and continue to succeed, you can charge a higher markup to create more income for your business.

4. Payroll Funding Can be a Viable Option

Payroll funding is a useful service offered by factoring companies, which have specialized plans for staffing companies. After you choose your factoring company and send them invoices to factor for your funding, these companies will advance you a large percentage, between 80-90% of the invoice value.

There are many benefits to you by choosing this route. It offers consistent cash flow in your business’s early stages, which helps you better manage payroll and other business expenses. As your staffing company grows, factoring companies also provide relief by managing your accounts receivable, saving you resources and time in the long run.

One of the best things about payroll funding is that it does not take on any additional debt to your business. It is not a loan, and many staffing companies utilize payroll funding to grow their credit score. If you choose a quality factoring company, your business receives financial security, which allows you to focus on the essential things.

5. A Solid Marketing Strategy Will Help You Fast Track Your Client Numbers

The marketing strategy will be crucial when you first get your feet off the ground. Standard advertising can be useful in the staffing services industry if you do effectively, but feel free to get creative. When you create advertisements, focus on the specific benefits and results that you will deliver. Explain what makes you different and be sure to put your creative twist with your brand story.

When you market to potential companies that will use your services, explain how you deliver pre-screened and pre-tested employees. You should also have data and stats ready to reduce their turnover, which will be a top priority for a lot of businesses. You also want to save them time and money, so you should lay out a transparent process on how you plan to do that.