How to Start a Staffing Agency

Starting a staffing agency can be stressful, as there are many pieces and parts with more than some assembly required. Tips on how to start a staffing agency can make the journey easier.


  • Create a business plan. This will not only keep you organized but also inform lenders or vendors of your company’s stability and growth potential. The U.S. Small Business Administration has a step-by-step business plan guide to help you create the perfect plan.


  • Seek advice. While it is important to have experience in the industry, you can also benefit from the wisdom of your peers. Talk to other owners who have started a firm and ask what they wish they would have known when they were starting a staffing agency. Seek out owners who are not in your niche or geographic area to avoid competition.


  • Research governmental requirements. When determining how to start a staffing agency, it is important to evaluate areas such as licensing, taxation and workers’ compensation, as requirements vary by state. Workers’ compensation is typically the second-largest expense for staffing firms, so make sure your coverage counts; ensure that your coverage protects not only your business but your employees, as well.


  • Evaluate your cash flow needs. The staffing industry is unique in that temporary employees are often paid weekly, while the firm’s clients don’t pay for 30, 45 or 60 days, creating a cash flow gap. In the first year, especially, staffing firms should keep close track of their cash flow needs and determine whether a factor can alleviate those needs. Don’t forget to include not only your income and expenses but also how much cash you’ll need to operate on a day-to-day basis.


  • Gather clients. Ask for referrals from people you know in the industry and let your existing contacts know you’re open for business. However, be sure to follow the rules of your noncompete agreement if you’ve previously worked for a staffing agency. Also consider cold calling potential clients or purchasing mailing lists or trade association directories.


  • Hire employees. Recruit through resources including advertisements in trade media, newspapers and online job sites. Don’t forget your contacts, such as clients and former employees. Do a simple online background check on potential employees to start but also consider a professional background check, which will provide more detailed information. And don’t forget, when starting a staffing agency, you’ll need internal staff, as well.


For information on TemPay and how to start a staffing agency, contact or (866) 683-6729.