How to Start a Staffing and Recruitment Consulting Agency – A Complete Guide
Have you ever considered a new business idea or consulting career into uncharted territory? Perhaps starting a staffing company? The mere thought of taking the plunge can often feel very intimidating particularly start a temp agency from home and you’re unsure of where the whole idea might land. The entrepreneurship world is packed with endless unknowns, particularly if it is your first time in that specific industry or sector-it can scare you enough to even hinder you from taking that important first business step.
The goal of employment and recruitment consulting firms is to help match employers who have job openings with qualified employees who are available. Going by different names such as recruitment agencies or staffing agencies, this type of business or industry can be found in big cities and small towns giving support to lots of different industries or organizations.
The objective of this comprehensive guide is to bring to the fore in a transparent manner what and how to start a staffing agency or consulting business entails when you are completely new to the consulting industry and fully in charge of the staffing venture. This is your ultimate guide to creating and starting a recruiting and staffing consulting firm.
To start a staffing company may appear to be a straightforward transaction or business undertaking. You need just a couple of employees, there’s no huge inventory to acquire, and you could even start your staffing consulting business from the convenience! There are, however, plenty of things and steps to be considered before your staffing and consulting business is ready to take staffing orders from clients or even face your first candidate. This article is designed to guide you if you are thinking about how to start a staffing agency online or establishing a brick and mortar recruitment consulting company.
Starting a Staffing consulting Agency – What Do You Need
So, you are determined in terms of starting your own staffing consulting and recruiting agency – excellent business idea. Remember that entrepreneurship in any industry comes with lots of ups and downs, many quite unexpected and the same is true of staffing agencies. Even when you have a great love for what you are intending to do, your consulting business won’t succeed with passion alone. You not only need to be fully committed for the long-haul but also have an in-depth understanding of every possible staffing situation, business downturn, or even points of frustration which you could be transformed into a growth opportunity. And that is what this article intends to equip and guide you with as you enter this potentially lucrative consulting agencies industry.
Let’s first look at the basic staffing and consulting business requirements and areas that you will need to focus on when starting your consulting and recruiting agency in your new industry.
Get your Staffing Business Registered and Licensed
Perhaps you have explored the business plan or ideas on running agencies, or may be actively considering taking the plunge from your modest in-house temp recruiting to starting full consulting. Step one is obviously to get your staffing business registered. Before starting, learn all the relevant local requirements for that appertain to getting the appropriate business licenses, contact your local business bureau or check online. Then proceed to register the name of your staffing recruiting agency at the designated office, file your business articles of incorporation, and pay all fees.
Some of the key staffing business registration requirements for this consulting and recruiting agencies industry before starting include:
• A business name
• A qualified accountant
• Money for fees
• Business Banking account
• Insurance cover
• A place to work
You may, in addition, need to obtain extra staffing licensing to place employees legally in select specialized sectors or an industry like health care. Before you start the staffing or recruitment consulting agency, it is prudent to consult your local business bureau or licensing office regarding special staffing licensing information. They can also advise and guide you on ideas, business and industry approach strategies.
Obtain Legal Counsel that Understands How to Open a Staffing Agency
A larger portion of investment when starting recruitment agencies will go into getting suitable legal counsel to ensure proper due diligence on clients and employees. It is important to make sure that the legal counsel you employ understands staffing and the consulting business as well as all the relevant national and provincial legislation dealing with the staffing and recruiting agencies industry. This way, you are sure of them giving good guide tips.
Such legal counsel will assist you in terms of the requisite staffing consulting business documentation before starting operations in this industry. Some these will include:
• Employment Agreements
• Workplace Violence and Harassment Policy
• Termination & Layoff Clauses
• Disciplinary Policy
• Health & Safety Policy
• Client Service Agreements.
Secure Staffing and Recruitment Consulting Business Insurance
Most clients will want to see proof that your staffing agency has in place some insurance in case one of your temp workers cause damage as they work for their company, industry or site. Getting affordable insurance capable of meeting the needs of your clients is imperative. Talk to a reputable insurance company that understands your staffing, recruiting and consulting operations to ensure you remain covered for all manner of possible insurance situations before starting any consulting or recruiting agency or agencies as they can guide you.
Finding Your Staffing Consulting Business Niche
Staffing and recruiting services have traditionally been operating across all employment sectors. However, increasingly staffing consulting services can now be seen operating within a single niche market. The growing number of specializations existing today in the staffing industry is making the staffing industry more complex.
Also, beware of special niches existing within a single staffing or recruiting sector. If for example, you plan to start staffing agency that focuses on clerical and office positions, you will discover that it’s possible to even specialize further. For example, you may decide to only provide midlevel administrative support staffing needs to only select Fortune 500 companies. Other examples worth looking into include recruiting for finance or legal personnel staffing if your location has many accounting or legal firms.
As you plan and look into the above staffing and recruiting business niche possibilities, take some time before starting and consider the following important staffing and recruiting factors as they can guide your choices and strategies in the recruiting industry:
Past Consulting and Recruiting Experience
If you happen to have a background or previous experience in a specific field or sector, this could turn out to be a greatly advantageous. You will not only be able to assess job applicants better in that particular field, but the experience also lends much credibility to your recruitment business. The other great benefit is that you will be feeling more comfortable because you are doing business in an industry that you understand well or have sufficient experience in. You will still need to carry out your staffing market and industry research prior to starting out in this employee recruiting industry. Understand the employees and clients industry well to be successful.
Staffing Demographics and Psychographics
The most common structure when it comes to starting a staffing agencies or recruitment consulting business is to acquire a small office staffed by a handful of employees who do the recruitment of candidates and selling employment services to businesses operating in the local area. The composition of your staffing or recruiting consulting services agency should be determined by the demographic and psychographics of the area you intend to specialize in. In general, staffing agencies should make sure they are adhering to the country’s labor laws.
Competition in the Staffing Consulting Services Industry
The competition level in this industry will by a large degree depends on the location of your business and of course your chosen staffing consulting niche. If for instance, you start your own staffing agency and it is the only one dealing with recruiting nurses for the home care industry in the whole location, you can be sure of monopolizing that staffing aspect right from when you are starting.
Whatever the case, it pays to be prepared and have ready strategies to face all manner of competition, either as you set up or later as you begin recruiting.
Local Staffing Industry Demand and Supply
Staffing and consulting agencies need both clients and temporary employees to survive. Before choosing your niche, ensure you know what types of jobs opportunities are available in your location as well as the supply of potential staffing labor. If for example your town 10 factories, you cannot afford to rule out the potential for industrial placements.
Before you start a staffing company or recruiting services, plan a visit to your location’s chamber of commerce website so that you may get to know more about the top companies and industries in the area.
Occasionally, a staffing consulting market niche that would appear to be the natural option given your background may not be feasible due to the financial implications. For example, you might be a medical professional with experience in clinical services but choose not to set up a medical staffing business because of its rather steep start-up financial demands. In addition, nursing homes, hospitals, and other medical facilities generally tend to pay after 1 to 3 months. In that case, you may decide to try your hand in higher-end clerical recruitment instead.
Different Types of Staffing Consulting Agencies
Having covered a staffing agency or consulting business in its broadest sense, here are the different types to help you plan your recruiting strategies.
• Temporary staffing agencies
• Long-term staffing agencies
• Temp-to-perm staffing agencies
• Contingency Search Firms
• Executive Search Firms.
While it’s important and helpful to understand the existing distinctions among these different types of staffing consulting services, you can now easily start a staffing agency from home that offers all these services combined under one roof.
Starting a Temp Agency from Home
A temporary agency employs individuals who are trained in specific fields to work for other businesses through short-term contracts or assignments. This is a very hands-on type of environment as clients and employees may contact you any hour of the night or day throughout for a variety of reasons. When starting a temp recruiting and staffing consulting agency from your home, it is important that the staffing or consulting business is structured in such as to maintain your home’s privacy while still keeping in contact with your consulting clients.
In terms of choosing whether to rent or lease staffing recruitment office space, what should guide all your strategies is your business budget.
Important steps in setting up staffing/consulting business include:
• Visiting your local zoning office.
• Get insurance coverage and all vital staffing business licenses employees!
• Obtain worker’s compensation and important consulting and business tax details even for employees.
• Acquire a dedicated or private phone line for your staffing agency.
• Plan on purchasing ads in the local radio stations or local paper for promoting your new consulting agency to find new or additional employees or consulting clients.
• Consider accepting online applications from potential employees. This helps in keeping employees and clients away from your private home and offers security.
• Organize meetings with human resources managers and executives; explain the working of your staffing consulting business and the benefits that come with temp employees.
• Keep yourself accessible so that staffing consulting clients and employees can inform you in case of no-show employees or any other staffing or recruiting incidents that need your immediate action.
If you want to run a staff consulting and recruiting firm of medium scale, experts suggest that you will need at least 10 key staff when starting. Of course, there may be times when you may need to go further and engage experts to assist you in recruiting high profile employees.
In all probability, when you are just starting consulting, finances may be limited or your staffing consulting business structure still growing and unable to retain all the recruitment professionals full-time hence why it is important to partner with other recruiting experts operating as freelancers. Locate your staffing consulting office near where potential clients are operating and identify a convenient spot for interviewing temporary workers or future external employees.
Get Latest Applicant Tracking & Payroll Processing Systems
Once your staffing business is rolling, you will need to plan how to begin paying your contract workers employees on a regular basis: weekly, bi-weekly or every month. On top of that, you have to regularly remit both the employer and employee taxes. Options to handle all these technical consulting aspects include either outsourcing a professional business payroll processing provider or hiring an in-house payroll administrator.
It is possible to use Microsoft Office as you are starting out but soon you are going to need some more robust staffing and recruiting tools geared to boosting the efficiency of your staffing agency. Ensure that you research the available tools as well as technical support, functionality, and cost.
Staffing Client Credit Checks
Clients credit checking is perhaps one of the most important components of the entire process of your taking on all your new clients. A credit check on clients informs you how long it takes a particular client to clear invoices on average and whether they could be experiencing financial stress. Don’t unintentionally plan to be part of those waiting to be paid or those that never saw their money after offering consulting or legal services.
Give your Expertise and Consulting Time
There is a very reason why recruiters are referred to as ‘Consultants’. Some of the leading recruiters end up developing lots of industry expertise and knowledge which they openly share that openly with many of their clients. Hiring managers and industry owners need access to experts they can easily contact to seek guidance and discuss the latest trends in salary rates, resources, legal issues on recruiting, consulting, employee availability and so on. Become that person to whom your clients can confidently turn to consulting, and remember to do that for free – you will reap the benefits in the long-run. You will be amazed at the referral this approach can bring to your brand, especially if you are starting a recruitment agency or consulting firm in an area that is untapped.
As you prepare on how to start an online staffing agency, remember that when it comes to recruitment, developing personal relationships is everything. Spend time off-net getting to personally know your key clients. When funds allow, take potential clients for lunch as you sell your staffing business ideas to them, call them weekly just to say hello, invite them to a game of golf, share useful information with them even before thy ask. While these business tactics may appear obvious, the art of building relationships is disappearing slowly in many recruitment sectors as it becomes too automated.
Experiment and be Flexible with your Consulting Terms
When starting a temp agency from home, it is important that during the initial period you don’t become too fixated with your business Terms and Costs. Of course, this necessarily doesn’t mean you should go giving discounts everywhere, but it’s good to become creative and try experimenting with different arrangements in attempts at finding what works best for your clients and yourself. Engage clients in discussions on retainers, fixed fee arrangements, exclusivity, etc. You will be pleasantly amazed at the kind of deals or ideas that you can get by offering a more personalized kind of staffing service, each customized to the needs of individual clients.
Steps on How to Start an Employment Agency from Home
Starting a staffing business that cost much money may appear to be an intimidating undertaking, but the key lies in staying organized. By following the simple guidelines described below on how to start a staffing agency from home or in a leased office, you’ll be positioning yourself for success.
1. Gain some experience: Lots of people launch a staffing business with very little or zero experience in this competitive industry. Try and gain some experience or basic knowledge about the industry before you start.
2. Research all governmental requirements: plan for and look into aspects like areas licenses, taxes as well as workers’ compensation.
3. Have a viable cash flow analysis: During the first year of your consulting, put into place a realistic estimation of your cash flow needs. Take into account all staffing business overheads to avoid potential pitfalls towards the close of the year. It is important to determine your staffing business income and expenses, from there calculate the amount of much cash needed to operate your operations on a daily basis.
4. Consult industry and business experts: Free counsel is always available. Talk to others who have also started a staffing firm. Talk to business owners not operating in your geographic area or the chosen recruiting niche to avoid unnecessary competition.
5. Develop a niche: This allows you to stay updated on current staffing consulting trends and needs in the chosen niche and also limits levels of competition.
6. Hit the streets. Use all the contacts you have to bring in employees and clients and if you lack these, hit the streets and knock on doors.
Locating your Staffing Agency
‘Location, Location, Location’ – You may be forgiven for thinking that this is something only found in the real estate business sector. It is, however, equally true when applied to the staffing and recruitment consulting industry. Office location matters a lot, and generally speaking, operating from home is the best idea except when you are grappling with how to start a staffing agency with no money or at low cost. Ideally, you need a professional atmosphere to conduct your consulting business like testing applicants, interviewing and training candidates as well as for holding business meetings with clients.
So when looking for a suitable location for your new staffing consulting firm, make sure it’s located in an area that is easily accessible and visible, probably in the business hub of your city. Your applicant ought to easily locate your staffing office when seeking to submit their CVs, or coming for background checks. Your staffing clients should easily locate you and drive there with no difficulty.
As you work out how to open a staffing agency and scope out possible locations, consider all of the following business-related factors:
• Image: Depending on the clientele you want to serve, location can be very important. For instance, for the legal consulting profession, image is everything and you may want to locate your staffing office in an upscale area. You also want to project the image of professionalism in tour staffing consulting business.
• Proximity to client: Often choosing your business office location on the basis of the clientele you wish to attract pays. If you want to serve McDonald’s, placing your office close by may be a good idea!
• Accessibility: Your consulting business location must be easily accessible to your potential staffing employees and clients. It makes no sense locating your business where those who want plan to reach your office must hire a taxi cab.
• Economic Feasibility: Your staffing office location must make economic sense. Go for a location that contributes to minimizing business overhead.
• Possibility for expansion: Always consider and hope that your consulting business and brand will grow. Therefore choose a location that has room for potential expansion as moving is expensive. To plan ahead is to be successful
• Lease flexibility: When starting small, it’s an excellent idea to consider taking up temporary space for an initial couple of months. If you feel the decision to start a staffing business is not your idea, then you won’t find yourself locked into a binding long lease.
Starting a Staffing Agency – Promotion Strategies
Marketing is vital for any business, especially a new consulting startup. Here are several advertising strategies that you can adopt or modify to suit your specific promotion goals and the cost you are ready to incur:
• Brochures – This is a recognized staffing brand advertising vehicle.
• Direct mailing – Choose your list in such a way that it focuses on those organizations and companies whose industry sector and size make them potential staffing clients.
• The Internet – Well-crafted electronic business ads place on select bulletin boards are an effective method, especially when they are industry-specific.
• Newspapers. This traditional tool is useful for select staffing industry sectors.
• Specialty publications. Helpful when you’re staffing consulting agency is targeting specific types of organizations or brands.
• Telephone – Your consulting and staffing business can use this to get in touch with existing clients to alert them about available applicants. An effective business tool of generating additional business.
• Select Business &Trade Journals/Publications – Effective for targeting professional clients and technical sectors.
• Word-of-mouth – Perhaps the best method of brand advertising, most credible and certainly one of the least expensive.
• Yellow Pages – Ads placed on Yellow Pages are effective when you want to recruit employees though not very good for attracting clients.
Financing a Recruitment Agency Business
The most important and greatest expense for a recruitment consulting agency goes to employee payroll. Employees have to be paid on time and regularly otherwise they may seek employment elsewhere. Your staffing agency business will, in addition, need to have funds that are sufficient to pay for relevant employment taxes as well as other employee associated expenses. Tax compliance is another issue that a staffing business has to deal with and to fail can cost you much money and could even put you out of work besides having to pay penalties.
Starting Recruiting Agencies – Financing Options
When starting a recruitment agency, much needs to be done and you cannot afford to relax. To get suitable financing will require perseverance, diligence, and great wisdom in identifying the best financing option for your new staffing business. Today, however, securing business credit can be easier than many would assume.
Assuming you have now fully registered your staffing business, obtained licenses, have ready employees, and secured all applicable insurance certificates, you are now ready to roll. However, before you proceed to apply for all available business loans, sit down and carefully go through your business plan. Take a detailed look at the projected business operating costs over the initial 6 to 12 months including how long you are expecting to be operating before you begin turning a profit.
Here are some of the options on how to start a staffing company when it comes sourcing for business financing.
Small Business Loan
If you are considering how to start a temp agency with no money or limited saved funds, the Small Business Administration is implementing strategies designed to make loans available for wider range of small businesses. However, similar to any standard loan, the process of small business loan underwriting can take anything from a couple of weeks to several months. It might also entail pledging collateral – something that might not be possible for a new staffing agency. While some of the application and approval criteria have recently been relaxed, it remains it is incredibly difficult for new businesses or those with less than perfect credit rating to qualify for this type of loan.
The main drawback associated with small business loan is that even if you qualify you are not guaranteed that what will get approved is the amount you need to comfortably operate your staffing business. In addition, there is no way of ensuring that interest rate is going to be low enough as to justify the debt appearing on your new business balance sheet.
Unsecured Business Loan
Also referred to as a business cash advance, an unsecured business loan is basically a short-term financing option that gives you the financial cushion you need to get the staffing agency started. Unsecured business loans don’t demand any form of collateral, although they require business bank statements of at least 3 months. While this may not be the best option for new business, if your recruitment agency can supply those needed bank statements, they offer a reasonable financing option.
Private investment may typically assume several forms such as stock options or a friend or family member contribution. It is always tricky business navigating money contributions coming from a family member or friend, particularly when you consider the risk of your business not succeeding and them losing their contribution. This avenue of financing should be approached with care and very candid communication.
Another mode of private business investment that gaining popularity is financing from an ‘angel investor’. This is a person who gets sufficiently motivated by the business concept and plans you have and is ready to contribute some hard cash into the business.
In their own standing, angel investors are tricky enough, though also advantageous. Usually, there is no pre-existing connection with them on a personal level, which a useful angel when it comes to negotiating agreements and contracts. Typically, these categories of investors also have access to more funds compared to your typical relative or friend. However, the trick comes in terms of convincing an unknown angel investor to trust you and take their chances with their money on your business. This certainly calls for a well-drafted business plan along with convincing financial projections that guarantee near-future success.
Consulting Business Growth Impossible Without Funds
Once you start a recruitment agency, one of the biggest challenges you are likely to face is ensuring that your employees get paid on time and accurately. The consequences for your brand and business are sadly understandable if this fails to happen. As a new startup, what you need the least is to constantly worry about having to pay your employees (and other overheads). You need financial freedom so that you can concentrate on building other aspects of the new business.
The majority of government and commercial clients generally clear their invoices after a month or even 60 days. For most agencies, this time frame could pose a serious business and financial challenge. Remember you need to pay your corporate business overheads during that period before the invoices are cleared by your respective clients.
The only way your business will grow is if you got adequate money sources or reserves capable of meeting all your corporate expenses. It goes without saying that when you have larger contracts you are going to need a reserve that is larger. Without a reserve, you certainly will not be in a position to take up any new contracts. When you cannot take on board new contracts, your growth will be stifled.
Include in your overall financial plan and budget extra start-up cash that you will utilize in paying your external employees. Most likely, you will have to arrange how to pay your employees before you get paid by the clients. In your business financial forecast, establish your payment plan overall pricing, including details such as hourly pay rates in case you have engaged external employees, the markup percentages to be charged to clients as well as your gross margin target percentages.
Starting a staffing agency from home – Possible Threats and Challenges
To start a temp staffing agency requires hard work but is well worth your effort and time if you love the recruitment industry. Among the major challenges likely to be faced when setting up a new staffing business is the possibility of competing with well – established consulting firms offering similar staffing services like yours. The only route to avoid or overcome this type of business challenge is by creating your own niche market; focus on providing services to start – ups who may not be in a position of affording the high-end fees being charged by the big and established forms.
The majority of start-up temp staffing agencies don’t even realize they have to pay their temp workers out of pocket as they wait for the clients to honor the invoices, something that can take even 60 days. Securing the adequate payroll financing is possibly your biggest single challenge towards securing your staffing business startup success. A healthy cash flow is critical for business survival.
Be Aware of All Relevant Laws
When looking into how to start a temp agency from home options, it is up to you to ensure your staffing company follows both national and local labor laws. While knowing the national laws on employment is important, some may become more complicated when you apply them specifically to the staffing and recruitment industry.
Some business and labor laws related to recruiting labor you may need to get familiar with include:
• Official Wage and Hour Rates
• Non-Discrimination Guidelines
• State/Provincial Law on Workers’ Compensation and Unemployment Insurance
• Locality-Specific Labor Laws
• Business Taxation.
Whether you are looking into how to start an online staffing agency or an office-based business, this is a potentially very viable business option for those who love the task of matching personnel to appropriate companies and jobs. Through opening a recruiting agency, you are helping those seeking employment to get temporary or permanent work in your area or elsewhere. You are also helping businesses to get the right candidates suitable for job openings they have.
It’s important, however, to realize the degree of responsibility you are taking on towards businesses and employees you are recruiting when you start your own staffing agency. You must put in place appropriate staffing business measures to not only streamline the entire hiring process but also ensure that everybody is happy with the service being offered by your recruitment business. A happy client is the surest route to a good Return-On-Investment on your staffing consulting business.
With the right tools, information and a good plan, there is absolutely no reason why your small staffing consulting and recruiting business can grow, thrive, be successful, and compete with other well-established players in the industry. A good plan is all you require for a successful consulting recruitment company that will be the envy of many in the recruiting agencies industry.