The consulting industry in the United States of America is indeed a big and thriving industry and staffing agency is a subset of the industry. Those who run staffing agencies are classified as Human Resources consultant or recruitment consultant.
Staffing agencies are responsible for helping organization recruit staff to fill vacant position in their organization and also help applicants / those in between jobs secure employment; offer a wide range of recruitment -related services, largely temporary and contract staffing.
They also recruit employees for permanent placements. Some staffing agencies offer services beyond just recruiting employees for its clients, but also help in training and preparing the employees to fit into the role that they are being recruited for. Usually such staffing agencies charge more than those who just recruit employees for their clients.
Table of Content
- How Do Staffing Agencies Make Money?
- 1. Understand the Industry
- Interesting Statistics About the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Choose a Catchy Business Name
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- Write a Business Plan For Your Staffing Agency
- Detailed Cost Analysis for Starting a Staffing Agency
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- The Service Delivery Process of the Business
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Iron-clad Competitive Strategies to Help You Win
- 18. Brainstorm Possible Ways to Retain Clients & Customers
- 19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
- Tips for Running your Staffing Agency Successfully
How Do Staffing Agencies Make Money?
When it comes to getting paid, some staffing agencies charge their clients; applicant administrative fees so as to enable them process their application, match them with employers and successfully help in securing jobs. Processing the application of an applicant includes helping them restructure their CVs and cover letters so as to fit into the expectation of the recruiter (the organization they want to work for).
In essence, it is the practice for staffing agency to earn their money by charging their clients (employers of labor) for the amount of work the employee undertakes. In most cases, the staffing agency receives the same amount as the employee. Staffing agencies make more money when they help organizations recruit highly skilled staff on a permanent basis.
Although some recruitment agencies still enter into personal contract agreement with applicants -such that they will collect a percentage of their salary for a period of 3 months or more if they help the applicant secure a job; most states in the U.S. have outlawed this type of arrangement.
23 Steps on How to Start a Staffing Agency from Home With No Money
1. Understand the Industry
It is on record that the staffing, recruiting, and workforce solutions industry makes a huge contribution to the economy of the Unite States of America, and they provide jobs and career opportunities for about 14 million employees annually. Despite the fact that staffing industry growth has outpaced the overall economic and employment growth in the U.S., it employs only about 2% of the U.S. non – farm workforce.
Interesting Statistics About the Industry
Statistics has it that in the united states of America, there are about 17,000 staffing and recruiting agencies and they operate around 35,000 offices scattered all around the U.S. Statistics also has it that the top 122 staffing agencies generates a combined sum of $69.4 billion in U.S. representing 55.9% of the market..
Records has it that 17 staffing agencies generated more than $1 billion in staffing revenue in 2014 and these staffing agencies represented over a third (36.4%) of the market. Each staffing agency on the list generated more than $100 million in U.S. staffing revenue in 2014. No doubt, the $69 billion in staffing revenue generated by these staffing agencies give emphasis to the health of the staffing industry.
The staffing agency industry will continue to blossom because more and more organizations are beginning to realize that somehow they need the services of employment consulting firms to help them take aware the stress of recruiting workforce for their business which sometimes goes beyond recruiting to proving trainings and other Human Resources related services.
From all available statistics, it is safer to say the recruitment consulting industry is growing steadily despite the competitive nature of the industry. One thing is certain if you are well positioned, and have the required business skills, network. Plus a robust CV bank, you may likely not have to struggle to compete favorable in the staffing industry.
Another reason why people prefer to start a staffing consulting business is that, consultants have the monopoly to charge a fee as it suits them -especially if they are have been able to pay their dues in the industry over the years.
Other factors that encourage entrepreneurs to start their own staffing agencies could be that the business is easy to set up and the start – capital is indeed affordable; you can actually start your own staffing consulting business from the comfort of your house. All you need to do is to create an office somewhere in your house. People usually pay you for the staff you can help them recruit and train.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographics composition of your recruitment / staffing agency is dependent on the area of recruitment you intend specializing. On the average those who operate staffing agencies ensures that they follow the labor law of the country they are operating in. In the United States in almost all the countries of the world, it is an offence punishable by the law if you recruit under age as workforce.
So if you are looking towards defining the demographics for your staffing agencies, then you should consider age (usually workforce are made up of people within the age bracket of 18 – 60), professions / industry (the skill sets they are bringing to the table) and the nature of the contract (permanent staffing or temporary / contract staffing et al)
3. Decide Which Niche to Concentrate On
These are some of the area of specialization in the recruitment / staffing consulting industry;
- Staffing for the IT industry
- Staffing for the Oil and Gas Industry
- Staffing for the Health Sector (Nurses, Doctors et al)
- Staffing for the Banking, Insurance and the Financial Sector
- Recruitment, Human Resource and Capital Development Consulting
- Recruitment and Training Consulting
- Highly Skilled Staffing Consulting Firm
- Unskilled Staffing Agencies (Maid supply, Nannies, Gardeners, Security Guards and Drivers et al)
- Permanent Staffing Agencies
- Temporary / Contract Staffing Agencies
The Level of Competition in the Industry
The level of competitions in the staffing consulting industry depends largely on the location of the business and of course the niche of your staffing consulting business. If you can successfully create a unique niche for your staffing consulting agency, you are likely going to experience little or no competition. For instance; if you are the only staffing agency that recruits nurses for organizations and homes in your location, you are sure of monopolizing that aspect of staffing.
But over and above, there are several staffing consulting firms scattered all around the United States. So if you choose to start your own staffing consulting firm in the United States, you will definitely meet stiffer competitions; there are larger recruitment consulting firms that determines the trends in the industry and you should be ready to compete with them for clients.
4. Know Your Major Competitors in the Industry
These are some of the lading staffing agencies in the United States of America;
- Allegis Group
- Randstad Holding
- Manpower Group
- Kelly Services
- American Staffing Association
- ACA Talents
- A Plus Recruiting
- Chronos Consulting
- Cross Road Consulting, LCC
- Synergy Solutions
- Strategic Recruitment, Inc.
- Sanford Rose Associates
- The River Group
- Robert Half International Inc.
If you are looking for a business that requires less stress and perhaps minimal start – up capital to start, you can consider starting a staffing consulting business. The cost of running a staffing consulting firm when compared to the turnover you get can be poles apart (this is applicable when you have been able to establish your feet in the industry).
People who venture into staffing business can as a matter of fact start the business from their home and still make headway in the business. One thing is certain when it comes to staffing business, you are sure of making profits when you successfully recruit an employee for an organization.
The cost of running the recruitment process from start to finish could be restricted to the cost of making phone calls, transportation and internet subscriptions. With that, it is easier to place a projection on the profits you are likely going to make if you are able to successfully seal a staffing deal.
5. Decide Whether to Buy a Franchise or Start from Scratch
When it comes to starting a business of this nature, it will pay you to start from the scratch as against buying a franchise. First and foremost, before you can win any recruitment / staffing consulting job, your profile will be scrutinized even if you are operating the franchise of a successful recruiting / staffing consulting brand. Besides it is difficult to come buy a franchise of a staffing agency.
Please note that most of the big and successful staffing consulting firms around started from the scratch were able to build a solid business brand. It takes dedications, hard work and determination to achieve business success and of course you can build your own staffing / recruiting consulting brand to become a successful brand in your area of specialization and even go ahead to recruit nationwide.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own staffing / recruiting consulting business today, one of the major challenges you are likely going to face is the presence of well – established staffing / recruiting consulting firms who are offering same services that you intend offering.
The only way to avoid this challenge is to create your own market; concentrate on start – ups who can’t afford the high end fees charge by big staffing / recruiting consult face is economic downturn; if the economy is in bad shape, history has it that the consulting industry usually struggles to maintain their old clients or even win new clients.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- Best legal entity to use for type of business
Starting a staffing/recruiting consulting business is indeed a serious business, so the legal entity you choose will go a long way to determine how big you want the business to grow. No doubt choosing a legal entity for a business can be a bit challenging.
When it comes to choosing a legal entity for your consulting firm you have the option of choosing general partnership, a limited partnership, an LLC, a “C” corporation, or an “S” corporation. It is important to clearly state that these different forms of legal structure for business has its own advantages and disadvantages; which is why you must weigh your options properly before making your choice.
These are some of the factors you should consider before choosing a legal entity for your staffing / recruiting consulting business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your staffing / recruiting consulting business, you will agree that Limited Liability Company; an LLC is most suitable. You can start your staffing / recruiting consulting business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or a ‘S’ corporations especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your staffing / recruiting consulting business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.
8. Choose a Catchy Business Name
When it comes to Choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represent. Usually it is the norm for people to follow the trend in the industry they intend operating when naming their business.
If you are considering starting your own staffing / recruiting consulting firm, here are some catchy names that you can choose from;
- Kinston Jay Staffing Consulting, LCC
- Maryjane Associates
- Stella – Maris Nursing Staffing Services
- Peoples Prime Employment Agency
- The Las Vegas Consulting Group, Inc.
- Brooks and Beta Company, LLC
- Zach & Crawford Global Business Services
- Memphis Talent Hunt, Inc.
- Joel and Janel Associates
- Macqueen Maids Recruitment Agency
- Brick House Staffing and Training Company, LCC
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance that is required by the industry you want to operate from. So it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best insurance policies for your staffing / recruiting consulting business.
Here are some of the basic insurance cover that you should consider purchasing if you want to start your own staffing and recruiting consulting business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own staffing agency, usually you may not have any need to file for intellectual property protection / trademark. This is so because the nature of the business makes it possible for you to successful run the business with having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you. Then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.
11. Get the Necessary Professional Certification
Professional Certification is one of the main reasons why most staffing / recruiting consultants and consulting firms stand out. If you want to make impact as in the staffing / recruiting consulting industry, you should work towards acquiring all the needed certifications in your area of specialization.
You are strongly encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business. These are some of the certifications you can work towards achieving if you want to run your own staffing / recruiting consulting firm;
- Certified Recruiting Specialist (CRS)
- Recruitment Consultant Certification (RCC)
- Physician Recruiting Consultant (PRC)
- Certified Personnel Consultant (CPC)
Please note that the higher your qualifications and experience (expertise), the easier it is for you to secure high profile staffing contracts as a consultant.
12. Get the Necessary Legal Documents You Need to Operate
These are some of the basic legal document that you are expected to have in place if you want to run your own staffing / recruiting consulting business in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Consulting contract documents
Write a Business Plan For Your Staffing Agency
A business plan is the blue print of your business; it is a business document that can aid you to successfully set up a business and also administer / manage the business. It is not enough to just write a business plan for the sake of writing one, your business plan should be able to pass reality check; you must put relevant facts, figures and statistics into consideration when writing your business plan.
These are some key factors that you should also consider when drafting your business plan;
- Executive summary and Company’s descriptions: you are expected to write about the concept of your business, descriptions of your company, your company’s vision statement, and mission statement, where your company will be located, how you intend sourcing for CVs, the industry you want to recruit for and perhaps why people should patronize your services.
- Other key components that should not be missing in your staffing consulting business plan are your service offering, SWOT analysis, marketing and sales analysis / strategies, pricing, costing and financial projection, management techniques, expansion strategies, publicity and advertising strategy, budget and start – up capital generation et al.
Detailed Cost Analysis for Starting a Staffing Agency
Starting a staffing consulting firm can be cost effective; this is so because on the average, you are not expected to acquire expensive machines and equipment.
Basically what you should be concerned about is the amount needed to secure a standard office facility in a good and busy business district, the amount needed to furniture and equip the office, the amount to purchase the required software applications, the amount needed to pay bills, promote the business and obtain the appropriate business license and certifications.
When it comes to starting a small scale staffing / recruiting consulting firm, the following expenditure should guide you;
- The Total Fee for incorporating the Business: $750.
- The budget for Liability insurance, permits and license: $2,500
- The Amount needed to acquire a suitable Office facility in a business district 6 months (Re – Construction of the facility inclusive): $40,000.
- The Cost for equipping the office (computers, software applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al): $ 5,000
- The Cost of Launching your official Website: $600
- Budget for paying at least two employees for 3 months and utility bills : $10,000
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al): $2,500
- Miscellaneous: $1,000
Going by the report from the research and feasibility studies conducted, you will need about $70,000 or less to set up a small scale staffing / recruiting consulting firm in the United States of America. You will need over a hundred thousand U.S. dollars to successfully set – up a medium scale staffing / recruiting consulting firm in the United States of America.
If you are considering starting a large scale staffing / recruiting consulting firm with several professionals under your payroll and offices in key cities in the United States of America and other parts of the world, then you should look towards budgeting from 1 million United States dollars and above.
13. Raise the Needed Startup Capital
Starting a staffing/recruiting consulting firm can be cost effective especially if you choose to run the business from your home, share office space with a friend or make use of virtual office. Securing a standard office is part of what will consume a large chunk of your start – up capital, but if you choose to start the business on a small scale, you may not have the need to go source for fund to finance the business
Without a doubt when it comes to financing a business, one of the first thing and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start – up capital for your staffing / recruiting consulting firm;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for Loan from your Bank / banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
14. Choose a Suitable Location for your Business
The fact that you can operate your staffing consulting firm from your home does not mean that locations has little influence on the success of a consulting firm. If you have taken your time to study the consulting industry, you will realize that consulting firms are willing to pay expensive rents in order to stay in a busy business district; a place where business activities is at its peak.
So if you are looking for a location for your staffing / recruiting consulting firm, ensure that it is a place that is located in the hub of business in your city, a place that is visible and easily accessible. Of course you would not want to locate this type of business in the outskirt of town.
Your clients should be able to drive down and locate your office with little or no difficulty. Applicant also should be able to easily locate your office when they have to come submit their CVs, documents or for background checks et al.
15. Hire Employees for your Technical and Manpower Needs
On the average, there is no special technology or equipment needed to run this type of business except for customized HR / recruiting software applications et al. In the bid of working out recruitment and effective staff monitoring solutions for your clients, you might be required to design a customized software application.
When it comes to choosing between renting and leasing an office space, the size of the staffing consulting firm you want to build, and your entire budget for the business should influence your choice. If you have enough capital to run a standard staffing consulting firm, then you should consider the option of leasing a facility for your office; when you lease, you will be able to work with long – term planning.
As regards the numbers of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision.
Averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Consultants and Associates (Different areas of specializations as it applies to your business), Business Development Executive / marketing Executive, Customer Service Officer or Front Desk Officer, and Accountant.
Over and above, you would need a minimum of 10 key staff to effectively run a medium scale staffing consulting firm. Please note that there will be times when you are expected to go out of your way to hire experts to help you handle some high profile recruitment jobs.
If you are just starting out you may not have the financial capacity or required business structure to retain all the professionals that are expected to work with you which is why you should make plans to partner with recruiting experts that operates as freelancers.
The Service Delivery Process of the Business
The truth is that, the way staffing agency works varies from one agency to another agency, but ideally, a staffing agency is responsible for handling both hiring and terminations, as well as employment taxes such as payroll, medical insurance and Social Security et al.
It is the practice for staffing agencies that have a robust CV bank so that whenever an organization demands employees from them, they are able to able to quickly produce qualified candidates without putting up any vacancy. It is the practice for staffing agencies to prepare applicants to take on some job roles before the opening even surface; it puts them ahead of their competitors in the industry.
When an organization request for staffs from a staffing agency, they are expected to sign a contract document that clearly defines the scope of consulting role they want them to play. It could be just recruiting, it could be recruiting and training and it could be handling the human resources role as it relates to staffing for the organization.
16. Write a Marketing Plan Packed with ideas & Strategies
- Marketing ideas and strategies
As a recruiting consultant, you would have to prove your worth over and over again before you can be awarded any recruiting consulting contract. So if you have plans to start your own staffing consulting firm, it will pay you to build first build a successful career in the consulting industry.
People and organizations will hire your services to help them handle all their staffing needs and handle other human resources role as it relates to staffing if they know that they are going to get value for their money. So when you are drafting your marketing plans and strategies for your staffing consulting firm, make sure that you create a compelling personal and company’s profile.
Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to staffing and the organizations you have recruited for in time past. This will help boost your chances in the market place when sourcing for staffing contracts.
Please note that you will be for staffing contracts from organizations, you will be called upon to defend your proposal, and so you must be pretty good with presentations. Here are some of the platforms you can utilize to market your staffing consulting services;
- Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations and businesses in the United States ( if you are just starting out, you may want to concentrate on start – ups and smaller businesses)
- Promptness in bidding for staffing / recruiting consulting contracts
- Advertise your business in relevant business magazines, radio stations and TV stations (make yourself available for human resources related talk shows and interactive sessions on TV and Radios)
- List your business on local directories / yellow pages
- Attend recruitment / HR expos, seminars, and business fairs et al
- Create different packages for different category of clients in order to work with their budgets
- Leverage on the internet to promote your business (when you blog regularly on key issues as it relates to your business, people who consider you an expert in the field)
- Join local chambers of commerce around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks.
- Engage the services of marketing executives and business developers to carry out direct marketing
17. Develop Iron-clad Competitive Strategies to Help You Win
The staffing consulting industry is a competitive industry, and you must come up with a unique strategy to be able to outsmart your competitors in the industry. Part of what you need to do in order to stay competitive in the industry is to continue to create easier and cheaper ways of tackling staffing and training challenges in the industry you service.
Organizations and people will always run to you if they know that you have a better option especially as it relates to preparing applicants to acquire the required soft skill sets that they need to perfectly fit into the job opening they are being recruited for.
Another strategy that you can adopt is to ensure that your organization is well positioned; key members of your team are highly qualified and certified recruitment and training consultants.
18. Brainstorm Possible Ways to Retain Clients & Customers
When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customers’ retention and perhaps to attract new customers is to satisfy your customers always. If your customers are satisfied with your services delivery, they can hardly source for alternative service provider or products.
Statistics has it that one of the major reasons why clients source for alternative service provider or product is when there is a drop in quality. Another reason is poor customer service. If you can continue to improve on the quality or your services and your customer service delivery, then you won’t struggle to maintain loyal customers.
Part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands. When it comes to managing your customers and building loyal clientele base, you should purchase a customized CRM software.
With a customized CRM system you can easily stay in touch with your clients (you can carry out quick survey, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all you can easily receive compliant and feedback from them).
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portray your business to be. One of the secret of larger corporations is that they are willing to spend fortunes year in and year out to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.
If your intention of starting a staffing consulting firm is to grow the business beyond the city where you are going to be operating from, then you must be ready to spend money on promotion and advertisement of your brand. In promoting your brand and corporate identity, you should leverage on both print and electronic media.
As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, besides it is pretty much effective and wide reaching. Another strategy is to sponsor relevant TV and radio programs, advertise your business in relevant magazines and newspapers.
Tips for Running your Staffing Agency Successfully
The truth is that, irrespective of the kind of business you run, your ability to get all the members of your team on same page at all times is one of the keys you need to successfully run the organization.
As the chief executive officer or president of the staffing consulting firm, it is you responsibility to give direction to the business. Part of what you need to do is to ensure that you create time for office meetings; a time where challenges, feedback, projections and relevant issues are discussed. The meetings could be daily, once in a week or once in a month.
Carrying out appraisals on a regular basis and training your employees will help you run your organization effectively. Encourage your employees to pursue certifications in their various area of specializations; it will help your organization’s profile and of course it will help the individuals.
You can choose to sponsor some of the certifications. Lastly, you should keep your doors open for suggestions from members of your team and you should be willing to reward excellent performance as at when due.
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