Back to Basics: How to Start (and Scale) a Staffing Firm of Your Own

Starting your staffing firm can be an exciting entrepreneurial opportunity, especially when so many businesses have openings that they are struggling to fill. 

Getting your financials in order and gaining ample staffing experience before starting your firm is essential — and even then, success is no guarantee. Entrepreneurship always carries risk (especially if you’re leaving a salaried job behind).

Fortunately, you can set yourself up for lasting success by focusing on some fundamental principles as you launch and scale your staffing firm.

Hone In On Your Business Model and Area of Expertise

First things first: your staffing firm can’t be all things to all people. Even at a significant picture level, it can be helpful to focus your staffing firm in different areas. For example, a full-time staffing firm will place candidates for full-time positions and receive a commission based on the individual’s salary. Contract staffing helps provide temporary contract positions, and firms are generally paid in an hourly-based margin.

In today’s ever-evolving work environment, many firms are shifting their focus to emphasize providing freelancers and independent contractors who can work remotely. Still, other firms focus on a mix of both full-time and contract staffing.

Even beyond these basic business models, it is still generally recommended to niche down. For example, some staffing firms exclusively serve manufacturing companies. Others focus on the tech sector. Within these niches, finding a unique way to position your staffing firm will be vital to staking out a strong position in the market. 

Identifying the gaps in the market and focusing your services on addressing those issues will help you stand out and become competitive quickly. For example, your staffing firm could specialize in assisting clients in improving DE&I efforts or finding candidates for positions that need to be filled in a short timeframe. 

Pain points that you’ve identified in your prior staffing experiences (such as lengthy hiring processes in a particular industry) are often the perfect starting point because these are issues you already know and care about.

Find Unique Ways to Differentiate

Your area of focus and business model isn’t the only way to differentiate your staffing firm from the competition. Sometimes, actions that aren’t directly related to filling positions for clients can significantly impact who decides to do business with you.

In an interview with Ivy Podcast, Patricia Karam, CEO & Founder of Mission Recruit, highlighted one of the unique ways that her staffing agency stands out from others in her niche:

“We have a focus on giving back. It’s so important to me. So for every placement we make, we donate $100 to both the domestic violence organization as well as the sex trafficking organization […] In addition to that, we are launching a new program called Profit for Nonprofits, where any certified nonprofit can come to us and refer us a new client. Any placement we make for the life of the contract, we’ll give 10% to that nonprofit [that made the referral].”

Such initiatives would go a long way in engaging with nonprofits and organizations passionate about fighting against domestic violence and sex trafficking. Finding a cause that your firm can support through meaningful action will make you that much more appealing to like-minded clients.

Don’t Forget to Be Human

While staffing firms are often focused on filling positions for their clients, you also need to prioritize the acquisition and retention of your internal talent.

There are only 24 hours in a day — and that means to take on larger projects, you will need to make your own internal hiring decisions. You may already know how to find top talent, but you must ensure that your growing firm provides an attractive work environment where individuals feel valued and like they will have opportunities to develop their careers.

As Karam explained in the Ivy Podcast interview, “HR stands for human resources. So [you should remember] that people are human at home and work and have motivations, and they have things that de-motivate them. And it’s about employers recognizing this and understanding their employees.”

While quotas and numbers are essential, creating an incredible culture that values your employees and helps them focus on what matters most will encourage top talent to stay and grow alongside you. As Karam notes, tenure can be significant in creating a solid culture for any brand — including staffing firms.

Take Advantage of New Tech

To remain competitive in an increasingly saturated market, new staffing firms must take advantage of the broad swath of technology resources that are available to them.

For example, CRM software helps you streamline and stay on top of lead generation. Legal tools and billing systems can automate many vital processes, such as accounts payable and receivable, delivering contracts, and more. Data analytics tools can help you improve employee retention, your leadership practices, and of course, performance.

For staffing specifically, back-office solutions platforms can help you maintain compliance in critical areas such as worker classification, risk mitigation, benefits administration, client contract fulfillment, and more. Talent acquisition marketplaces can help you grow your portfolio by providing access to broader talent pools and completing job requisitions.

Each of these technology services requires an initial upfront investment. But they give you a definite competitive edge, especially when you are first starting to scale your staffing firm. Critical tools that automate or simplify vital tasks will allow you to devote more time to onboarding new clients and filling projects with the best possible talent. Data-driven insights will unveil critical actions you can take to improve your profit margins.

Starting a successful staffing firm requires much work — and just like any other entrepreneurial endeavor, there is no guarantee of success. However, when you combine your staffing expertise with these essential principles, you will be well on your way to creating a staffing firm that can succeed in today’s ever-changing labor market.

 

Author: Cesar Romero
Cesar is the Head of Marketing at myBasePay, where he’s responsible for overseeing the company’s content marketing, community, and partnerships strategy. He also co-hosts The Ivy Podcast where he interviews executives from Fortune 500 companies on executive leadership. When he’s not helping startups with marketing and community strategy, you can find him paying it forward by serving as a mentor for leading organizations like StartingBloc, Hive, and Global Citizen Year.