Tried and True: 5 Things You MUST Know When Starting Your Own Staffing Agency

It’s estimated that 70 percent of staffing startups fail. While that is a grim-sounding number, there are still over 25,000 independent agencies in the United States alone. A competitive industry with a highly saturated market may seem like an easy source of blame for the high startup failure rate, but this only scratches the surface.

In reality, a big part of why so many staffing startups fail is because they lack the foundational building blocks needed to create lasting success. By focusing on these five critical areas when starting your staffing agency, you can significantly increase your chances for success.

A Competitive Candidate Experience

With thousands of staffing agencies available to choose from, you need to offer a compelling candidate experience to convince top talent to work with your agency — and stick with you for the long haul. Quite often, however, creating a competitive candidate experience boils down to delivering the basic things that high-quality candidates want from a staffing agency.

For example, research from Talent Board indicates that 63 percent of job candidates say they do not receive adequate communication regarding their candidacy status. In the same survey, 53 percent said they did not receive a response until three months after they applied.

Simply engaging with candidates after they submit applications (even with a response automation system) can dramatically improve their experience. Of course, simplifying forms and making it easy to apply for and obtain jobs is ultimately what matters most for candidates. Make the process easy and relatively fast, and you’ve already separated yourself from the pack.

Infrastructure to Scale

A successful staffing agency will ideally experience continual growth in the number of job candidates and employers it works with. But as the number of clients grows, your agency needs the capacity to keep up.

If you don’t have the infrastructure in place to handle this growth, your staffing agency could quickly collapse as your team is stretched too thin. As many as 70 percent of startup failures in any industry are attributed to premature scaling.

Before pursuing rapid expansion, you must have the infrastructure firmly established so you can handle this growth. Automation tools and outsourcing of critical functions can help you expand without creating an undue burden for your team.

Funding to Take On Big Projects

A big project with a significant client represents a big opportunity — but it also requires a considerable investment of your agency’s resources to fill a large swath of positions. Candidate outreach involves time and money. So, too, does vetting the sometimes overwhelming number of candidates who will apply for a significant project.

While these big projects can result in lucrative ongoing relationships with clients, you must ensure that your agency has the necessary funding to get the job done right. If you don’t have a large enough budget to fulfill the project’s requirements, you may ultimately deliver subpar candidates to the client, making them unlikely to use your services again in the future.

Of course, intelligent use of your funds can help you circumvent potential limitations when you don’t have outside investor funding. Talent acquisition marketplaces and other resources can help you find top talent without breaking the bank. Taking steps to promptly receive payment for your agency’s invoices will also ensure that you have the adequate cash flow to take on more high-level projects.

Administrative Oversight to Ensure Compliance

Staffing agencies are facing an increasingly complex hiring world. Remote workers, contractors, and international employees are all far more commonplace than in the past. Failure to comply with applicable regulations for such hires can result in significant fines and other legal complications for staffing agencies.

Staffing agencies must monitor a wide range of documentation and regulations, such as worker classification, worker clearance and visa verifications, distribution of benefits, and more. Because of this, risk mitigation must be a top priority when starting your staffing agency. This cannot be an afterthought. Administrative oversight for potential compliance issues needs to be built into your agency from day one.

While ensuring compliance is a tall task, staffing agencies can place contract workers with confidence when working with an employer of record. An employer of record assumes all liabilities related to your agency’s hires, managing tax and compliance issues so your team can focus on matching the suitable candidates to the right clients.

Willingness to Invest In Technology

Technology investments can make or break a staffing agency. Investing in the right technology at the right time will give you a distinct competitive advantage, particularly in today’s increasingly tech-driven world. With more remote workers on the market than ever before, the ability to connect outside of “traditional” means is key to creating a solid candidate database.

In an interview, Andy Shatwell, Managing Director of Charlton Morris, gives this example: “When we started, we all got LinkedIn Recruiter seats. That fired us right to the front of our competition, helping us create processes, advertise jobs, create a follower base, and reach out to prospects. It all started because we went all-in early.”

LinkedIn may no longer be a cutting-edge staffing tool. Still, this example illustrates how investing in the right technology early on can make your agency far more efficient and accelerate growth.

Set Yourself Up For Success With myBasePay

Starting your staffing agency is an exciting endeavor — but with so much competition, it is undeniably a challenging proposition. By focusing on essential practices when building your company, you will be in a far better position to serve both job candidates and employers successfully.

Especially during those early stages when your staff is somewhat limited, having the right tools and resources available can make all the difference for your long-term outcomes. This is where myBasePay comes in. Offering a comprehensive suite of back-office solutions, our turnkey solution helps fulfill urgent tasks such as employment liability, tax reporting, claim management, benefits administration, and more.

With tried and true knowledge and myBasePay on your side, you will be well on your way to achieving the results you desire with your new staffing agency.


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.

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