How to Start A Staffing Agency

Written by Dave Lavinsky
Executive Search Firm and Recruitment Business

Starting your own staffing agency business can be a lucrative venture; however, it is essential that you have a plan in place to ensure success. In this guide, we will discuss the steps you need to take to start and operate a successful staffing agency and the important research you should conduct before beginning.


Types of Staffing Agencies 

There are many types of staffing agencies that you can start. Some focus on a particular industry, such as technology or healthcare. Others specialize in a certain type of worker, such as temporary or contract workers. Still, others work with companies of all sizes to fill general staffing needs.

One thing that all staffing agencies have in common is that they help companies find the right workers for the right jobs. Staffing agency personnel take the time to understand both the company and the worker and then make the perfect match. This saves the client company time and money, and helps the worker find a job that is a good fit for them.

Naming Your Staffing Agency

When starting your own staffing agency, it’s important to choose a name that is both memorable and professional. Your business name should reflect the type of services you provide and be easily recognizable. It’s also important that your name does not conflict with any existing businesses in your area. Check with domain name websites and other data sites to make sure the name you’ve chosen is not taken.


Writing Your Staffing Agency Business Plan

Your staffing agency business plan should outline all the key components of your legal business entity, including the legal structure, funding options, marketing strategy, and any additional services you may offer. Your business plan should include the following segments:

Executive Summary

An executive summary is short and concise. It summarizes the key points of a staffing business plan and is typically used to introduce readers to your overall plan.  It should include the most important information so that readers can quickly discern the main concepts of your business plan. 

Company Overview

This section informs the reader about the history of your staffing agency and what type of staffing agency you operate. It will include an overview of the business model you wish to employ. 

Industry Analysis

An industry analysis or market analysis is an evaluation of a particular industry. It includes a review of the industry’s size, growth rate, profitability, and competitiveness. A market analysis can be used to make informed business decisions about whether or not to enter a particular market.

Customer Analysis

A customer analysis is an evaluation of your company’s current and potential customers. It includes a review of the company’s target market, customer demographics, and customer needs. Customer analyses can be used to make informed business decisions about how to best serve current and potential customers.

Competitive Overview

A competitive analysis is an evaluation of your company’s competitors. It includes a review of your company’s rivals, their strengths and weaknesses, and how they compare to your company’s own strengths and weaknesses. Competitive analysis can be used to make informed business decisions about how to compete with or beat out the competition, while also identifying your company’s competitive advantage within the staffing industry.

Marketing Plan

The marketing plan outlines a company’s marketing, sales, and product strategies. It includes information about your company’s target market, how you plan to reach that market, what products or services you plan to offer, and how those products or services will be priced. Marketing, sales, and product should be updated regularly as your company’s marketing, sales, and product strategies evolve.

Operations Plan

The operations plan outlines your company’s operations strategies, as well as your daily business operations and processes. It includes information about your company’s process, how you plan to deliver products or services, what resources you will need to support operations, and how you plan to manage and monitor operations. The operations strategy, design, and development plan should be updated regularly as your company’s operations strategies evolve.

Management Team

The management team section of a business plan is a document that outlines the key members of your company’s management team and your respective roles. It includes information about the company’s CEO, COO, CFO, and any other key members of your management team. The management team section should be updated regularly as your company’s management team changes.

Financial Plan

A financial plan outlines the company’s expected financial performance, as well as startup or establishment costs. It includes information about your company’s projected income, established costs, initial costs, business expenses, and cash flow. The financial plan should be updated regularly as your company’s financial performance changes.


An appendix in your business plan typically includes supplemental information, such as additional financial information, information about the company’s management team, or other information that is relevant to your company’s business plan. The appendix should be updated regularly, as the company’s supplemental information changes.


Legal Structures of Staffing Agencies

In order to start a staffing company, it is important to understand the legal structures available for your business. The most common legal structure for a staffing agency may include a sole proprietorship, a partnership, a corporation, or a limited liability company (LLC). Each structure has its own advantages and disadvantages, so it’s important to research each one before deciding which one is best for your staffing firm.

  • Sole proprietorships are the simplest and least expensive business structures, with few legal requirements or taxes. They offer a great deal of flexibility to owners but also come with the most personal liability, as personal and business liability are shared. 
  • Partnerships are set up for two or more people to start a business together and share profits and losses, as well as responsibilities. Liabilities for the business are shared with the owners unless the partnership is set up under a corporate model.
  • Corporations are legal structures that provide owners with a line  of separation between business liability and personal liability. Shareholders are also protected. A C corporation is set up for more than 100 potential shareholders, which an S corporation is typically suited to a small group of shareholders or partners in the company. 
  • LLCs blend elements of both sole proprietorships and corporations; however, there is a line of separation between members of an LLC and any business liabilities. LLCs are initially easier to set up, but can become more difficult to manage as the company grows.


Funding your Startup Staffing Agency

Once you’ve chosen a legal structure for your staffing agency, you’ll need to consider how you’re going to fund it. The most common sources of funding are personal savings, loans from family or friends, small business loans, venture capital investments, and crowdsourcing campaigns. It is important to research each option thoroughly before deciding which one is best for your staffing firm.


The Right Location for your Staffing Agency

Choosing the right location for staffing firms is a critical decision as it can have a major impact on the success of your business. When selecting a location, consider factors such as access to transportation, local laws and regulations, lease costs, potential customers, and the amount of office space staffing agencies tend to need. It is important to research each option thoroughly before deciding which one is best for your staffing agency.

How to Open a Business Bank Account

Opening a business bank account is an important step for any business, including a staffing company. When selecting a bank, consider factors such as fees, customer service, and the types of accounts offered. Research each option thoroughly before deciding which one is best for your staffing agency.


Required Business Licenses and Permits

Starting a staffing firm requires obtaining the necessary business licenses and permits. These vary, depending on the state and city in which your business is located. Research each requirement before submitting your applications.


Staffing Agencies and Business Insurance

Every business, including staffing agencies, needs some form of insurance to protect its assets and employees. There are many types of business insurance available, so it’s important to examine which one is best for your staffing agency.

The most common types of business insurance are liability insurance, property insurance, and workers’ compensation insurance.

  • Professional Liability insurance protects your business from any legal damages that may be incurred as a result of your business operation. 
  • General Liability Insurance will protect your staffing agency from potential lawsuits from clients, employees, and other parties. This type of insurance can help protect the agency from costly legal fees and settlements if someone were to file a lawsuit against the agency. 
  • Property insurance protects your business property from damage or theft.
  • Workers’ compensation insurance provides benefits to employees who are injured or become ill as a result of their work.

Be sure to consult with an insurance agent or broker before making decisions regarding the scope and amount of insurance your staffing agency will require.  


Business Equipment Needs

In order to operate a successful staffing agency, you will need certain equipment, such as computers, phones, printers, furniture, and office supplies. Research the staffing agency industry or your competitors to determine what business equipment will be needed for your company. 


Marketing Material Development

Creating marketing materials for your staffing agency is an important step in getting the word out about your business. Consider purchasing software to help in the design of your website, logo, business cards, and other materials that can help promote your staffing agency. It’s also important to take advantage of online marketing tools, such as social media and search engine optimization (SEO) to increase your visibility.


Staffing Agency Software

Staffing agencies require specialized software to manage the various tasks associated with its business. There are a variety of software solutions available, examine the pros and cons of each software program to determine which one works best for your agency. 

Software created specifically for you staffing agency will assist in day-to-day operations by completing a variety of tasks: software can sort and revise job postings, applicant tracking, interviews, onboarding, and payroll. It’s important to select software that fits the specific needs of your staffing agency.


Finding Employees

Once you’ve established your staffing agency, you’ll need to start looking for qualified employees. Consider utilizing online job boards and social media networks to reach a larger pool of potential candidates. It is also important to establish relationships with local schools, colleges, and universities in order to find talented individuals.

Opening the Business

When you have completed the tasks to successfully start your staffing agency, it’s time to officially open it. Make your press announcement in local newspapers and on social media networks. List the unique benefits of your staffing agency and consider hosting an open house to attract potential customers. Finally, don’t forget to reach out to current and former employers about working with your staffing agency. Good luck and happy staffing!


Staffing Agency FAQs

A staffing agency is a business that connects workers with employers who need temporary or contract-based employees. Staffing agencies can provide workers for a variety of positions, including clerical, administrative, customer service, skilled labor, and professional positions.

There are several benefits of starting a staffing agency, including:

  • Low overhead costs - A staffing agency typically has low overhead costs, since you do not need to maintain a large inventory of products or services. This can be an attractive option for start-ups and small businesses.
  • Scalability - A staffing agency can easily scale up or down its operations to meet changing needs. This makes it a flexible option for businesses that experience peaks and valleys in its workforce needs.
  • Diversification - A staffing agency can help businesses to diversify its workforce and reduce its reliance on a single source of employees. This can be helpful during times of economic uncertainty.

The initial steps involved in starting a staffing agency include:

  1. Developing a business plan - This document will outline your business goals and how you plan to achieve them. It is essential to have a solid business plan if you want to secure financing from investors or banks.
  2. Securing financing - Start-up costs for a staffing agency can be significant, so it is important to secure adequate funding before launching your business. You can either self-finance your business or seek investors, loans from banks, or use other sources of funding. 
  3. Registering your business - You will need to register your business with the appropriate government agencies before you can start doing business. This process varies by state so check out the websites of each agency or city office regarding the specific requirements in your area.
  4. Creating a staffing personnel recruitment strategy - One of the key components of any successful staffing agency is having an effective recruitment strategy in place. This will involve developing relationships by both engaging with potential staffing personnel and marketing your services to potential clients. 

Executive search firms are companies that specialize in finding and placing high-level executives in companies. They have a large pool of experienced candidates and use a number of methods to find the best fit for a company. Executive search firms can be very helpful in finding the right executive to fulfill a corporate executive position. Executive search firms command significantly higher payments for a completed executive placement; however, the searches may take months and placements may be fewer in comparison to staffing agencies.  

Taking into consideration each of the steps necessary to create your own staffing agency will require some diligence and time on your part. However, the rewards of effectively placing the best individuals in suitable positions will be advantageous, both personally and in your successful ownership of a staffing agency. Best wishes for your success!