The temporary staffing industry continues to expand, with double-digit annual growth common. Companies find it convenient and profitable to work with a temp agency to meet unforeseen demand, fill short-term vacancies, and help with changing workloads due to restructurings or mergers. Additionally, employers are drawn to the idea of ”trial driving” new hires to minimize risk and ensure a good match for permanent positions.
Many job seekers have reaped great rewards from hiring temporary staff. Skilled but inexperienced workers can walk into the door of prestigious companies, where a weak resume would have made it very difficult to be considered. Similarly, “homeless” (those who tend to change quickly from job to job) can be affected by too long a resume. Temporary staffing services can be ideal for homeless people, as they have the opportunity to work on short-term projects and move on without the negative repercussions. Retirees and college students are also very common candidates. A retired nurse can enjoy and earn additional income in a temporary medical staffing company. A computer science student can gain valuable experience working with a technical agency.
Only a small number of staff are required to handle recruiting and clientele. Even the largest international firms tend to operate with small, mostly independent branches serving specific regions. This modular structure means that it is highly possible for an office temp agency to compete effectively with established companies.
Overall, the triple win for clients, associates and employers has contributed to the phenomenal growth of the temporary staffing industry. Because of these benefits, you will remain an integral part of the employment process through thick and thin.
Initial costs and sources of financing:
$ 5,000 to $ 25,000
The initial and operating costs of a temp agency are much lower than many other businesses. The basic requirements are a small office with typical supplies, a computer system with general accounting software and database software to organize contracts, and the skills to work with clients and associates. It would not be impossible to start a temp agency with a reduced budget of a few thousand dollars.
The biggest business expense is payroll. It is common for the agency to pay the associates before the client pays the agency. An account with sufficient funds must be maintained to cover payroll costs until clients pay bills.
It is difficult, but not impossible, to get help from venture capitalists to cover part of the costs of setting up a temp agency. A well-researched and forward-thinking business plan is essential.
Pricing guidelines for the service:
Associates are paid by the hour and the agency covers its costs by charging a premium for the amount billed to the client. The exact amount of the premium varies from case to case and can range from 5% to 50% or more. Some associates are willing to work for less and some clients are willing to pay more, which, when combined properly, can generate very decent returns for the temp agency. The contract generally spells out a flat fee to be paid to the agency in the event that a client decides to permanently hire an associate.
Advertising and marketing:
A competitive hurdle for small startups is that larger agencies have already established a reputation and brand recognition. This is actually a minor hurdle due to the localized nature of the business. You don’t have to wage a national marketing war to gain visibility for a new agency. An inexpensive and well-targeted marketing campaign can quickly build a valuable reputation within the startup’s local operating region.
An office (perhaps a home office) should be stocked with standard office supplies and at least two phone lines.
At least one computer system with accounting software and a database is required to keep track of projects. A printer is used to print invoices and job lists, and a high-speed Internet connection connects the agency to online job search sites.
Many temporary staff services have computers with tutorial software available to help associates train their basic keyboard skills and office software. These computers are also used to assess applicants’ skills.
Many billions of dollars are spent each year on temporary staff services. A small agency with a single office can make profits in the tens of thousands of dollars. Large international companies raise millions every year.
A temporary recruitment agency is the intermediary between two different markets: clients and associates.
It is usually not a difficult matter to reach hundreds of applicants with simple help search ads. Probably more attention will be paid to connecting with client companies and convincing them that your services will help their business.
Some industries seem more receptive to temporary staffing. Financial institutions and other office-centric businesses are constantly looking for qualified office support staff. Factories often need labor for light industrial jobs, product assembly, and shipping and receiving tasks. Hospitals and clinics use temporary medical staff to hire transcriptionists, certified nurses, and other support staff. Increasingly, high-tech companies are hiring computer programmers, database specialists, and systems engineers on a temporary basis through specialized technical placement agencies.
Tips for success:
Develop a niche!
In larger markets, temporary staff service providers have found it useful to branch out into niches such as temporary medical staff, legal, financial or technical fields. The focused nature of these agencies allows recruiters to create a pool of highly educated, trained and experienced associates who can provide the best service to clients within a particular industry.
A hospital executive would be more comfortable hiring nurses from a temporary medical staffing agency than from a one-stop shop that also places welders, janitors, and filing cabinets. This trust also helps associates earn better wages than they might otherwise receive through a general service temp agency.
Much of the work of running a temp agency can be automated by computer software. Well-designed database software can facilitate the process of matching qualified associates with suitable job openings. Accounting operations can be highly automated (but working closely with a good accountant is still recommended). With these tools in place, there are only two main tasks left: finding customers and finding partners.
Use your own services!
As the business grows, it will be necessary to add staff to handle recruiting and marketing. That should never be difficult, as typically tens or hundreds of qualified candidates are already in contact with the agency!
Necessary training, skills or experience:
Recruiters have an edge with experience in human resources, business management, and marketing. A degree is not essential to starting the business, but the knowledge gained through a business management program is helpful. People skills are important and can be learned through experience and self-study. Numerous books have been published, specifically addressing temporary staffing as a business opportunity.