Your Guide to Starting a Staffing Agency Business

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starting a staffing agency

If you’re thinking about starting a staffing agency, now may be a good time!

The Bureau of Labor Statistics projects that the employment services industry is expected to enjoy employment growth from 2014 to 2024 [i]. This is good news to anyone looking to get in on the ground floor of starting a staffing agency.

But there may be a lot of things to think through before you start a business, and some are unique to staffing agencies. Many details might need to be hammered out before you even open your doors. Here are some ideas to consider that may help you start a staffing agency.

Specialize Your Business

You know the popular saying, “You can’t be all things to all people.” That’s why it may be a good idea to specialize. There are all kinds of staffing agencies, and you may want to figure out which type you want yours to be before you seek out clients or get workers on your roster.

So how do you figure out what to specialize in? With market research! Here are a few things you might want to look into.

First you have to ask yourself what kinds of workers you’ll be placing. Are they clerical workers? Industrial? Professionals like accountants or lawyers? The goal here is to figure out what your area needs. Or if you can spot a need in a different area, it may not be unusual to start a staffing agency wherever you see a gap in the market. Either way, let the needs of the market help you narrow down your choices and get you through the decision-making process.

Next you may consider the employment terms that your company might deal with. Broadly speaking there are three types of agencies: temporary, long-term (also known as “contract”), and temporary-to-permanent [ii]. Of course it may be possible to do all of them or two out of three.

One more thing to consider about specializing: What are you good at? What are your skills? Where do you have experience? You’re going to have an easier time evaluating potential candidates if you understand the client’s industry.

Measure Twice, Cut Once

Think everything through carefully before you jump in with both feet. In this case, it may to require a business plan. A business plan may be a good tool when you’re starting your staffing business. It could even help you understand startup costs and how you’d like to make a profit — before you’ve even spent a dime.

If this kind of thing is new to you, don’t panic! You may be able to find free business plan templates at And the Small Business Administration exists to help people who are starting a small business. Check out its website to see if there is an SBA office near you — there probably is! In addition, the SBA has its own business plan wizard that may make the process a lot easier.

When working up your staffing agency business plan, don’t forget to include all the expenses particular to the personnel industry. For instance, you may find that you need more liability insurance than other kinds of businesses. And some agencies offer health insurance to temporary workers if they are employed for a certain number of weeks [iii]. All of this will affect your bottom line, so make sure it’s included in your business plan.

Where Might the Money Come From?

Every new business has startup costs, and most need operating capital. A business plan might help you crunch those numbers. Now it’s time to figure out where you may be able to get the cash.

Do you have enough in the bank to get your staffing agency off the ground — and to keep it running until the checks start coming in? Or will you need to borrow money? Is it some combination of the two?

You may want to try crowdfunding. More and more people are trying sites like Kickstarter to look for the cash to start a business. But it’s not as simple as asking for money. Think about how you can set your staffing company apart. Maybe you’ll help low-income people find employment, or specialize in making older workers more prepared for interviews. Whatever you decide, you may have better luck raising money if you have a good story to tell or a way that your staffing business will show reciprocity within the community.

Make It Official

When you’re starting a staffing agency, you might want to consider what may be the perfect way to structure your business. Basically there are different kinds of companies, each with different tax and legal implications: sole proprietorship, limited liability corporation (LLC), and corporation. [iv]

To learn more about your choices, check out the Choose Your Business Structure section of the SBA website. But before you choose one, familiarize yourself with the legal requirements for your business. The federal government has certain requirements, and every state is different. Even your city or county may have laws that will affect how you structure your business.

Location, Location, Location

What’s true for restaurants may be true for other kinds of businesses: location may make a big difference [v]. Your clients may feel more comfortable if you’re nearby, or at least in the same city. You may want an office near public transportation to make it easier for potential workers to meet with you.

In the beginning, there may be the temptation to work from home to keep your costs down. But a staffing agency may be one of those businesses where it’s best to have an office [vi]. You might wish to have a professional-looking space for meeting potential clients and interviewing prospective employees. If you hesitate at signing a long-term lease, some cities now have shared office spaces, some with services like receptionists and office equipment.

Go It Alone or Hire People?

When starting a new business it may be important to keep your overhead low, so you don’t want to hire more people than you need. But that doesn’t necessarily mean you can handle all of the work yourself. When you’re starting a staffing company there may be too much work for one person to do. Finding clients, interviewing employees, paying the electric bill — you probably won’t have time to do all of it.

Getting the Word Out

Staffing agencies are unusual in that they have two audiences for their marketing: potential clients and potential employees. You want your clients to know that you offer reliable, experienced workers. You want your potential employees to know that they’ll work and that your company is trustworthy. Keep this in mind when you’re developing your materials. Think about reaching out to a company's hiring managers or Human Resources Manager to let them know what services you could provide to their company.

There are a few basics things you may need — a website, of course, and business cards. You may want to have some printed marketing materials like brochures. But the Internet may likely be an important source of leads. Consider posting an ad on employment sites like And if you have decided to specialize in a particular industry, you may want to advertise in trade publications or their websites.

Finally, you’re probably going to have to network. Your business deals with people, which means that you might have to get out there and meet them. Go to industry events or check out to see if there’s anything interesting taking place near you. Sign up for email alerts or event notices.

Where Else Can I Go for Information?

When you’re starting a staffing company, it may be a good idea to join a trade association [vii]. Here are three leading organizations that help staffing companies work through legal, ethical and professional practices particular to the personnel services industry.

  1. American Staffing Association
  2. National Association for Professional Employer Organizations
  3. National Association of Personnel Services

*None of these companies are owned by, operated by, endorsed by or affiliated with Education Dynamics, LLC.


**This information is for informational purposes only and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal or accounting advisors before you act, or fail to act, upon this information.

[i] | [ii] | [iii] | [iv] | [vi] [vii]