The temporary staffing industry continues to expand, with double-digit annual growth being common. Businesses find it convenient and cost-effective to work with a temp agency to meet unforeseen demand, fill short-term openings, and help with changing workloads due to restructuring or mergers. In addition, employers are drawn to the idea of ​​”trying out” 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 get a foot in the door of prestigious companies, where a weak resume would have made it very difficult to be considered. Similarly, “tramps” (those who tend to move quickly from one job to another) can be affected by a resume that is too long. Temporary staffing services can be ideal for homeless people, as they have the opportunity to work on short-term projects and move on without negative repercussions. Retirees and college students are also very common candidates. A retired nurse can find fun and 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 recruitment 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 quite possible for a single 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 advantages, it will continue to be an integral part of the employment process through thick and thin.

Startup Costs and Funding Sources:

$5,000 to $25,000

The costs of starting up and operating a temporary employment 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 people skills to work with clients and associates. It would not be impossible to start a temporary employment agency on a shoestring budget of a few thousand dollars.

The biggest business expense is payroll. It is common for the agency to pay associates before the client pays the agency. An account must be maintained with sufficient funds to cover payroll costs until bills are paid by clients.

It’s difficult, but not impossible, to get help from venture capitalists to cover some 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 their costs by charging a premium to the amount billed to the client. The exact amount of the premium differs 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 make a very decent profit for the temp agency. The contract usually establishes a fixed fee to be paid to the agency in the event that a client decides to permanently hire an associate.

Advertising and marketing:

One competitive hurdle for small startups is that the larger agencies already have an established reputation and brand recognition. This is actually a minor hurdle due to the localized nature of the business. It is not necessary to wage a national marketing war to gain exposure for a new agency. A well-targeted, inexpensive marketing campaign can quickly build a valuable reputation within the startup’s local operating region.

Essential equipment:

An office (perhaps a home office) should be equipped with standard office supplies and at least two phone lines.

At least one computer system with accounting software and a database is required to track projects. A printer is used to print invoices and job listings, and a high-speed Internet connection connects the agency to online job search sites.

Many temporary staffing services have computers with tutorial software available to help associates train their basic typing and office software skills. These computers are also used to test applicants’ skills.

Income Potential:

Many billions of dollars are spent on temporary staffing services each year. A small agency with a single office can earn tens of thousands of dollars. The big international firms earn millions every year.

Target market:

A temporary work agency is the intermediary between two different markets: clients and associates.

It’s usually not difficult to reach hundreds of applicants with simple help-seeking ads. More attention will probably be put on connecting with client companies and convincing them that your services will help their business.

Certain industries seem more receptive to hiring temporary staff. Financial institutions and other office-centric businesses are constantly looking for qualified office support staff. Factories often need labor for light industrial work, product assembly, and shipping and receiving duties. Hospitals and clinics use temporary medical staff to hire transcriptionists, registered nurses, and other support staff. Increasingly, high-tech companies hire 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 staffing service providers have found it useful to diversify into niches such as temporary medical, legal, financial, or technical staff. The focused nature of these agencies allows recruiters to build a pool of highly educated, skilled, 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 hires welders, janitors, and file clerks. This trust also helps associates earn better wages than they could through a general service temp agency.

Automaton!

Much of the work of managing a temporary employment agency can be automated using computer software. Well-designed database software can ease the process of matching qualified associates with appropriate 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, staff will need to be added to handle recruiting and marketing. That should never be difficult, as typically dozens or hundreds of qualified candidates are already in contact with the agency!

Training, Skills or Experience Needed:

Recruiters have a head start with backgrounds in human resources, business management, and marketing. A degree is not essential to start the business, but the knowledge gained through a business management program is helpful. Social skills are important and can be learned through experience and self-study. Numerous books have been published that specifically address temporary staffing as a business opportunity.