How to Start a Temp Agency: A Step-by-Step Guide

Temp staffing agencies are a must-have for many fast-paced industries, but how do you go about starting and running one?

In the article below, we discuss what it takes to start a temp agency, how temporary recruitment agency software can help, and the 7 steps necessary to sustainably grow your staffing business for long-term success.

What is a temp agency?

A temporary (temp) recruitment agency is a business specialising in finding contract workers or temporary employees based on the client's requirements. These organisations can help find the most suitable candidates in the shortest time, usually at a much lower cost.

As a temp recruiter at a temp staffing agency, your day-to-day responsibilities may include:

Creating job postings suited to client’s needs.
Screening resumes to identify qualified candidates.
Connecting potential candidates with clients.
Collaborating with clients to ensure their staffing requirements are met effectively.

What do temp staffing agencies offer?

If you harbour plans to start a temp staffing agency, knowing what your business brings to the table is the first thing you need to define. Here are some common benefits that temp agencies offer:

Less administration: Recruitment agencies help with sourcing, interviewing, and training potential candidates to reduce workloads and save time and money.
Flexibility: As long as clients' requirements are communicated clearly, recruitment agencies can assist them in finding the correct number of qualified candidates.
Expertise: Established temp agencies have experience and networks that enable them to thrive at recruiting top talent. They are more likely to identify the ideal staff than the client.

In industries like hospitality or event management, the demand for temporary staff is both high and variable. Meeting these demands internally can be time-consuming and costly, especially when maintaining relationships with potential candidates. As a result, many organisations choose to outsource their recruitment efforts to a temp staffing agency, allowing them to save time, reduce costs, and focus on their core operations.

What is a temp agency job?

A temp agency job is a short-term employment opportunity arranged through a temp staffing agency. These positions are designed to meet the immediate needs of businesses and can range from a few days to several months, depending on the client’s needs.

Temp agency jobs typically offer:

Flexibility: Workers can choose roles that fit their schedules and preferences.
Diverse opportunities: Temporary roles allow individuals to gain experience across different industries and roles.
Quick placement: Agencies streamline the recruitment process, helping candidates secure work faster.

These jobs are mutually beneficial, giving businesses access to on-demand staffing while providing workers with valuable experience and income.

Should I start a temporary staffing agency?

Before starting a temp staffing agency, there are some key factors that you need to take into consideration. Do you or your team have knowledge relating to human resources? It might seem obvious, but recruitment firms often overlook this point.

Additionally, running a successful temp staffing agency requires mastering essential recruitment processes. This includes sourcing and screening candidates, conducting interviews, and managing tax compliance for temporary staff.

Beyond recruitment, your sales team plays a vital role in the success of your agency. Their primary responsibility is to identify and attract clients who need your temporary staffing services, helping you build a steady pipeline of business opportunities.

By ensuring your team has the right skills and structure in place, you’ll be better equipped to launch and grow a successful temp staffing agency.

How do temp staffing agencies make money?

There are plenty of ways to make a profit from temporary staffing services. The most popular practice is to charge your client a fee based on the salary of the employee, usually 10% to 30% of their starting annual salary.

Other organisations take hourly rates and pay the employees from that amount. For example, if a recruitment agency takes $10 an hour, they’ll pay the temporary worker $8, with $2 assigned to operations and profit. There may be other additional fees to charge your client if needed.

In addition to providing temporary staffing services, recruitment agencies can also offer consulting services related to personnel and training processes. This type of service can be charged with a fixed fee or hourly rate. You can choose the most suitable and profitable method depending on your business.

What are the requirements to open a staffing agency?

Starting a temp staffing agency? Make sure you go through this checklist before implementing your plan:

Long-term and short-term goals: The clearer the goals, the better the execution of your plan.
The team: Determine the personnel and personalities you need to make things work.
Build your business plan: Take the time to nail the details and stick to it.
Potential clients: Don’t wait until the last minute. Establishing relationships as soon as possible is a smart move.
Candidate pools: How can a staffing agency operate without a talent pool? Know where your candidates are and build strong connections with them.

Seven steps to starting & growing a temp agency

1. Research your target market

The first step in starting a staffing agency is to study the target market. You need to look for information about your potential clients and available candidate pools that can meet your clients' needs.

The type of clients you target and the industries you focus on will depend on your geographical location and area of expertise. For example, if you have experience sourcing and training event staff, it may be beneficial to start by specializing in that sector. Understanding the specific needs and challenges of your market will help you tailor your services and establish a strong foundation for your agency's success.

You may also want to look at other agency models to learn what they do and don't offer. Check how they treat their clients and if there is any cultural aspect involved, as this could be valuable insight for your own temp staffing agency.

2. Build the right team

Team building is at the heart of any business's operations and it is no different for a temporary staffing agency. You'll need to develop two core teams:

Recruitment: Focused on sourcing, screening, and matching candidates to client needs.
Sales: Responsible for identifying and attracting potential clients to use your staffing services.

These two groups must collaborate closely to establish connections between clients and potential prospects.

On top of that, you'll also need to get legal counsel to address any legal or compliance-related questions and ensure your agency operates within regulatory guidelines.

3. Develop a business plan

Your business plan reflects your approach to entering the market - and how your organisation operates in the future. Making the right business plan can increase your chances of running a successful temp staffing agency.

Here are some things that should be included in your business plan:

Your business name: Finding a name that is easy to recognise and fully expresses your organisation's spirit is not an easy task. Your name must show who you are and what you can offer.
Your market niche: Based on your expertise, determine the target market from which you can draw the most profit. Those usually are markets with high demand but a shortage in supply.
An effective marketing plan: You need to find potential customers before launching your business and think about how to market your services to them.
Financial strategy: Any organisation needs to have a realistic financial plan six months before actual operation. It would help if you predicted how many clients you could find at the early stage of your business and build a backup plan to keep your business going if things do not go as planned.
Your goal for the first month: Goal-making is an essential part of business planning. However, many businesses' goals are too broad and ambiguous. A good practice is to divide your goals into smaller milestones and set more specific KPIs to keep track of and manage business activity.

4. Register your business

Depending on your model, there are a variety of legal business entities to choose from when it comes to registering a business, including limited liability, sole proprietorships, and trusts.

Once you have the most suitable option, the next step is trademarking, which protects your brand's name. It can also help your temporary staffing agency stand out from competitors and increase trust among clients.

5. Plan ahead for your finances

Before the launch, several financial components must be planned for smoother operation:

Banking and credit for businesses: Consider opening a bank account purely for your business transactions and making reporting more straightforward.
Accounting: Pay close attention to all of your business transactions. Consider having accounting personnel help you with this. This is essential for tracking your business performance and filing taxes.
Payroll: Staff payment requires accurate working records and tax compliance.
Software: Do you need to invest in specialised software for temporary recruitment agencies?

6. Forming a client network

Establishing a client profile is a vital task for a temp staffingrecruitment agency. Start by creating a professional website that highlights your services, expertise, and unique strengths. A well-designed site helps establish credibility and attract potential clients.

To expand your reach, leverage strategies like advertising, email marketing, social media campaigns, and participation in professional networks. These tools can help you connect with businesses in need of temporary staffing solutions.

As you gain experience and understand the market better, focus on developing your own client network. A personalized network is easier to manage, fosters stronger relationships, and can lead to long-term partnerships.

7. Where to find candidates

Sourcing temporary workers is a critical task to complete before starting a temp staffing agency. Channels to consider include, but are not limited to: recruiting networks (e.g.: LinkedIn), social media, referrals, personal networks, etc.

Establishing a candidate database is just the first step. You also need to build and maintain close relationships with them. Maintaining close communication and engagement ensures you always have high-quality profiles available to meet client needs promptly.

How much does it cost to start a temp agency?

Starting a temp agency requires careful financial planning. While costs can vary based on your scope and speciality, there are essential expenses you should account for

Office spaces: You’ll need a physical office for your temp recruitment team. While remote work is an option, having a central location allows you to monitor team performance effectively. Additionally, clients may prefer in-person meetings to discuss requirements and deliverables. Don’t forget to budget for office facilities as well.
Recruitment automation: Purchasing recruiting software can assist your business in many ways. You can use temp staffing software to find, source, and interview potential candidates in a much shorter time - as well as to handle monthly reports, payrolls, and billing.
Temporary staff wages: Depending on your business model, you may need to handle payroll for temporary staff. If your role is strictly introducing candidates to clients, this may not apply
Salary for employees: This is an ongoing expense and needs to be counted.
Advertising: Particularly during the early stages of your temp staffing agency, you’ll need to invest in advertising to promote your service to potential clients. Once the business operation is stable, you can reduce these costs and keep them at a stable level.

8. Transform your temporary staffing agency with Vincere’s recruitment agency software

Given the current recruitment landscape, digitisation is a key consideration factor when starting a temp staffing agency. With the assistance of technology, your recruitment process can be much more efficient.

Vincere’s recruitment agency software offers many features that can meet your needs:

Applicant Sourcing & Interviews: You’ll need to contact and evaluate your candidates effectively at the setup phase. These two features make it easier for temporary recruiters to complete the task.
Pre-built Analytics and Custom Dashboards: Your business needs to communicate with clients closely and clearly to stand out from competitors. Our recruitment dashboard helps you inform your clients about the latest performance with custom working boards that are familiar to them and more convenient for receiving feedback from clients.
TimeTemp: Vincere can keep track of employee clock-ins and produce invoices automatically for you to send to other departments with its time management software.

If you're ready to explore Vincere's temporary staffing agency software features, you can request a demo now.

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