The temporary staffing industry continues to expand, with yearly double-digit growth being commonplace. Companies find it convenient and cost-effective to work with a temporary staffing agency to fulfill unforeseen demand, fill short-term vacancies, and assist with changing workloads due to restructuring or mergers. Additionally, employers are enticed by idea of "test driving" new employees to minimize risk and ensure a good match for permanent positions.
Many a job seeker has reaped great rewards from temporary staffing. Skilled but yet-inexperienced workers are able to get a foot in door at prestigious companies, where a weak resume would have made it very difficult to be considered. Similarly, "drifters" (those who tend to rapidly drift from job to job) may be plagued by an overly-long resume. Temporary staffing services can be ideal for drifters, as they have 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 may find enjoyment and extra income from a temporary medical staffing firm. A computer science major can gain valuable experience working with a technical agency.
Only a small number of personnel is required to handle recruiting and clientele. Even largest international firms tend to function with small, mostly-independent branch offices serving specific regions. This modular structure means it is quite possible for a one-office temporary staffing agency to compete effectively with established firms.
Overall, triple-benefit to clients, associates, and entrepreneurs has contributed to phenomenal growth of temporary staffing industry. Because of these advantages, it will remain an integral part of employment process through good times and bad.
Start Up Costs and Financing Sources:
$5,000 to $25,000
The startup and operating costs of a temporary staffing 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 for organizing contracts, and people skills to work with clientele and associates. It would not be impossible to start a temporary staffing agency on a shoestring budget of a few thousand dollars.
The largest business expense is payroll. It is common for associates to be paid by agency before agency is paid by client. An account must be maintained with sufficient funds to cover payroll costs until bills are paid by clients.
It is difficult - but not impossible - to get help from venture capitalists in covering part of costs of setting up a temporary staffing agency. A well-researched, forward-looking business plan is essential.
Pricing Guidelines for Service:
Associates are paid by hour, and agency covers its costs by charging a premium to amount billed to client. The exact amount of premium differs from case to case and can vary from 5% to 50% or more. Some associates are willing to work for less and some clients are willing to pay more, which when properly matched can result in very decent profits for temporary staffing agency. The contract usually spells out a flat fee to be paid to agency in event that a client decides to permanently hire an associate.
Advertising and Marketing:
A competitive hurdle for small startups is that larger agencies already have established reputations and brand recognition. This is actually a minor obstacle because of localized nature of business. It is not necessary to wage a national marketing war to gain exposure for a new agency. An inexpensive and well-directed marketing campaign can quickly build a valuable reputation within local operating region of startup.
An office (perhaps a home office) should be equipped with standard office supplies and at least two telephone lines.
At least one computer system with accounting software and a database for keeping track of projects is mandatory. A printer is used for printing invoices and job listings, and a high-speed Internet connection connects agency with online job search sites.
Many temporary staffing services have computers with tutorial software available to help associates to train their keyboarding and basic office software skills. These computers are also used to test skills of applicants.
Many billions of dollars are spent on temporary staffing services each year. A small, single-office agency can earn profits in tens of thousands of dollars. The large, international firms rake in millions every year.