How to open a recruitment agency in 11 steps

Opening a recruitment agency, especially if managed correctly, can produce exponential results and be profitable in the long run. As more and more organizations need their services, this presents a great opportunity that needs to be taken advantage of correctly.

In fact, “HR is a $174 billion industry and one of the fastest growing industries in the B2B services industry. There are more than 20,000 staffing and recruiting companies in the United States operating out of 39,000 offices,” according to Murray Resources.

If you're considering the idea of starting a staffing agency or are already in the process of starting your own staffing agency, it would be helpful to review the steps and guidelines we've listed below to ensure you're on the right track from the start.

Basics: What is a staffing agency?
Well, as usual, let's start with the definitions.

A staffing agency, also called a staffing agency or recruiting company or temporary staffing. Its main task is to satisfy the recruitment needs of companies and select job candidates in accordance with their requirements and requests. You have the opportunity to connect with various hiring managers who are looking for suitable candidates for specific vacancies.

A staffing agency allows these clients to save time and resources while finding opportunities they otherwise would not have been able to obtain.

On the other hand, employees also benefit from working with such companies. They find jobs and flexible work schedules the way they want. This could be a way for them to get a regular part-time job or a permanent job.

The Basics: How does a staffing agency make money?
A temporary staffing agency provides employees to organizations that need new staff. They make money by receiving a certain percentage of the employee's hourly wage. It varies greatly and depends on factors such as number of employees, industry or area of activity, demand, location and much more.

For example, if a customer says the rate for a required worker is $15/hour, the company might pay the worker $12/hour.

In some cases, companies pay a fixed fee for services rendered. Temporary staffing agencies may work on an “appointment basis” and charge a monthly fee for their services until the required position is successfully filled. This is often done for specialized industries. Why? Because such vacancies can be difficult to fill, and it can take a long time to find the required specialist who is ideal for the job.

How to open a recruitment agency
With that in mind, here are 11 steps on how to get started with staffing agencies.

Step 1: Assess Your Own Skills

If you want to succeed as a staffing agency founder, you need to develop four specific, cross-cutting skills. You should know how to:

Find employees
Acquire clients
Finding the ideal talent to meet client needs
Manage and train staff or employees.
All of these skills are very important and should not be overlooked. If you lack even one of them, chances of failure are inevitable. This is why you need to evaluate and examine yourself. Determine if there are any gaps that need to be filled.

You can fill this gap by using yourself or by partnering with like-minded people you can trust.

Step 2: Choose the right industry

One of the determining factors for your success is supporting the right industry to work in. In short, you must be able to find your niche.

You can find it by learning more about your market and making sure you can meet the needs of that industry. Understand the supply and demand cycle of your chosen niche.

Look at it from your local market's perspective. What types of jobs are available in the area? What are the potential needs for such jobs? Asking yourself this question will help you choose the right industry to get started.

Step 3: Plan your startup costs in advance

Of course, you need some capital if you want to start your own business. Remember that startup costs can be divided into two categories: creation costs and operating costs.

Establishment costs are the foundation your business needs. These are usually one-time expenses and must be paid/purchased before you officially start. It can be:

Legal expenses for registration (creation of a legal entity, contracts, etc.)
Equipment (computers, telephone, etc.)
Software (HR, accounting, payroll, testing, training, etc.)
Of 

original premises
Insurance
The ongoing coronavirus pandemic may provide you with more options during this time as you can save on many expense items during this time. You can even waive some of the above expenses! For example, you may not need office space because either you don't need it and working from home is still standard and none of your clients will be bothered by it.

Operating expenses are the costs you pay to initially hired employees and customers and for the first months of work. This is especially true for recruitment for senior management positions; they require higher costs because their salaries are higher, the selection process is more complex, etc.

Know your business well and you'll have a much easier time estimating and planning your upfront costs.

Step 4: Pay attention to the company's cash flow

One of the most common mistakes new agencies make is that they don't have a good understanding of cash flow.

In staffing firms, employees must be paid weekly, bimonthly, or monthly. Your clients, on the other hand, must pay you monthly or bi-monthly. Any delay in payments by customers can cause serious problems for all parties concerned.

You must manage the financial side of the issue correctly and avoid delays in cash flow, missed payments and tax liabilities. Otherwise, it will deal a heavy blow to your business.

Step 5: Managing the Legal Aspects of the Business

You can avoid your organization's personal liability in the event of litigation if you have created a legal entity. This directly affects certain aspects of your business, such as business name, taxes, liability, etc.

With that said, another important thing to keep in mind is choosing the right business name.

Be wise and choose wisely because the name of your company will ultimately be critical to your overall success. This is how people will remember you. If your name isn't catchy or doesn't sound good, it may influence their decisions.

Make sure the name you choose is not already trademarked or is already in use. Only then should you register your business name and domain name.

After this, make sure that all licenses and permits required to operate the business are obtained. Depending on where you are, different countries have different rules. Do your due diligence and research everything that applies to your firm.

Step 6: Create an Effective Website

Once you've registered your business name and secured your domain name, it's time to create the perfect website.

A website that appeals to potential customers and has a great user interface and ease of use can give you an edge over other competitors. This is important to note because if the site is slow, has bugs, or is not user-friendly, then the likelihood that people will simply leave after opening it is very high.

"Think about the user experience and the journey a user will take while exploring your site. Whatever your site's main goal is, users should be able to easily achieve it, and the goal should be reinforced as users are exploring your site,” says Gabriel Shaoliang of Blue Fountain Media.

You can order an excellent website at Hosting Pokrov

Step 7: Know where to find your ideal employees

Finding the perfect employee is not easy. Before you start communicating with job seekers, you should ask yourself: “Why do they want to work for my company? What sets my company apart from others and makes it better?”

If you don't have an adequate answer to these questions, then you may need to take a step back and reconsider your entire plan. Only when you come up with a good answer can you confidently begin searching for the right talent.

You can recruit people in the usual ways: job boards, LinkedIn, personal contacts, referrals, etc. The only problem with this is that everyone is doing the same thing. If your company does not operate in a highly specialized industry, then you will face serious competition.

What you need to do is get creative and use modern recruiting tools. The tactics here depend on the specific industry in which you operate. Social media can be a good way to reach a wider audience!

Finding the right people is all about knowing what you have to offer and communicating better with them, which comes from asking the right interview questions. These two skills can 

make you successful and differentiate you from other recruitment agencies.

Step 8: Finding Clients

Just like finding employees, finding clients can be just as challenging. We've already said how many recruiting agencies there are in the US, haven't we? This creates a problem because people may view your startup as just another agency out of many thousands.

As in the previous case, ask yourself why clients should work with you and how you are different from others. If you have good answers to these questions, then you will be able to convince your clients.

Need help finding clients? Here are some ideas:

Internet (social networks, forums, online communities, etc.)
Newspapers
ads
Recommendations
Events (such as networking events)
Cold calls
These can all help you in your search, but don't forget to be creative too. Develop a compelling USP that will attract them to do business with you. Give them something that your competitors can't offer. This will take your chances to the next level.

Step 9: Use Technology

Another mistake companies make is thinking they can do everything manually. Managing businesses and people using outdated methods, using spreadsheets, sending individual emails, all that jazz! In the long run, this will only lead to chaos and confusion as processes and contacts cannot be tracked as they accumulate.

This is why you need to integrate technology into your operations. For recruitment agencies, a comprehensive recruitment solution is the right choice. 

Step 10: Get Insured

We have already mentioned insurance as one of the expenses of your business, but it deserves special attention. Why? You need it to protect your business.

This should not be forgotten because you never know what can happen. We are not experts in this matter, so we strongly recommend that you contact an insurance agent who knows your business best and understands how to properly insure you 

in the following areas.

Here are some popular insurance examples:

Business owner policy
General commercial liability insurance
Insurance against theft and crime among employees
Employed persons liability insurance
Key Employee Insurance
Liability Insurance
Workers' compensation
Property insurance
Complex policies
Business auto insurance (if you have a company car)
... and much more!

Step 11: Come up with an effective marketing campaign

Last but not least, start promoting your recruitment agency both online and offline. Create a powerful campaign that can reach the attention of the right customers and candidates.

Create a well-thought-out and clear marketing plan and monitor its implementation. This can ensure that people recognize your brand and will be their first choice when looking for a similar recruiting firm.