Starting a Staffing Service

An entrepreneur with strong HR and accounting skills may find a staffing service to be the ideal start-up business
By Jo Averill-Snell, writer, researcher Staffing services fill an ongoing business need and are currently a growth industry in the U.S. While initial outlay can be expected to be high – you may need to pay your employees before your initial clients have paid you – a well-run staffing service can be a profitable endeavor that brings fresh projects and challenges every day. Starting a staffing service is suited to a small business owner who:
 
1. Is a people person who is good at building business relationships.
2. Handles detail well and has financial and legal acumen.
3. Is tied into the local business climate and can foresee economic trends and staffing needs in the region or industry her business serves.

Choose a market segment in which you are confident of finding employees and clients

You may decide to operate a general staffing service – clerical temps are always in demand – or to concentrate exclusively on one industry or niche, such as health care staffing or legal secretaries. Your own background and contacts should drive that choice, as well as market demand in your area. Once you have decided where to concentrate your efforts, you’ll need to institute outreach for clients and potential employees. Business associations, trade publications, and referrals can begin netting you client contracts; local colleges and retiree centers can be sources of potential workers.
Try: You can obtain a list of colleges near you from 50states.com or Yahoo’s Higher Education directory. Most colleges and universities have a career center and job board. Existing online job boards, such as Career Builder, Monster.com, and Hot Jobs, can also connect you with potential employees.

Familiarize yourself with licensing, tax requirements, and other regulations that apply to staffing

The applicable laws and regulations very from state to state, and you’ll need to be on top of payroll taxes and withholding as well. Make sure that you’re on solid footing when it comes to legal requirements!
Try: Assistance is available from the National Association for Professional Employer Organizations, which maintains a database of regulations by state and at the federal level. Information is also available from the American Staffing Association. You may wish to obtain personalized professional advice from a group such as Small Business Taxes & Management, which provides tax and management guidance.

Arrange for Workers’ Compensation insurance for your employees

Workers’ Compensation is sufficiently complicated and expensive that it is a large part of the reason why many of the small companies that choose to use payroll services or employee management companies do so. With a large and rotating pool of employees whom you send off to different worksites, you’ll need to be an expert in handling Workers’ Compensation insurance.
Try: You may find it easiest to invest in a software solution such as Fiserv’s Workers Compensation Management System from Insurance Solutions or Delphi’s OASIS Workers’ Compensation Solution.

Put a robust payroll process in place

Payroll and invoicing will be major parts of your operation. Easy and effective processes are a must – this will be one of the foundations of your business.
Try: A small staffing service may wish to begin by availing itself of outside payroll and invoicing services such as that provided by the Bank of America. If you prefer to keep these core activities in-house, then the right software can help. QuickBooks Payroll and PayCycle.com are two popular options. Evaluate additional options at FindAccountingSoftware.com.

Choose industry-specific recruitment and training solutions

You’ll need to track and evaluate applicants continually and in quantity. You’ll also require much more in the way of testing and training software than the average business. After all, the skills of your employees and your ability to accurately assess whether a given applicant is the right match for your client are central to your business operation.
Try: Explore workforce technology packages designed specifically for staffing service agencies. TempWorks Software, Questek Systems, and Intelligence Software are among the options.

Consider a franchise

You may decide that you’d rather follow an established model than build from scratch. In that case, opening a franchise of an existing staffing service may be the way to go.
Try: Examine franchise options at Best Staffing Franchises. 

• Choose your office’s location, layout, and appearance thoughtfully —image is important and should match your target market. Accessibility to potential employees is also a key consideration.
• Telecommunications and reliable email and internet access are crucial! Multiple phone lines and high-speed access will help your business operate efficiently. Much of your contact with current and potential clients will likely be through these mediums.
• Word of mouth and referrals are an excellent way to grow your business and ensure that you find quality employees and clients. Network constantly within both groups.