Temporary staffing businesses can be very profitable if managed correctly. However, managing a successful agency is not easy. There is a lot of competition – at least in some markets.
You must know how to differentiate your agency, recruit talent, and attract clients – all while dealing with competitors that are vying for the same contracts. In this article, we discuss seven steps to take to have a successful staffing agency.
Step #1: Define why you are better than competitors
One of the major mistakes new staffing companies make is running the business without first defining why they are “better than everyone else.” It is difficult to get clients if your company is just like everyone else’s. The same goes for recruiting employees.
- Why are you different?
- Why are you better?
- Would you buy services from your own company if you needed them?
- Would you work for your own company?
Review these questions honestly. Don’t move forward with your company until you have good answers to these questions.
The easiest aspect to compete on is price. It’s the easiest variable to change, and everyone defaults to that approach. However, being “the cheapest” is not always the best strategy. It’s a quick race to the bottom and the national staffing agencies have the upper hand.
A better strategy can be to make your company a boutique agency that caters to a specific niche. Agencies that cater to companies that need technical or educated professionals usually have an upper hand in price. And they have less competition. Recruiting highly technical talent is difficult and time-consuming.
When competing for employees, you must become the place where people want to work. Think about your company. Why would someone want to work there? Maybe it’s because you have great clients? Or perhaps you offer high pay and benefits? Or flexibility? You get the gist.
Step #2: Find the right clients
Now that you have defined why your company is better than competitors, you are ready to start looking for clients. Specifically, you want to find the right clients.
Unfortunately, all the so-called “easy” ways of getting clients are crowded with competitors. LinkedIn, industry associations (some of them), and internet boards are full of salespeople bombarding hiring managers with emails. You can try this approach, but it’s hard for your message to get through the noise.
On the other hand, the so-called “hard” way of getting clients is not crowded at all. I am referring to cold calling.
Everyone hates cold calling. Salespeople hate making the calls. Hiring managers hate getting the calls. And most calls result in hang-ups – except when they don’t, and the call results in a sale – a sale that you got because your competitors did not cold call.
Everyone touts the benefits of referrals and networking as the best way to build the business. And we agree – they are great. However, these strategies often take time to develop. They seldom produce results quickly.
For better or for worse, “dialing for dollars” (cold calling) is one of the quickest and most cost-effective ways to build the business.
Step #3: Find the right temporary employees
Most industry veterans agree that employee referrals are the best way to staff your company. This time-tested strategy works well, especially if your company is established.
However, it’s hard to get referrals if your company is new. This challenge can be significant if you are just starting and growing your staffing agency.
If you are just starting, consider other channels to build your employee base. The usual channels are employment trade shows, LinkedIn, or many of the websites that allow you to find employees (Monster, Indeed, CareerBuilder, Dice, and so on).
Step #4: Become a master match-maker
Matching temporary candidates with potential employers is difficult. You must ensure that both parties – the employee and the employer – are happy with the transaction. And you must do this profitably.
You must know your employees’ skills and preferences. Develop a database to collect questionnaires and interviews. Similarly, learn as much as you can about your client and their needs. Ensure that the match is good for both your employee and the hiring company.
Step #5: Master human resources and relations
You must ensure that both your employees and clients are happy with the assignment. Unfortunately, this step involves dealing with the inevitable issues that arise between employers and employees. This task is one of the hardest parts of owning an agency. There is no way around it.
You must know how to deal with employee and client complaints – usually about each other. And you must solve these issues in a fair and satisfactory manner.
Mastering human resources and relations is critical, as it allows you to build your reputation and, ultimately, get client and employee referrals.
Step #6: Master organization
Running an efficient temp agency requires a lot of organization. Numerous details need to run like clockwork. Otherwise, you encounter problems – quickly.
You must collect all time cards in a timely fashion and ensure they are accurate. Without time cards, you can’t run payroll or invoice clients – the two most important functions of running an agency.
Payroll must be run every week. When appropriate, taxes must be forwarded to government agencies. Always be careful about taxes and handle them appropriately.
Your bookkeeping system must be kept up to date, including all time card information. This effort, although time-consuming, allows you to invoice clients quickly. Remember, your invoices bring cash flow, and cash flow covers payroll and other expenses.
But there is more. You must also interview potential employees, find new clients, deal with disputes, file paperwork, and so on. The list is never-ending. Successful agency owners are task-masters who also know how to delegate important functions to the right people.
Step #7: Watch your cash flow carefully
Lastly, successful temp agency owners watch their cash flow carefully. They understand that growth can be a double-edged sword. Clients pay invoices in 30 to 60 days, while employees prefer weekly payments. You must have the resources to pay employee salaries while waiting for invoices to be paid.
The most effective way to achieve this goal is to build a cash reserve ahead of time. This step can be difficult. But in the long term, it is the best way to handle things.
Alternatively, you can finance your payroll using factoring financing. Factoring your invoices allows you to finance slow-paying invoices. This strategy gets you immediate funds, which you can use to pay your staff.
Factoring can be a great tool for temp agencies that are growing quickly and need funds to pay employees. Most factoring lines are flexible and can easily grow with your business. Here is more information about how factoring works.
Need payroll financing?
We are a leading provider of payroll financing (also known as factoring) and can help temporary staffing agencies that need funds to make payroll. For more information, call (877) 300 3258 or get an instant online quote.