How to Run a Successful Business: 5 Keys to a Profitable Staffing Agency

AdminAssist
AdminAssist July 5, 2021
7-minute read
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Did you know that over three million contract and temporary employees work for staffing companies across the US weekly?

If you run such an agency, you likely are wondering how to run a successful business. Here, we're going to talk about the factors that heavily affect your profitability and analyze how your firm can become more lucrative. Read on to become a more successful staffing firm that brings in more money.

What Are the Factors That Heavily Affect a Staffing Agency's Profitability

Many people believe that staffing industries are not profitable, but this is not the case. You simply need to understand the factors that impact how profitable you are. You can then take action to increase ROI.

The first core factor is business model. It often isn't built on any type of recurring revenue or passive income, so you need to build the staffing business from the ground up. Income can widely vary from month to month because the model is inconsistent.

The industry also is highly unregulated, which makes staffing agencies constantly to experience pressure to lower their fees. This makes potential employees take them less seriously as well as causing downward pressure on profits.

Finally, turnover is incredibly high for recruiters. Many don't make it in the cutthroat industry, which causes company to train and onboard new recruiters constantly. This is a costly process, and since the recruiters barely make any money, it isn't lucrative.

However, some staffing agencies find themselves incredibly profitable. They have quality recruiters and understand how to create and operate a lucrative staffing agency. Let's take a look at how this works.

1. Assess Your Market

Many new staffing firms simply select people in a niche before checking out the marketplace. You need to determine who your clients would ideally want to work with or they will be paired in an unsatisfactory manner. This includes looking into the places that the market is booming and the geographical region of potential employees.

You can learn more about a market by looking into data from the Bureau of Labor Statistics. The Chamber of Commerce may also have some insights, as will those who perform market research for the niche you're examining.

This ensures that you can help businesses who need staffing assistance find skilled laborers within their specific niche. They won't need to settle for those who don't perfectly fit into their market.

2. Offer Moderate Rates

Many staffing firms begin offering the lowest possible rates from the get-go. Their idea is that this will attract both businesses and those who want to be paired with them. Unfortunately, clients will then become used to your rates and leave when you ultimately choose to raise them.

Additionally, businesses that need staff are unlikely to trust a business that charges less. They will (consciously or subconsciously) assume that your business is of lower quality than those who charge higher rates. This may drive customers away and damage your reputation.

Don't create the highest prices in the staffing industry, but start with middle-of-the-road rates. You'll appear reputable and remain consistent, which will draw clients in and keep them working with you.

3. Automate Your Firm's Processes

The recruitment and placement process is usually a top priority for staffing firms. However, without automation, this can be difficult to do. You would need to find, choose, screen, and nurture all candidates manually.

However, with automated employee scheduling software, your recruiters don't need to spend too much time on administrative tasks. They can instead spend more time recruiting new workers/businesses and fostering lasting relationships between them.

Some processes that you can automate include:

  • Invoicing
  • Accounting
  • Payroll services
  • Meeting sign-up
  • Checking client availability
  • Communicating details about jobs
  • Confirming client placements

4. Invest in Communication

Any quality business invests in communication tools that let them connect with other staff members and clients. Staffing firms are no exception. In fact, because they need to communicate workers' abilities to pick up placements that they've pre-qualified for, these tools are more important than ever.

SMS is often the most effective tool for communicating with others. Texting provides you with immediate notifications and mobile-friendly functionality. This is critical in a world where most people are accessing the web from smartphones.

You also need a system by which you can communicate with accounting teams within your staffing firm. Tools that automate accounting processes make it easier to see the questions that you need to ask them. This allows you the chance to communicate within your company more clearly and ensure that accounting, payments, payroll, and invoicing are running smoothly.

5. Get Feedback from Candidates

New staffing firms often underestimate how important feedback from candidates can be. If you ask for feedback from those who work with you, you can analyze the recruitment process more easily. You then can see how effective it is and tweak the process to optimize it.

Another reason that candidate feedback is important is that it's important for future placements. Those who talk about the companies that they matched with favorably will let you know the worker persona that matches best with a business. You can then use it to place other staff members there in the future.

More on How to Run a Successful Business

Now that you know how to run a successful business and grow your staffing firm, it's time to get started. Contact us with any remaining questions that you have about optimizing your staffing business.

We offer a wide variety of tools that you can use to boost the effectiveness of financial processes like accounting, invoicing, and payroll. Our experts also are knowledgeable in other ways that you can help your staffing firm make it in a competitive industry. Since we're committed to ensuring your success, we look forward to hearing from you soon.