6 Mistakes New Staffing Agencies Make

August 21, 2017

Starting a new staffing agency is exciting. Not only will you help companies fill their talent needs, you’ll help real people find high-quality work, expanding their career potential and opportunities.

But no one has ever said it will be easy. If you want to last as a manager or owner of a staffing agency, there are six mistakes that new staffing agencies make that you need to be aware of.

Avoid These Mistakes New Staffing Agencies Make

1. Not Having an Industry Niche

We’ve talked about the importance of having an industry niche or specialization in the past. Specializing in a certain market or industry- for example, specializing in IT talent- helps you streamline your process and make yourself more marketable to clients in that industry.

Unfortunately, many new staffing agencies want to be everything to everyone, which often makes them average (at best) to all people. It’s better to be the go-to choice in a certain industry than to be another run-of-the-mill agency in a potentially crowded market.

2. Racing through the Interview Process

When a client places an order, you (for good reason) want to fill the order as fast as possible. Unfortunately, this can often cause new, inexperienced staffing agencies to race through the interview process.

Even if the position is low-skilled, entry-level work, you need to make sure you are sending clients quality talent that is reliable and useful. Conduct multiple interviews and take your time with testing, background checks and other necessary screening to ensure the best possible results.

3. Spending Too Much Time Interviewing the Wrong People

Wait, didn’t we just say that you need to spend more time interviewing? But on the same note, one of the mistakes new staffing agencies make is spending too much time interviewing the wrong people, wasting valuable energy, resources and time on people that likely won’t pan out.

To make your interviews more productive, you need to change your pre-interview processes. Make sure your job descriptions are properly defined, with clear information about the job itself, educational requirements and expectations. By having clearly-defined job descriptions, you allow people to self-screen; after all, who wants to waste time applying and interviewing for a job they don’t really qualify for?

4. Insufficient, Vague, or Ineffective Contracts

Let’s make one thing clear: the success of your staffing agency will not be defined by the details in your contracts. But that doesn’t mean contracts can’t make a significant impact on your bottom line.

Contracts are very important to a staffing agency. Both the contract between you and the client and the contract between you and the employee can determine how much profit you make and how long you can keep the employee under your wing. Sound legal advice and support with an experienced attorney can ensure your contracts are written properly, bringing an advantageous relationship between all parties.

5. Square Hole, Round Peg

What happens when you can’t find the right people for your client? In some cases, it can be tempting to send someone, anyone, to the client in order to fill your contract. But it’s often better to send no one and to keep looking for the right person than to send the wrong person, just for the sake of filling the contract.

As we discussed earlier, you need to take your time, fill out detailed job descriptions and interview thoroughly; don’t make the mistake of sending your clients round pegs when they need to fill a square hole.

6. Not Having Enough Starting Capital

It can take months to realize profits on the staffing agency. For this reason, you need plenty of initial capital to ensure the lights stay on, the staff stays paid and the business keeps functioning.

While every staffing agency will have different needs for financing, you likely need more than you think, and it never hurts to have a big cushion of capital to get things started. Don’t make the mistake of starting your staffing agency without proper capital or you may not make it to the next fiscal year.

Many staffing agencies rely on payroll funding to get the cash flow they need. In the staffing industry, it is common to wait for payment from your clients. Payroll funding eliminates this wait by paying you same day.

Enhance Your Success with Payroll Funding & Scale Funding

Scale Funding can ensure you have the financial resources to get your staffing agency off the ground through our payroll funding services.

Whether you are just starting or need financial assistance to make it to payroll, we are here to help with payroll funding and the value-added services. Call us at (800) 707-4845 for a free, no-obligation factoring consultation and quote.