In an industry where margins can be thin and your ability to meet payroll can make or break your business, it comes as no surprise that many staffing agencies go belly up before they even have a chance to make a name for themselves.
But let’s be honest: opening any kind of business these days, when regulations are growing and insurance costs are skyrocketing, can be a challenge to most of us who have a vision of making their small business dreams come true. While there are many items to address when it comes time to cut the proverbial red tape and open your doors, there are three critical aspects of your staffing agency you must ensure are completely airtight. In this article, we’ll discuss how you can make sure these are not only addressed, but also give you an understanding as to why they are so important when you are ready to open a staffing agency.
You’ve registered your entity with secretary of state and you have a shiny new company name. It’s time to ensure it becomes a name that sticks.
Whether or not you are just opening your doors or have been around for years, your top priority is meeting payroll. The number-one reason new agencies don’t survie is because they have not secured adequate financing to cover payroll.
The primary issue of a new business is its lack of established credit. With bank options limited or unavailable, some boldly stroll into the arena without protective gear. In other words, they plan to cash flow themselves. Unfortunately, rent, electricity and other expenses, in addition to your critical payroll obligations, stack up faster than money comes in. Even with pay terms at seven days, many are not able to stay afloat.
Many staffing agencies get it right out of the gate. They sign up for payroll funding as they are planning to open their doors. At TCI Business Capital, we not only provide agencies with immediate cash on their open invoices, but our programs are comprehensive. It is our goal to provide a full suite of services to agencies that includes:
Without the stress of meeting payroll, your resources are able to focus on what matters most: finding and recruiting the best talent, identifying new customers and promoting your business online so that you can succeed in your plan for growth.
What many staffing agencies don’t realize is that by utilizing the best software, many functions can be streamlined, communications across your business can be clear and you can eliminate or drastically reduce the chances of information being missed or misrepresented through manual entry. What you need is a solid software that includes among others, the following:
TCI Business Capital knows a good solution when we see one, which is why we are a premier partner of Avionté. Avionté believes in a robust staffing software solution that will help your agency be more productive, profitable and proficient. Operate your agency with the confidence that you’ll have a system to support your entire business.
Insurance. Many business owners cringe at the sound of the word. But the truth is, you must have the right insurance to meet legal requirements and limit your risk and exposure. As an agency, your top concern after liability is ensuring you have adequate workers compensation insurance. As if securing the right coverage wasn’t enough, worker’s compensation is often the highest expense after payroll. There is little margin for error.
According to the American Staffing Association, rates for workers’ compensation insurance vary based on a number of factors, like assigned risk classification, so work with your agent to get the coverage you need so that you are prepared. If you have a legal agent for your business, consult for guidance on which insurance to purchase based on your jurisdiction and the type of work you anticipate your employees will be doing. It’s no surprise that clerical staff will not need the same insurance as those in manufacturing. Depending on your state, you could have access to a state-funded workers’ compensation plan. If you haven’t met with an insurance agent yet, consider doing a bit of research on an agency or broker that has experience in the industry. You could save yourself from headache, and more importantly, avoid costly mistakes due to lacking sufficient coverage.
Do not let your dreams be shattered by missing a step when it comes time to open your agency. You have done the legwork of building up a customer base, preparing your marketing materials and sales strategy and so much more. While the checklist can seem daunting for setting yourself up for success, if you ensure that you’ve checked the box for workers’ compensation, software and most importantly payroll funding, you can move forward with confidence in knowing that your first batch of invoices will be paid and you will not find your agency in a cash-flow crunch.
TCI Business Capital is an invoice factoring company serving businesses across the United States. For more information on factoring, call (800) 707-4845 for a free, no-obligation consultation and quote.