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I’m guessing you found your way here because you want to know how to start and grow a staffing agency the right way. The staffing and recruiting industry is notorious for several challenges, including a lack of cash flow and high staff turnover rates. You’re not alone if you’ve ever had a challenge growing or developing your staffing firm. Most staffing and recruiting firms underperform or, even worse, go out of business as soon as the economy slows down.
The question is, how do you overcome these challenges, set your business (and yourself) up for success, and grow your staffing agency?
In this article, I’ll cover where staffing and recruiting agencies experience common challenges and how to build a staffing agency that addresses and protects against these problems.
Before we get started, here are my credentials:
Over the last 20 years, I’ve worked with more than 1,000 businesses—many hitting 6-7 figures. So there’s a good chance I’ve helped companies like yours. I’m a Certified Business Coach specializing in business coaching for staffing and recruiting firms. I spent 10+ years in the staffing and recruiting industry by running a staffing firm with annual revenue of $25 million, which later sold for 8 figures—which, as you likely already know, is the ultimate validation you’ve managed to build a business of value.
In other words, I’ve been there, done it, and bought all the t-shirts!
Where do staffing and recruiting agencies tend to run into problems?
If you’re already running a staffing agency (or you ever have), you’ll probably know that most staffing firms end up hitting a metaphorical “wall” at some stage. This is usually a combination of a few common problems, obstacles, and bottlenecks that prevent you from growing into an 8-figure business.
Here are some of these common challenges:
- Low-quality job orders
- Taking on too many job orders and not placing enough of them
- Inefficient processes for taking job orders and knowing which ones deserve the most attention
- Not being aware of which types of jobs make the most sense for your staffing agency to take on (not having a niche)
- Cash flow problems
- A lack of processes for recruitment, staff onboarding, and training
- High staff turnover rates
- Failing to track how well the business is performing with KPIs
- Bottlenecks in the business (often caused by you, the business owner) preventing you from scaling and exiting the company in the future
- Meetings that lack focus and purpose and don't lead to anything
Here's how to start and grow a successful staffing agency
Be willing to adapt
Learning how to start and grow a staffing agency is all about developing and maintaining strong relationships with your clients. You need to know who they are, understand their goals, and how these change over the years as they plan for the future. This is how you will strengthen your relationship with them and build trust, which is why being agile and able to adapt quickly is key.
Although it’s tricky to find the right balance between answering to market trends and staying true to your core values, being flexible will help you find greater success.
So, the million dollar question is, how do you stay flexible?
By building the right infrastructure and ensuring you’ve got strong back-office support. By maintaining a client-oriented approach to help you deliver on your promises. And by having a clear process in place to combat potential obstacles and times of insecurity.
Get clear on which clients are best for your business
When you think about who your best clients are, you’ve probably got a solid idea. It’s companies that:
- You've worked with for a long time
- Are vocal about the success they've had with you
- Consistently have new openings
- Your staff quickly finds candidates for
- Those candidates end up staying with those clients for a long time
- And these clients provide a consistent source of revenue for you
But let’s drill down a little deeper here. Your ideal client isn’t necessarily the one who spends the most money with your staffing agency. To develop a long-term relationship, looking at revenue alone would be a mistake because clients will only return if your efforts drive their business forward in the long run. This is why the best clients for your business are those with whom you can quickly meet their goals and are happy with your service while being profitable.
Take some time to get clear on your best clients over the past two years by analyzing:
- The size of the company
- Location
- Industry
- Customer demographics
- The services they purchased
- Any common denominators
- Price and profits
- Accounts receivable aging
Generally, you want to target 85% of your marketing efforts on your ideal clients.
Identify more client leads
Next up on how to start and grow a staffing agency is to figure out how to get more awesome clients that align with your values and niche. Here are some ways to do it:
- Start a client referral program for your existing clients
- Make a list of sources you'll use to gather a set number of leads each month to meet your goals (including those generated through marketing efforts, provided by your recruiting team and candidates interviewed)
- Network (personally and professionally)
- Identify hot companies (when interviewing candidates)
- Utilize social media—particularly LinkedIn and relevant niche jobs boards
- Browse websites
- Visit trade shows
Before you dive in, identify which channels bring you the most qualified leads, remove any that aren’t providing a return on your investment, and move away from those where you struggle to predict a healthy ROI.
Once you get your foot into a company, ask the manager you’re directly working with to introduce you to other managers. If you’ve had success, then your chance for more introductions will rise exponentially. And remember to connect the dots (between each call, interaction with a candidate or manager, etc.)—this is critical for success.
Develop a repeatable process to reach your candidates
Another issue staffing firms face is maintaining a steady, consistent flow of candidates in their pipeline.
So, how do you get more candidates?
By conveying to them that your staffing agency is the best fit for them. Optimize your hiring process (more on this later) to provide a positive experience to candidates and staff. Work hard to build a positive employer brand. Make sure your roles and responsibilities are clear. Demonstrate your value to candidates (and deliver on this when they join your organization).
Evaluate your pricing structure
Next up on how to start and grow a successful staffing agency is to analyze your current pricing. An effective pricing structure must be profitable, competitive, and consider emerging trends.
Here are some things to think about:
- Does your pricing structure align with your business goals?
- Is there room to grow and expand into new markets?
- Which clients, sectors, and locations have the highest growth potential?
- Where can you cut back on overhead costs and make things more effective?
- When and how should you charge clients for maximum profitability?
- Where can you increase your margins?
As a general rule, make time to evaluate your pricing structure once a year.
Invest in the right marketing strategies
Exploring and implementing new marketing strategies is one of the best ways to find new clients and candidates for your staffing agency.
The number one method used by job seekers and employers is still online search, so it’s vital that you aim to get your staffing agency on the front page of search results in your niche and location. You can do this through paid ads, social media campaigns, and SEO articles.
Track your conversion rate to ensure your marketing strategies bring in the right clients and candidates and win them over. Maintaining awareness of hiring trends will help you understand what they’re motivated by and are seeking. And don’t forget to develop your brand presence to boost credibility.
Stand out from your competitors
There are many creative ways to stand out from the noisy staffing agency crowd and be better than your competition!
- Maintain a constant dialog with your clients (not just when you're making money from them)
- When problems arise (which they will), stay calm and collected and act with integrity
- Send written expectations to prospects and clients
- Use percentages when taking orders, contracts, and assignments
- Ask for target dates when filling positions
- Identify the underlying problem when there's a vacant position
- Share testimonials that speak to the value you provide
- Build your relationship up from a vendor to an advisor, consultant, and even a friend that clients and candidates trust
Get clear on the value your staffing agency is providing & be vocal about it
Your ideal clients need to see tangible benefits and results that you have delivered to past and present clients.
The best way to do this is to obtain and share testimonials and make sure you feature them prominently on your website, under your email signature, and in your marketing material. Add recommendations to your LinkedIn business page, document client results in blog posts, and compile case studies to prove how you have helped your clients.
This is not the time to be humble!
Know your numbers by tracking critical KPIs
The secret to learning how to start and grow a successful staffing agency isn’t that complex. It comes down to knowing your numbers and tracking them so that you know whether you’re achieving your goals as a business and making money.
If you want to grow your staffing agency, begin by taking a look at your current metrics. This includes:
- Meetings booked
- Deals closed
- Calls and emails
- New leads
- Successful referrals
- Submittals
- Interviews
- Hires to interviews
- Hire to submittals
- Contacts resulting in a verbal pitch
- Contacts resulting in a meeting
- Pitches and meetings that result in an order, contract, or assignment
- Closing ratio
Remember that not all metrics are the same for all niches, so you’ve got to understand the business you’re in and what matters most.
Make sure you document everything as you test different strategies and scripts, present the benefits, and identify what’s resulting in sales. Refine and repeat what’s working.
Understand your cash flow
To grow a successful staffing agency, you must understand your cash flow. It’s common for you to pay your staff weekly or fortnightly while your clients pay you every 30 to 60 days. If not managed properly, this delay can cause serious cash flow problems. And cash will often be the most strained during the most critical times in your business: the startup stage and the scaling stage, so you’ve got to plan accordingly.
If you haven’t started the business yet, make sure you have an emergency fund to tap into; alternatively, consider using a payroll financing service. While using a funding source is okay, this should be a short-term plan because the fees are high and will eat into your margins.
Hire the right staff
It’s impossible to succeed in staffing and recruiting without having the right people working in the right places in your business.
When looking to recruit new staff, don’t limit yourself to recruiters—sales professionals can be just as beneficial to your company. Ask your placed candidates to refer you to their network so that you can find great candidates more quickly for your clients.
As a general rule, your staff should always ensure they find the right fit for each candidate they deal with, measure and optimize the candidate experience, and be considerate of everyone’s needs in the hiring process while pleasing both the clients and candidates. It’s also important to remember that the hiring process is not done and dusted once a candidate signs a contract. The right mix of a sales mindset and empathy is key to success, which is what to look for when hiring new team members.
As remote working becomes more popular and common, you’ve got to learn how to manage a remote team effectively. The best way to do this is to agree on ways of working, create structures, set and manage expectations, and trust your team. Check out this article for more advice.
And if you need help hiring “A” players, check out the book, Topgrading for more tips and insight.
Automate everything you can
If you want your team to be able to focus on high-value tasks like pleasing your clients and candidates, then you’ve got to free them (and yourself) up from mundane, repetitive tasks. Technology has revolutionized every industry, including staffing, and it’s now possible to utilize software and digital tools to speed up almost every facet of your business.
Take stock of your current ways of working and look for areas of improvement.
- Use the right ATS
- Automate data entry
- Automate the hiring journey (auto-scheduling interviews, communicating with clients, etc.)
- Use tools to send texts and emails
- Use a data scraping tool
Remember that you’re looking for tools that are agile, responsive, and integrate well into your current tech stack. Don’t throw money at fancy software that won’t improve your business.
Conclusion
So, now that you know how to start and grow a successful staffing agency, where do you go next?
The truth is, pushing past the 6/7-figure level is not easy. But with the right support and coaching, you can shoot past your current success and take your business to incredible new heights.
I specialize in business coaching for the staffing and recruiting industry, and I’d love to be the one to help you achieve your business goals!
Click here to book a complimentary consultation with me today, and let’s get straight to work on helping you grow your business.
