You need an estimate of $250,000 to start a medium-scale staffing agency in the United States of America. Note that this amount includes the salaries of all the staff for the first 3 months of operation.
The consulting industry in the United States of America, United Kingdom, Canada and Australia is indeed a big and thriving industry and staffing agency is a subset of the industry.
Those who run staffing agencies are classified as Human Resource consultants or recruitment consultants. If you are looking for a business that requires less stress and perhaps minimal start–up capital, you can consider starting a staffing consulting business.
The cost of launching and running a staffing consulting firm when compared to the turnover you get can be poles apart (this is applicable when you have been able to establish your feet in the industry). The cost of running the recruitment process from start to finish could be restricted to the cost of making phone calls, transportation and internet subscriptions.
With that, it is easier to place a projection on the profits you are likely going to make if you are able to successfully seal a staffing deal.
One good thing about starting a staffing agency business is that you have the options of starting it on a small scale from your home or from a virtual or shared office space with minimal overhead and running cost.
Other factors that may be slightly different in terms of costing when it comes to starting a standard staffing agency business in any of the countries listed above are cost of labor, cost of transportation and logistics, local tax, insurance policies, business incorporation fee, rent/leasing amongst other factors.
Estimated Cost Breakdown to Open a Staffing Agency
These are the key expenses you are expected to make when starting a medium scale but standard staffing business in the United States of America;
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $8,300.
- Marketing promotion expenses for the grand opening of the staffing agency in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring business consultant (including writing business plan) – $2,500.
- The cost for insurance (general insurance, health insurance, liability insurance, workers’ compensation, overhead expense disability insurance, and business owner’s policy group insurance) coverage at a total premium – ,400.
- The cost for leasing an office facility in a centralized business district – $70,000.
- The cost for remodeling the facility – $10,000.
- Other start-up expenses including stationery ($500) and phone and utility (gas, sewer, water and electric) deposits ($6,500).
- The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000.
- The cost for start-up inventory (writing materials, files/folders, stick–on papers, notice board, office pins and printing ink et al) – $5,000.
- The cost for store equipment (cash register, security, ventilation, signage) – $8,750.
- The cost for the purchase of furniture and gadgets (Fax machines, photocopy machine, telephone, printing machines, filling cabin, computers, tables and chairs et al) – $14,000.
- The cost of purchase and installation of CCTVs: $3,500.
- The cost for building and hosting a website: $600.
- The cost for opening party: $5,000.
- Miscellaneous: $5,000.
You will need an estimate of two hundred and fifty thousand dollars ($250,000) to successfully set up a medium scale but standard staffing agency in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a business with at least three staff members and more.
Starting a small scale but standard staffing agency business (from home, shared office space or virtual office space and with less than 3 employees in the United States of America will cost about five thousand dollars to fifteen thousand dollars ($5,000 to $15,000).
When it comes to starting a standard and large scale staffing agency with several offices and training centers in key cities in the United States of America, a staffing agency with the intention of selling franchise, then you should look towards budgeting well over one million, five hundred thousand dollars ($1.5 million).
Having said that, here are some of the factors that will influence the cost of opening a staffing agency in the United States of America;
Factors That Determine the Cost of Opening a Staffing Agency
1. The Type of Staffing Agency
A major factor that will determine the overall cost of opening a staffing agency in the United States of America is the type of staffing agency the owner of the business wants to start.
There are different types of staffing agencies such as Contract, Contract-to-hire, Temporary, Part-time, Full-time, GAP Staffing (Graphic Arts Professional) – executive staffing agency, maid and cleaners staffing agency, casual worker staffing agency and nursery recruiting, amongst others.
You will quite agree that the cost put into opening an executive staffing agency will be far different from the cost of opening a maid and cleaners agency. In the United States, some states require job-search-consulting firms to be licensed as employment agencies.
The fact that executive staffing agencies also provide training means that the cost of opening such business will be more.
2. The Choice of Location
Another major factor that will determine the cost of opening a staffing agency in the United States of America is the location.
In business, location is key part of what determine the success of the business. There are business consultants cum realtors who are specialized in helping people choose an ideal location for their business; a location that will guarantee them to profitability and to breakeven within the shortest time frame.
So, you will now agree that location can influence the cost of starting a staffing agency business. For example, renting or leasing a staffing agency office facility in a location that is off the city center or off employment hub will be less expensive when compared to renting or leasing an office facility in a business district.
3. The Required Licenses and Permits
In the United States of America, you cannot open staffing agency without first applying for the mandatory license and permits. Of course, you would need building license, zonal permits, and signage permits amongst others. As expected, these license and permits cost money and it will influence the overall cost of opening the business in the United States.
Please note that there may be several inspections you must pass before you can be issued your licenses and permits – this will also cost you money.
In order to get the overall cost of licensing and permits associated with opening a new staffing agency in the United States, we will advise that you reach out to your city government. You also need to consider state and federal requirements, so do your homework long before you set a date for the grand opening.
4. The Type of Facility
The type of facility you want to run your staffing agency business from is also a major factor that will determine the overall cost of opening the business.
As regards the facility, you have the options of renting, leasing or designing and constructing your own office facility from the scratch. With renting and leasing, you might just have to spend extra to modify the facility to fit into what you have in mind.
Let us assume that you want to construct your office facility from the scratch. It means that you will buy the land or a property, construct and equip the office facility to fit into the ideal picture of a staffing agency that you have in mind. With that, you will agree that you are going to spend way more when compared to people that rent or lease a facility. This indeed will greatly influence the overall cost of opening your staffing agency.
5. Additional Service Offerings
Another key factor that will determine the cost of opening and operating a staffing agency in the United States of America is the additional service offerings of the agency. There are different types of staffing agencies and these staffing agencies are designed to offer different services.
For example, the services offered by Contract, Contract-to-hire, Temporary, Part-time, Full-time, GAP Staffing (Graphic Arts Professional) are all different.
Full- time cum executive staffing agencies go beyond just hiring staff members for companies, but may also go ahead to training new employees. With that in mind, you will agree that they are expected spend more to set up their own agency.
6. The Number of Offices they Want to Start With
Another very important factor that determines the cost of opening a staffing agency in the United States of America is the number of offices they intend starting with.
No doubt, there are new businesses that start big with the aim of announcing their presence with a bang hence they may want to open two or more offices in different locations at the same time or within a short interval. Aside from the cost of renting or leasing office facilities in such situation, it will also cost you more to furnish and equip the offices.
7. The Cost of Hiring and Paying a Business Consultant and Attorney
As expected, if you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney. A business consultant will help with drafting a workable business plan document for the staffing agency, a marketing plan and strategy, comprehensive SWOT analysis, etc for the business.
An attorney on the other hand, will help you with registering the business, drafting contract documents and offering you all the legal expertise that will help you start the business on the right foundation. You will agree that these services will cost you money and it will indeed influence the overall cost of opening a staffing agency in the United States of America.
8. The Cost for Branding, Promotion and Marketing of the Staffing Agency
The cost for branding, promoting and marketing the staffing agency business is yet another key factor that will determine the overall cost of opening a staffing agency in the United States of America. Trust me, if you need massive results when it comes to winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing of your new staffing agency.
It is not cheap to come by an expert in branding, promotion and marketing that will help you compete with brands that are already determining the market direction in the industry in your city. So, if you add the cost of paying a branding and marketing expert, it will sure increase the cost of opening your staffing agency.
9. The Cost for Furnishing and Equipping the Staffing Agency Office and Training Facilities
Another factor that will determine the cost of opening a staffing agency is the cost of furnishing and equipping the office. You will quite agree that aside from the basic facilities that are expected to be found in an office, an investor may decide to spend more than expected to furnish office to look unique.
Also, before you can open a staffing agency, you should budget and buy training chairs and tables, projectors, flat screen TVs, sound system,
DVD players, Satellite dish and decoder, office furniture (table, stools and sofas), telephones, filing cabinets), office equipment (cash register, security and fire alarm and protection gadgets, CCTV, ventilation, signage), fire and fancy lightening amongst others. All these will cost money and it will influence the overall cost of opening your agency.
10. The Cost for Insurance
The cost for paying for insurance policy cover is yet another important factor that will determine the overall cost of opening a staffing agency in the United States of America. Interestingly, in the United States, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from.
Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your own staffing agency business.
11. The Cost for Registering the Business
The cost for registering the staffing agency business is yet another cost that will influence the overall cost of opening a staffing agency in the United States of America. Although, the cost of registering a business is affordable, it will no doubt add to the overall cost of opening a staffing agency in the United States of America.
12. Cost of Recruiting and Training Your Staff
The fact that you are opening your staffing agency as a new business means that you are expected to recruit and train your staff to conform to the kind of agency you want to operate. The training will help you sell the corporate culture of your organization to the new employees. As expected, it will cost you money to hire trainers that will help you train and bring your new hires up to speed.
13. The Cost for Grand Opening of the Staffing Agency
No staffing agency opens its door for business without first organizing an opening party to officially launch the business. This means that the cost of grand opening is part of the factors that will determine the overall cost of opening a staffing agency business in the United States of America.
You can choose to do a soft opening if you operate on a low budget or you can choose to go for grand opening party. The bottom line is that it is a cost that must be part of your budget and this cost will influence the overall cost of opening the staffing agency business.
Can a Staffing Agency be Bootstrapped on a Lean Budget Right from Home?
Staffing agency service business can indeed be bootstrapped on a lean budget right from home. This is possible because of the nature of the services offered by a staffing agency. In some cases, a staffing agency might not necessarily meet physically with an applicant and employer of labor before sealing a recruitment deal. The deal can be concluded via phone calls, emails and fax et al.
These are activities that can be carried out even in the bedroom. All you need to do to bootstrap your staffing agency on a lean budget from your home is to ensure that you create a small office space within your apartment and also make provision for business meetings venue outside your house. It could be a shared office space or a virtual office space.
How Much Does It Cost to Buy a Staffing Agency Franchise?
In the United States of America, the Average Cost of Purchasing a Staffing Agency Franchise is $35,000. Examples of 3 Well – Known Staffing Agency Franchising Companies in the United States of America are;
- PrideStaff Franchises
- AtWork Franchise
- Link Staffing Services Franchise
In Conclusion,
Please note that there are other factors not listed above that will sure influence the overall cost of opening your staffing agency business which is why we advise that you work with a result driven business consultant in your city to give you the needed guide and info as it relates to the unique factors in your location that will influence the overall cost of opening your staffing agency business.
Frequently Asked Questions
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What Are The Responsibilities Of A Staffing Agency?
The responsibilities of a staffing agency are as follows;
- A staffing agency can provide end-to-end staffing solutions to a business
- Understanding the workload needs of the company
- Determining the workforce required to meet the same
- Conducting interviews and shortlisting candidates
- Vetting potential candidates through background checks and employment history
- Drawing contracts and looking at legal issues
- Imparting training in case of gaps
- Follow-ups on the performance of the temp workers to see if the requirements are met
- So also, if the worker is not the right fit, then it’s the responsibility of the staffing agency to terminate the hire and compensate, as needed.
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What Is A Staffing Agency And What Does It Do?
A staffing agency is an agency that is responsible for helping organization recruit staff to fill vacant position in their organization and also help applicants/those in between jobs secure employment. They also offer a wide range of recruitment-related services, largely temporary and contract staffing.
Some staffing agencies offer services beyond just recruiting employees for its clients, but also help in training and preparing the employees to fit into the role that they are being recruited for. Usually, such staffing agencies charge more than those who just recruit employees for their clients.
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How Does A Staffing Agency Get Paid?
When it comes to getting paid, some staffing agencies charge their clients administrative fees so as to enable them process their application, match them with employers and successfully help in securing jobs.
In essence, staffing agencies make more money when they help organizations recruit highly skilled staff on a permanent basis.
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What Are The Benefits Of A Staffing Agency?
Here are some of the benefits of a staffing agency;
- Staffing agencies have specialists to identify the right talent.
- Staffing agencies maintain a talent pool.
- Staffing agencies can hire faster and more accurately.
- Staffing agencies offer tailor-made solutions.
- Staffing agencies let you focus solely on your growth.
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When Should You Opt For A Staffing Agency?
- You should opt for a staffing agency when you want to quickly fill a position in your organization
- You should opt for a staffing agency when you need tailor made solutions to your recruitment process in your organization.
- You should opt for a staffing agency when you are finding it difficult to access pool of talents to fit into your organization.
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What Can A Staffing Company Do For You?
A staffing agency is an organization that matches companies and job candidates. By registering with a staffing agency, you have the potential to make connections with multiple hiring managers looking to find the right people for their job openings.
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What Is It Like To Work For A Staffing Agency?
Working for a staffing agency can be exciting, challenging and of course rewarding.
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What Are The Different Types Of Staffing Agencies?
These agencies are divided into three categories namely (I) Line Agencies (II) Staff Agencies, and (III) Auxiliary Agencies, depending on the nature of work performed by them.
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What Are The Benefits Of Working With A Staffing Agency?
The benefits of working for a staffing agency are enormous and some of them are;
- You will be in a position of influence
- You will earn an above-average salary
- You will have the chance to change lives
- You will have the opportunity to meet with different people
- You can help develop the people around you.
- You will feel gratification from solving problems.
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What’s The Difference Between A Staffing Agency And A Temp Agency?
Even though temp agencies and staffing agencies offer temporary workers to their clients, but temp agencies only offer temporary work, staffing agencies focus on the long term needs of their clients as well as placing candidates in what can turn out to be full time employment with major corporations.
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How Much Does A Staffing Agency Charge?
Staffing agencies typically charge 25 percent to 100 percent of the hired employee’s wages. So, for example, if you and the staffing agency have agreed on a markup of 50 percent, and the new employee earns an hourly wage of $10, you will pay the agency $15 per hour for their work.
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What Kind Of Roles Do Staffing Or Placement Agencies Offer?
Staffing agencies help fill temporary positions, temp-to-hire positions and direct-hire positions.
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How Can A PEO Assist With Employee Training?
A PEO can assist you with employee training in a variety of ways. This might include giving your employees access to internet-based learning sites, offering custom training with an outside expert, or even creating new seminars just for your employees.
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What Is Contract Staffing And Permanent Staffing?
Contractual staffing refers to the recruitment of employees for short-term employment contracts as opposed to full-time permanent workers, while permanent staffing is the process of providing required candidates for long-term employment based on specified candidate factors.
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Should I Use A Temp Agency To Find A Job?
Working with a staffing agency to find your next career will only help you expand your options. Employers are using staffing agencies and you should be too.
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What Are PEO Companies And What Do You Do?
PEO stands for professional employer organization. This is how PEO works; once a client company contracts with a PEO, the PEO will then co-employ the client’s worksite employees. The PEO typically remits wages and withholdings of the worksite employees and reports, collects and deposits employment taxes with local, state and federal authorities.
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How Do Employees Benefit From A PEO Arrangement?
Through a PEO, the employees of small businesses gain access to big-business employee benefits such as: 401(k) plans; health, dental, life, and other insurance; dependent care; and other benefits they might not typically receive as employees of a small company.
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What Are The Benefits Of Using A Temp Agency?
- Reduced overhead costs.
- Reduced overtime pay.
- Save on training, time, and reduce hiring risks.
- Saves time and increases ROI.
- Access to talent networks.
- The ability to hire quickly
- Industry market knowledge
- The ability to try out an employee before extending a full-time offer
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How Long Can You Hire A Temporary Employee For?
A period of temporary employment should last no longer than one year and have a clearly specified end date. Federal law also dictates that you cannot hire the same temp employee for more than two consecutive years.
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Do You Have To Offer A Temporary Employee Benefits?
You don’t have to offer a temporary employee benefit. Please note that while it may not be a requirement to provide health insurance to your temporary and seasonal workers, you are still obligated to provide a safe and healthy work environment. You can offer them voluntary benefits which they can pay for at low group rates.
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What Is The Difference Between PEO And ASO?
PEO – stands for Professional Employer Organization. ASO – stands for Administrative Services Organization and the most important difference between an ASO and a PEO is that the service provided through an ASO does not establish a co-employer relationship.
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What Is The Difference Between A PEO And A Staffing Company?
Both staffing agencies and PEOs are focused on workforce HR tasks, but with a staffing agency you are outsourcing your hiring process and the associated tasks. With a PEO, you are doing the hiring on your own and only outsourcing the administrative tasks, payroll, and compliance associated with your workforce.
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How Much Do Agencies Take Off Your Wage?
Standard recruitment costs tend to range between 15 percent and 20 percent of a candidate’s first annual salary, but this can go as high as 30 percent for hard to fill positions.
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Can You Just Leave A Temp Job?
Some contracts stipulate a mandatory notice period you may have to work through before leaving your job. The temp agency representative may want to inform your current employer of your intention to leave, since you are still technically an employee of the agency.
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Is It Bad To Get A Job Through A Staffing Agency?
Staffing firms play a critical role in helping companies find talent. Unlike corporate recruiters, recruiters at staffing agencies have access to jobs at multiple companies covering a wide spectrum of industries and positions. If companies and your competition are using them, you should be too.
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What Are The Differences Between A PEO And A Broker?
Generally speaking, a health insurance broker is an expert at insurance, whereas a PEO can provide expertise and assistance in a number of HR and compliance issues, in addition to providing access to health coverage
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Should You Outsource HR Or Keep It Inside Your Business?
In my opinion, I will advise that you outsource HR as against keeping it inside, especially if you are just starting out. As a matter of fact, even the smallest companies can benefit from small business HR outsourcing. In reality, the smaller your business is, the more beneficial it is to outsource human resources.
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What Are Common Misconceptions About Staffing Agencies?
Here are the top five common misconceptions of staffing agencies.
- Temporary Work Only (With No Stability)
- Take a Cut From Your Pay
- Don’t Pay Well
- Low-Level Jobs
- Only Offer Jobs at Small Companies
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How Can You Get Out Of Temp Agency Contract?
If you found your current job through a temp agency, the first step you should take is to contact your agency representative and inform them of your decision to leave, especially if it is prior to the agreed date.