How to Start a Temp Recruitment Agency? 

by Maisie

Excerpt: If you are an entrepreneur interested in pairing businesses that seek candidates for their company’s vacancy with talented employees, you may consider creating and operating a temp recruitment agency. Here is the guide to help you with the same.

In America, total recruitment revenue is $152 billion, and temp staffing agencies contribute 89% of the total revenue. 20% of recruiters believe that schedule flexibility is the primary reason for the growth of temp recruitment agencies.

These agencies are responsible for recruiting talents on behalf of their clients for a specific project or length of time where temp employees work without fully committing to the long-term benefits and salary as regular employees.

These kinds of agencies include three forms of possible talent acquisition:

  • Temporary Employment (Possibly for a single day)
  • Direct Hire (For the immediate full-time placements)
  • Temp-to-full-time: It involves delivering employees temporarily who may be hired as full-time employees after a certain trial period.

While some temp recruitment agencies provide only some of these services, others may offer all. As the industry evolves, these agencies have equipped themselves with new recruitment technologies, embraced the hybrid working model, etc., like any other large firms.

This article will help you get a better insight into the definition, benefits, and steps to starting a temp recruitment agency.

What is a Temp Recruitment Agency?

Temp Recruitment Agencies specializes in hiring short-term employees for businesses. They create job postings, assess candidates, shortlist the qualified ones and pair them with the clients for the final hiring decision.

This type of hiring is common in event settings, project-based contracts, etc., where a sustained relationship between employee and client is not necessary.

These agencies charge higher fees than what clients pay the employees, usually per hour. The difference in hourly pay determines their profit margin.

Here are some needs a temp agency may fulfill:

  • Seasonal Hiring: This kind of hiring is mainly done for catering or events when companies require a little extra labor during their busiest weeks, like the holiday season.
  • Hiring by skill set or experience: While most temp agencies work with entry-level job candidates, some specialize in hiring candidates with extensive work experience. These short-term, highly committed positions are most difficult to fill.
  • Opportunities as per schedule: These agencies are ideal for candidates who need to work for specific time schedules, be it nights, weekends, or holidays to earn some extra money.

Here are some facts to know about temp recruitment agencies:

  • Temp agencies charge employers, not employees, which means most temp employees have similar pay rates and work benefits.
  • Candidates are employed by the agency and not the client’s company. So if there is any offer along with payment, it comes from the agency, not the employer.
  • Signing up with a temp agency doesn’t guarantee a job opportunity.

Benefits of a Temp Recruitment Agency

Here are three benefits of temp agencies that tempt clients to pay extra money signing a contract with them rather than recruiting talents on their own:

  1. Less Administration: Temp recruitment agencies relieve clients from the lengthy hiring process and efforts, labor, time, money, etc., required for recruiting candidates. They take on the hiring responsibilities that usually involve sourcing, training, and managing temp employees.
  2. Flexibility: Companies often undergo constant changes in their employment needs making it difficult to manage staffing levels appropriately. Temp agencies provide clients the flexibility to onboard candidates according to their needs anytime.
  3. Expertise: Temp agencies have a large talent pool and network that allows them to hire quality candidates for a short time.

10 Steps Guide to Start a Temp Recruitment Agency

1. Plan Out Your Business

The first step to establishing a temp recruitment agency is developing a clear plan. You must consider answering the following questions:

  • What will be the overall cost for setting up a temp agency?
  • Who will be your target audience?
  • What will be the name of your business?
  • How much profit margin do you expect?

Cost: Whether you work remotely or from an office, you will need an entire setup to kickstart your temp agency. From open space to Recruitment software, you will need money for investments.

Target Market: You will need a particular niche to start working in. According to your chosen niche, you will research your clients and build a talent pool.

Charges: Your profit margin may range from ten dollars per hour to several thousand according to the market competition and business location.

Business Name: Naming your agency is an essential but challenging task. This name will define your brand. You must check your business name in all these places before registering it:

  • State’s business records
  • Trademark records
  • Social Media platforms
  • Web domain listings

2. Form a Legal Entity

Forming a legal business entity protects business owners from being held liable if their agency runs into any trouble. Limited Liability Company (LLC), Corporation, Partnership, and Sole Proprietorship are the most common business structures.

3. Register for Taxes

Opening a business requires registering for various state and federal taxes. Depending on your business structure, you will have different taxing options. You must do proper research on all the business and state taxes that may apply to your temp agency.

4. Open a Business Bank Account

A business bank account and a credit card are necessary for personal asset protection. Building a business credit may help you get financing in your business’s name and better interest rates.

5. Set Up Business Accounting

Recording your expenses and income statement is critical for understanding your business’s financial performance. It can also simplify your annual tax filing.

6. Obtain Necessary Licenses

You will need the correct state permits and licenses to run a temp recruitment agency without causing your business to shut down. Also, you will need a Certificate of Occupancy if you plan to purchase or lease office space.

7. Get Business Insurance

Your temp agency will require an insurance plan to operate safely. Business insurance protects a company’s financial well-being in case of unexpected mishaps.

There are many different insurance policies made for different kinds of risks associated with the business. You should begin with General Liability Insurance if you are unsure of any other options.

8. Define Your Recruitment Brand

Your recruitment brand will define how your agency will be perceived in the marketplace. Have a proper name and logo for your agency and promote it on relevant social media platforms.

A robust online presence will boost your agency’s reputation and help you stand out from competitors. Use a presentation maker to get all of this together for your team.

9. Create a Website

Having an SEO-optimized website will give authenticity to your business. While social media can help in the marketing and promotion of your brand, it can not be a replacement for a website.

Nowadays, making a website is very quick, and you don’t need to hire a professional web developer. Utilize technology to build one quickly.

10. Set Up Your Business Phone System

This is a very crucial step in separating your personal and professional lives. It will also help you automate your business, boost its credibility, and makes it easier for your clients to contact you.

On a Final Note

Ten steps mentioned in the article will help you start your temp recruitment agency, but operating it successfully is the most challenging part. Having a prior experience as a recruiter or an employee in any staffing firm may be advantageous for you.

Some tips to improve the efficiency of your temp recruitment agency are:

  • Automate your agency using the right recruitment software and tools like Applicant Tracking System, CRM, resume parsers, etc.
  • Hire a team and divide the tasks among all the members based on their expertise. 
  • Define your niche and stick to it.
  • Keep an eye on the actions of your competitors
  • Focus on building a strong employer branding
  • Be active on Social Media
  • Safeguard your business legally. Take help from a legal professional to select the best policies and terms.
  • Track necessary metrics and improve accordingly.

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