9 Proven Best Practices For Staffing Agencies To Grow Fast

So, there is a big market! When you’re just starting out, growth is going to come quickly. A new staffing firm should typically have a high rate of growth for the first one to three years. It’s reasonable to expect (conservatively) 20 percent annual growth in your first year or two, though in reality you should aim for much more.

While such a dramatic growth rate will level off after a few years, when you’re in the middle of growing your staffing agency, the last thing you want is to be unprepared to handle the growth you need for success.

Use the following nine tips to help prepare your growing staffing agency for rapid expansion.

1) Know your strengths: You might be a rock star at sales and recruiting, but maybe your mastery of payroll, accounting and back office operations needs work. Be honest with yourself about your strengths and weaknesses in staffing. Your staffing agency won’t be perfectly poised for growth from day one. Embrace introspection. Determine where you need to make improvements before your growth accelerates and those weaknesses start restricting your growth and profitability.

2) Stay focused on your market and know where you stand in it: Define the staffing market you wish to serve and identify its needs. Not every vertical in the staffing industry is equal: medical staffing, for instance, is vastly different from light industrial staffing. Make sure you have the resources and manpower to serve your target market. Unless you’re backed by a treasure trove of resources, it’s generally unwise take a carte blanche approach to your staffing business. You’ll need an incredible amount of resources to successfully recruit and place candidates in industries as varied as medical, industrial, manufacturing, accounting and IT.

Stay focused on the verticals where you’re best suited to understand your clients’ needs and recruit the right candidates to meet those needs.

3) Get expert advice, but follow your instincts: Network with successful staffing agency owners and executives. Talk to them about their struggles and successes in the staffing industry. Many will be happy to share their story and offer tips and lessons learned from traveling down a path similar to the one you are on. Also take advantage of classes, seminars, online discussion groups and other opportunities to get connected. Use resources like the American Staffing Association and Staffing Industry Analysts for high-level information. Get connected with local and state-level staffing agency associations and groups for more detailed advice tailored to your situation.

While you should get as much information as possible, don’t lose sight of your purpose and never forget why you’re doing what you are. Take what you’ve learned and incorporate it into your own plans to reach your own goals. Rather than taking advice blindly, use your instincts and your own expert knowledge. After all, no one knows your passion, your zeal or your business better than you do.

4) Get comfortable being uncomfortable: You’re going to see some scary stuff when you’re running a start-up staffing business. You might find yourself in a situation where you thought you had a customer lined up to put 25 contract workers on the clock every week — you’ve invested, you’ve hired, you’re ready to go — only to discover that your customer decided to go with another staffing agency or has decided to downsize.

Don’t panic when things don’t go according to plan. Evaluate what made the other company the more attractive option and make adjustments accordingly. You’re going to be uncomfortable a lot. Get used to it.

There are countless variables you cannot control, but you can certainly plan better. Keep your eyes open to changes taking place in your market so you can plan accordingly and avoid surprises.  

5) Don’t fall behind on revenue generation: Your staffing business can essentially be reduced to two components: parts that produce revenue and parts that don’t. In general, only sales and recruiting produce revenue in staffing. Consider the time and resources you’re devoting to non-revenue producing (but essential) functions like accounting, billing, HR and payroll.

Ask yourself what can be done to ensure that you’re spending as few resources on non-revenue-producing functions as necessary. If you, as the agency owner, spend more than 10 or 15 percent of your time handling issues that have nothing to do with growing your business, it’s time to take a step back and reevaluate how you’re operating.

6) Develop useful business alliances: Try to form partnerships that offer a tacit mutual benefit. This might mean partnering with a factoring company to help ensure you have funds to make payroll each week, or outsourcing your payroll to a payroll services provider. (The latter should be a serious consideration for any start-up staffing agency; payroll in the staffing industry is extraordinarily complicated and there’s a lot at risk if you make a mistake.)

Believe it or not, companies that you consider as competitors may prove to be useful business partners. Envision a scenario where your client asks for 50 light industrial workers one week. If you’re only able to supply 25, consider reaching out to another staffing agency in your market to see if it can supply the remaining 25 people. You’ll obviously need to pay the competing agency a fee for its people, but your client doesn't need to know that you’ve outsourced some of your own labor. If you’re making your client happy, it’s good for your business. Plus, extending yourself out to a competitor may prove useful later if the agency finds itself in a situation similar to yours.

Another benefit from getting to know other staffing agencies in your region is that if a client asks you to provide something you’re unable to do, you’ll have a place to turn to for support. If you supply clerical staff for a client and one day you’re asked to start sending them IT workers too, it’s better to have a solution rather than an apology.

7) Track (and respond to) growth-related metrics: Establish metrics that measure growth, profitability, customer and employee retention, market penetration and any other element that’s important to your market. Next — critically — monitor these metrics! Far too many staffing agencies establish metrics but then don’t follow through with tracking them. There’s no sense in leaving useful data on the table. Track your metrics, learn from them and make data-driven adjustments to fuel your staffing agency’s growth.

One important metric to track in the staffing industry is worker groupings (i.e., jobs with similar risks, skills, etc.). Your staffing software should be able to break down these groupings and show you profitability for every grouping. For instance, you should be able to see the profitability of your packers, assembly line workers and forklift operators as one grouping. Having this visibility provides more insight into where you’re making (or losing) money and gives indications on what you could do to improve growth and profitability.

Other metrics to track include:

• Turnover ratio

• Average engagement length

• Placement ratio

• Number of candidate interviews per filled job

• New customers per quarter

8) Focus on providing value, not candidates: Access to labor isn’t the reason your customers work with you. Finding people who want to work isn’t hard. But finding qualified, effective labor quickly, efficiently and consistently is another story. This is where your staffing agency plays a role.

The American Staffing Association’s infographic explains some of the key reasons why companies hire staffing agencies:

When you’re providing value — not just bodies — your clients will recognize it. Don’t make them do due diligence; do that yourself. Vet your candidates thoroughly (don’t just pass the resume) and make sure they not only have the skills the job demands, but that they’re also a cultural fit for your client’s workplace. This means putting in some legwork, spending time at customers’ locations, really getting to know your clients’ organizational culture and learning which kind of people they need to operate effectively.

9) Leverage technology mindfully: Avoid the risk of creating silos and other operational barriers that hurt productivity and impact your ability to run an efficient staffing agency. Make sure you’re using the right tools to get the job done. Get good staffing software to help you manage your front office and back office as an integrated whole. If you’re stuck entering the same data multiple times into disparate systems, you’re just wasting time and risk making needless errors.

Smart staffing software is able to scale with you as your agency grows. You don’t want to be stuck having to research, buy and implement a whole new staffing software platform because you’ve grown beyond the scope of your current software’s capabilities. 

As your staffing agency grows, ensure you’re using tools that can grow with you along the way.

Before you decide on a staffing software platform, take the time to get a clear assessment of what your company needs. You need to know what you’re looking for before you start your search. If you don’t have specific objectives about what you need your staffing software to do, it’s easy to get dazzled by nice (but superfluous) features. A software package with lots of bells and whistles is nice, but if those features don’t align with your objectives, you’ll never end up using them.

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