How to Start a Staffing Agency (Step-by-Step Guide)

Starting a staffing agency can be a smart and strategic move, but it takes more than just a good idea.

Before you dive in, you need a clear plan.

In this guide, we’ll walk you through everything you need to know about starting your own staffing business. 

What is a Staffing Agency?

A staffing agency helps businesses hire workers and manages more than just the recruitment process. Unlike recruitment agencies, which focus on matching candidates to employers, staffing firms handle the entire employment lifecycle, from sourcing and onboarding to payroll, benefits, and even termination.

They’re great at filling temporary or contract roles, but may also help place permanent employees. The agency is responsible for issuing paychecks and benefits, while the business determines the length of the job.

Businesses rely on staffing agencies to speed up hiring and reduce HR overhead. Job seekers use staffing agencies to find flexible, temporary, or full-time work.

Create Your Business Plan

Your business plan should outline what you do, who you serve, how you operate, and how you’ll grow. Here are the steps to build one: 

Before you dive in, take a step back and ask yourself:

1. Who needs staffing help in my area?
2. What kind of jobs are in demand?
3. What are other staffing agencies doing? 
4. Where are the gaps?

Now, choose your niche. Maybe it’s hospitality, construction, healthcare, or office work. When you focus on one specific area it’s easier to stand out, build credibility, and become the go-to expert. 

Need help choosing? Try this:

• Play to your strengths: If you already have experience, knowledge, or contacts in a field, start there.
• Look at demand: Check local job boards to see what industries are always hiring.
• Find the gaps: Are there jobs that always seem unfilled or ones other agencies overlook? That’s your opportunity.
• Drill down: Be as specific as possible, going beyond “admin roles” and finding specialized roles like “entry-level office support” or “office operations assistants”.

To-Do List:

• Explore local job boards
• Ask around in your network
• Consider the value you can bring to both clients and job seekers

Remember: candidates are shopping around. Make sure your agency offers something they won’t find anywhere else.

Decide what types of services your staffing agency will offer, and which industries you’ll serve.  Your business model lays out how you’ll operate (remote or in-house?) and how your business will generate revenue.

Choose your service offerings:

• Temporary staffing: You place workers in short-term roles, like seasonal contracts, busy periods, or projects. 
• Temp-to-perm: You staff candidates in temporary roles with the option to become full-time if the fit is right.
• Permanent placement: You recruit for companies seeking long-term hires. Usually, the agency earns a fee when the company hires your candidate. 
• Contract staffing: You focus on staffing specific projects or freelance jobs, common in spaces like IT, marketing, or healthcare. 

What does payment look like:

• Hourly markup: You charge clients a higher rate than what you pay your workers, and you keep the difference as your profit.
• Placement fee: You charge a one-time fee, based on a percentage of the employee’s salary, when a client makes a hire. 
• Retainer model: Clients pay you upfront to recruit candidates, regardless of whether or not they make a hire.
• Subscription or flat fee: You offer monthly hiring support for a fixed monthly rate.

The startup costs for your staffing agency can range anywhere from $18,500 to $92,000, depending on your setup and location. For example, the cost of setting up a remote agency looks pretty different from an in-person firm. Here are some areas (and their costs) to consider:

• Office space ($5,000 – $30,000 annually)
• Utilities and overhead ($2,000 – $6,000 annually)
• Legal and registration ($500 – $2,000 initially)
• Payroll and HR software ($2,000 – $5,000 annually)
• Office equipment and supplies ($1,000 – $5,000 initially)
• Employee salaries ($5,000 – $20,000 initially)
• Business and liability insurance ($1,000 – $4,000 annually)
• Marketing and branding expenses ($2,000 – $20,000)

To Do List:

• Research local rent and salary ranges
• Look into software costs
• Reach out to an insurance agent 

You’ll need to work on a marketing plan in order to attract both talent and clients. This is essential, because job seekers are the core of your service. Without them, there’s nothing to offer business clients. Here’s where to start:

• Define your target market: Get specific about who you’re marketing to. Think about industries, locations, and job levels.
• Build your brand: Set your agency apart from the competition with a unique logo, tone, colors, or visuals. 
• Set your goals: Define what you want to achieve through your marketing strategy. Research the industry to set reasonable objectives.
• Choose your channels: How do you want to get the word out about your business? Will you go for digital channels (social media, Google, email campaigns) or advertise locally at job fairs, post flyers, or make cold calls. 
• Track your results: Monitor your marketing efforts to see what’s working and what still has room for improvement. Use the data to inform your steps going forward.

To Do List:

• Check where candidates are looking for jobs and start there
• Create a positioning statement: We offer [your service] for [your target market] to [value proposition]

How are you going to run your business? Your operational plan lays out how you’ll manage your day-to-day so your team knows what to do and how to do it. Here’s what to think about:

Build your team structure

Who will do what? Are you going to start your agency on your own, or do you want to hire a small team upfront? What are the key roles you might need, like recruiters, account managers, or administrative staff?

Find the right software

Getting organized from the start will make your business (and your life) easier to handle and scale down the line. Start off by using the right tools, including:

• Applicant Tracking System (ATS): This acts as a candidate database and helps you manage the hiring process and track applicants. 
• Customer Relationship Management (CRM): This helps you manage and communicate with existing and potential clients.
• Payroll software: This is how you’ll handle payments and track your spend. 
• Time tracking and staff scheduling: Platforms like Connecteam make it easy to track employee hours, build schedules, and manage shifts in one platform. 
• Internal communication: Make sure you can communicate clearly and effectively with your team. Tools like Connecteam offer an online team chat to keep everyone aligned and connected throughout the day. 

Establish workflows

Think through what your key tasks should look like. Write down processes for finding and onboarding candidates, handling client job orders, reporting progress, etc. Have everything documented so you have something to reference as your agency grows. 

No matter where you establish your staffing agency, you’ll need to get certain licenses and permits to become a legal business entity, including:

• Employer Identification Number (EIN): Once you register your business, you’ll need to apply for an EIN. Also known as a Federal Identification Number, this 9-digit number is assigned by the IRS and used to identify your specific business. 
• Local business license: Staffing agencies don’t require federal business licenses, but you will probably need one from your city or county.
• Employment Agency License: 24 states currently require staffing agencies to obtain an Employment Agency License, which legally allows businesses to find employment for job seekers.

To Do List

• Check your city’s licensing office to learn what paperwork you need
• Visit the U.S. SBA website to confirm registration requirements

Start thinking about a name for your staffing agency. Your business name should represent your values, stand out, and appeal to your niche target market. Here are a few types of names to consider:

• Descriptive: These names are clear and leave little room for misinterpretation (Pizza Hut or Bed Bath & Beyond).
• Acronyms: Create a clear business name and represent it with just its initials (UPS or GEICO).
• Geographical: Tie your business to a location to make it feel local (California Pizza Kitchen or KFC).
• Founder-based: Name your business after yourself to make it personal and build a legacy (Hilton or Disney).

To Do List

• Brainstorm a few names and run them by a trusted test audience
• Use a free tool to help inspire name ideas. Try: Looka or NameSnack 
• Check that your name is available with the USPTO

Launch Your Staffing Agency

You’ve done the prep work, and now it’s time to take action. Use your research and groundwork to start building your business. Here’s what you need to do next:

Once you have a business name, you need a website. It’s often the first impression your clients and candidates will have of your business. It should explain what your business does, who you serve, and how to get in touch. Your website should be easy to navigate and reflect your brand.

The first thing you should do is check domain availability as you choose your business name, so you can make sure they match.

Then, either hire a web designer or find a website builder to easily customize templates and create a professional site for your staffing agency. Here are a few to try: 

• Wix
• Squarespace
• Durable
• Elementor

To Do List

• Set your website budget
• Register a custom domain name
• Find a DIY website builder or hire a designer
• Add contact information and explain what you do

Business insurance protects you and your business from unexpected liabilities. Your location and niche will impact what types you’ll need, but a few common options include: 

• General liability 
• Professional liability
• Worker’s comp
• Business owner’s policy
• Employment practices liability
• Property or equipment coverage

To Do List

• Contact a few insurance agents for quotes

A business bank account helps keep your finances legal and manageable. It separates your business transactions from your personal ones, which prevents confusion and unnecessary compliance issues. When all your business expenses are in one place, it’s easier to track spending, prepare reports, and keep records clean for audits.

It also helps you establish business credit. With solid credit, it’s easier to qualify for low-interest loans, which you might need when you’re ready to scale. In addition, banks often offer extra perks for business accounts, like merchant services, overdraft protection, business credit cards, and affordable financing options.

To Do List

• Research banks in your area and compare what they offer to businesses
• Visit in person or call different banks to ask about account options, fees, and support

If you’re starting a business, chances are you’ll be running the business alone for a while. But once your agency starts to grow, you’ll need a team to help scale your operations. Here are few roles that will help your business succeed:

• Business Development Manager: Finds leads, builds relationships with clients, and secures staffing contracts.
• Recruitment Manager: Oversees the entire recruitment process, including finding candidates, conducting interviews, and finalizing placements. 
• Recruiting Coordinators: Supports Recruitment Manager, assisting with candidate sourcing, screening, scheduling interviews, and candidate communication.
• HR Specialist: Manages compliance with internal policies, employment laws, employee benefits, and payroll. 
• Operations Manager: Handles daily systems of the agency, including administrative tasks, resource management, and process improvement.
• Marketing Specialist: Promotes your agency’s services, increases brand awareness, and attracts both clients and candidates. 
• Finance or Accounting Specialist: Manages budgeting, bookkeeping, payroll, and taxes to keep your business financially healthy.
• IT Specialist: Handles the agency’s software and tools, security, and troubleshooting.

To Do List

Decide which roles you need filled now and which can wait
Write clear job descriptions and post them on job boards, LinkedIn, or Indeed
Look for team members with experience at staffing agencies

With everything in place, it’s time to open your doors and start reaching out to potential clients. Long-term partnerships are great for ongoing work and can lead to referrals down the line. 

When a client brings you on to fill a role, post it to job boards and get the word out right away. Reach out to potential candidates on LinkedIn and go through your network. Remember: you never know who knows who. 

Keep in mind that companies usually work with a few staffing agencies. If you’re the one who fills positions quickly and consistently, your client will want to come back to you again and again. 

How Do Staffing Agencies Make Money?

Staffing agencies make money by charging businesses for finding and placing employees. This saves companies time, administrative and HR costs, and job board fees.

Once an agency matches a job seeker with an employer, the employer typically pays a placement fee. The agency may also earn a percentage from the employee’s hourly rate. 

Fees vary, depending on location, industry, and demand. Hard-to-staff roles might have higher profit margins for staffing companies than oversaturated markets. 

How Much Money Does it Cost to Start a Staffing Agency?

Startup costs range from $18,500 to $92,000. It depends on your location, office setup, team size, and service model. 

Leasing office space, hiring staff, and investing in the right software and marketing tools all add up. If you need help funding the startup costs, consider a small business loan or Small Business Administration financing. 

The Bottom Line on Starting a Staffing Company

Launching a staffing agency takes more than ambition—it requires a clear plan, the right tools, and a strong understanding of your market. By choosing a niche, defining your business model, building reliable operations, and marketing effectively, you’ll set yourself up to compete and grow.

The demand for flexible staffing solutions is only increasing as businesses look for faster, smarter ways to hire. That means there’s real opportunity for new agencies that can deliver quality candidates and strong client relationships.

To scale successfully, you also need to keep your internal team organized. With Connecteam’s all-in-one platform, you can schedule staff, track time, manage payroll workflows, and streamline communication—so you spend less time juggling operations and more time growing your client base.

With persistence, organization, and the right systems, you can build a profitable staffing agency that meets today’s workforce needs and thrives for the long term.

Try Connecteam for free today

FAQs

Is owning a staffing agency profitable?

Yes, staffing agencies can be very profitable, especially in specialized industries. Profit depends on a staffing agency’s niche, location, and efficiency. 

How to start a staffing agency from scratch?

Start by researching your market, choosing a niche, and creating a business plan. Register your business and start developing your client base.

How do staffing agencies get clients?

Agencies get clients through networking, referrals, marketing, and targeted outreach. Tools like Connecteam make it easy to communicate and stay organized as your agency grows.