How to Start a Staffing Services Business

If there's one thing that can give any business owner a headache, it's staffing. Soothe your clients' pain by finding and placing the best employees for their needs.
How to Start a Staffing Services Business
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This is a good time to be in the staffing industry. Despite the 2000-2002 economic downturn, the industry is picking up steam again, and future prospects are bright. In the first quarter of 2003, U.S. sales of temporary and contract staffing services rose 5 percent, to $13.1 billion, according to the American Staffing Association (ASA). That marked the third consecutive quarter of growth after six straight declining quarters.

The personnel supply services sector, which includes the staffing industry, is projected to grow rapidly over the rest of the decade as the economy expands. In fact, the U.S. Bureau of Labor Statistics (BLS) predicts that more jobs will be created in personnel supply services than in any other industry over the next few years. Further, BLS forecasts that personnel supply services will be the fifth fastest-growing industry through 2010.

Broadly speaking, staffing services are all of the following:

  • Employers. Staffing services take on qualified candidates as employees. Such services not only pay their employees, but also withhold income tax and pay workers' compensation, disability and unemployment insurance.
  • Businesses. All companies have clients and products. In the staffing industry, clients are the companies that contract for labor or expertise, and the product is that very labor or expertise. As with any corporation, staffing services are in business to make money, which they do either by adding their markup to all labor charges or by charging clients a finder's fee.
  • Contractors. Temporary help and staffing services provide business organizations with employees for positions in all sectors of employment, from industrial to clerical to professional. In other words, staffing services match employees to client companies.

Types Of Staffing Services

Now that you know, in the very broadest sense, what a staffing service is, let's discuss the different types. Here they are:

  • Temporary staffing services make up the largest chunk of the staffing industry and are the type of service we discuss most in this guide. Temporary staffing services supply client companies with workers on a short-term basis, either to fill in for absent employees or to supplement existing staff during particularly busy times.
  • Long-term staffing services, also known as "facilities staffing," specialize in placing employees in long-term assignments, for indefinite periods of time. Project-related assignments, such as those found in the professional and technical sectors, often require long-term staffing.
  • Temp-to-perm staffing services are often combined with a temporary staffing service. A temp-to-perm staffing service offers clients a chance to try out a worker on a temporary basis and to hire that worker later if the client wishes to do so.

Although it's important to understand the distinctions between these types of staffing services, keep in mind that the lines between them have become indistinct and, in fact, have nearly disappeared. Many services do all these types of staffing.

What's Inside

Staffing Service Sectors

The industry gets even more interesting when you examine the different sectors within it. The staffing services industry is divided into the following sectors:

  • Office and clerical. Accounts for roughly one-third of the staffing industry's revenue and payroll. It covers secretaries, general office clerks, receptionists, administrative assistants, etc.
  • Industrial. Currently, it accounts for one-third of the staffing industry's revenue and payroll and includes the following positions: manual laborer, food handler, cleaners, assemblers, drivers, tradesmen, maintenance workers, etc.
  • Professional/Technical. This combined sector used to be broken into several smaller divisions, including professional, technical, health care and marketing. All these areas have been growing, thanks to shifts in the market as more people with higher skill and education levels look for the flexibility provided by temporary and contract work, and as the demand for these people increases. As in the first two sectors, the professional/technical area now accounts for about one-third of industry revenue and payroll. It covers a wide range of positions, including engineers, scientists, lab technicians, architects, technical writers and illustrators, draftsmen, physicians, dentists, nurss, hygienists, medical technicians, therapists, home health aides, custodial care workers, accountants, bookkeepers, attorneys, paralegals, middle and senior managers, and advertising and marketing executives.


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