How to Start a Staffing Services Business

Target Market

Finding Your Niche

Traditionally, staffing services have operated in all sectors of employment. Increasingly, however, staffing services operate within a niche market. The many specializations that exist today make the staffing industry much more complex, as well as far more interesting, than it has ever been before.

As you think about niche possibilities, you should consider each of the following factors:

  • Local supply and demand. Staffing services need both temporary employees and clients to survive. Before you choose your niche, make sure you know the types of jobs available in your area and the potential labor supply. For example, if there are 10 factories in your town, don't rule out industrial placements. And every owner we talked to does some business in the office and clerical sector. Because this sector accounts for more than 30 percent of the industry, chances are good that virtually every staffing service will place office personnel, even if the major placement emphasis is elsewhere.
  • Be aware of niches within a sector. For example, if you decide to focus on office and clerical positions, you'll find it's possible to specialize even further. Some staffing firms focus on providing midlevel administrative support staff to Fortune 500 companies. Rita Z. found that specializing in light industrial work was a natural choice for her company.
  • Experience. If you have a background in a particular field, this can be an advantage in several different ways. Not only will you be able to better assess applicants for jobs in that field, but your experience can also lend credibility to your staffing service. And you may feel more comfortable serving an industry with which you are familiar. For example, since Dyana V. is a lawyer, the legal staffing sector was a natural niche for her. Of course, familiarity and a high comfort level won't help if you can't find enough clients and employees, so you still need to do your market research.
  • Economic feasibility. Sometimes a market niche that might be a natural choice given an entrepreneur's background isn't possible for financial reasons. For example, in spite of her medical background, One former owner chose not to open a medical staffing service fue to its steep start-up costs. It can also be difficult to get hospitals, nursing homes and other medical institutions to pay in a timely manner, so that owner went into higher-end clerical staffing instead.

 

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