By As companies continue to embrace flexibility in hiring, the demand for staffing solutions is booming. From healthcare to IT, businesses need temporary, contract, and full-time talent—fast.
If you’ve got recruitment experience, strong networking skills, or a passion for connecting people with jobs, starting a staffing agency in 2025 can be a highly profitable and scalable venture.
In this guide, we’ll walk you through:
- What a staffing agency is and how it works
- Types of staffing agencies you can start
- Steps to launch and grow your business
- Legal, financial, and marketing considerations
- Tools to streamline your operations
What Is a Staffing Agency?
A staffing agency, also known as an employment agency or temp agency, connects employers with job seekers. Agencies are paid by companies to find and place talent for:
- Temporary jobs
- Contract assignments
- Temp-to-hire roles
- Direct hire (permanent) positions
How Staffing Agencies Make Money:
- Hourly markup: You bill the client more than the worker’s wage.
- Placement fee: One-time fee based on the hire’s salary (usually 15–25%).
- Retainer fee: Prepaid agreement for executive search or ongoing hiring.
Types of Staffing Agencies to Start
| Type | Description |
| General staffing | Office, retail, light industrial roles |
| Niche/specialized | Healthcare, IT, finance, engineering, etc. |
| Executive search | C-suite and senior-level placements |
| Temp agency | Short-term or seasonal placements |
| Remote/work-from-home | Virtual staffing and gig economy focus |
Choose a niche based on your experience, local market demand, or industry connections.
Steps to Start a Staffing Agency
Step 1: Conduct Market Research
- Identify industries in need of staffing solutions
- Research competitors in your area or niche
- Analyze hiring trends and job board data
Step 2: Choose a Legal Business Structure
- Sole proprietorship
- LLC (recommended for liability protection)
- S Corporation or C Corporation
Register your business name and apply for an EIN (Employer Identification Number).
Step 3: Get Required Licenses and Insurance
Depending on your location and niche, you may need:
- Staffing agency license
- State employment agency license
- General liability and workers’ comp insurance
- Professional liability (errors & omissions) coverage
Tip: Contact your state’s Department of Labor or Business Services to ensure compliance.
Step 4: Set Up Business Operations
Key Elements to Establish:
- Business bank account
- Accounting software (QuickBooks, Xero)
- CRM and applicant tracking system (ATS)
- Contracts and service agreements
- Payroll system (if hiring W-2 employees)
Popular ATS/CRM tools for staffing:
- Bullhorn
- JobAdder
- CEIPAL
- Zoho Recruit
- Workable
Step 5: Decide on Your Staffing Model
| Model | How It Works |
| W-2 model | You employ temp workers and handle payroll/taxes |
| 1099/contractor model | You place independent contractors (common in IT, freelance) |
| Direct-hire model | You find candidates for full-time roles and charge a fee |
Choose based on your niche and legal requirements.
Step 6: Build Your Brand and Online Presence
Create a professional, SEO-optimized website that includes:
- Services offered
- Industries/niches served
- Client testimonials
- Job seeker resources
- “Submit resume” and “Hire talent” forms
Invest in branding:
- Logo and business cards
- Branded email domain
- LinkedIn company page
Use SEO keywords like:
- “Staffing agency in [Your City]”
- “Healthcare staffing services”
- “Temp jobs near me”
- “Hire IT contractors in [City]”
Step 7: Set Your Pricing and Markup Rates
General Pricing Models:
- Temp Staffing: 30–60% markup on hourly wage
- Direct Hire: 15–25% of the candidate’s annual salary
- Retained Search: Fixed fee or monthly retainer + success fee
Factor in:
- Payroll taxes
- Insurance
- Overhead
- Profit margin
Example:
If you pay a warehouse worker $18/hour, you might charge the client $27/hour (50% markup).
Step 8: Find Clients and Build Your Talent Pool
To Attract Clients:
- Cold outreach via LinkedIn or email
- Attend networking events and trade shows
- Run Google Ads or LinkedIn ads
- Partner with local chambers of commerce
- Offer a free hiring consultation or trial
To Find Candidates:
- Post on job boards (Indeed, ZipRecruiter, Monster)
- Build referral programs
- Use LinkedIn Recruiter
- Connect with local training programs or colleges
- Offer resume help and job readiness resources
Step 9: Automate and Streamline Operations
Automate repetitive tasks like:
- Interview scheduling
- Resume screening
- Email follow-ups
- Timesheet approvals
- Payroll processing
Tools to Consider:
- Calendly for interview booking
- Docusign or PandaDoc for contracts
- Gusto or ADP for payroll
- HubSpot for CRM/email automation
Step 10: Scale Your Staffing Agency
Once you’ve landed a few clients and candidates, focus on:
- Hiring internal recruiters or account managers
- Expanding to new industries or cities
- Offering value-added services (HR consulting, training, background checks)
Set KPIs:
- Fill rate
- Time-to-hire
- Client satisfaction
- Retention rate
Track these metrics to optimize and grow your agency.
Common Mistakes to Avoid When Starting a Staffing Agency
| Mistake | Why It’s a Problem |
| Underpricing services | Hurts your profit and brand image |
| Skipping legal compliance | Can lead to fines, lawsuits, or shutdowns |
| Lack of client contracts | You need clear terms and payment agreements |
| Poor candidate vetting | Results in client dissatisfaction |
| No digital marketing strategy | Limits visibility and inbound leads |
Conclusion
Starting a staffing agency can be one of the most rewarding business ventures—especially as demand for flexible, skilled workers continues to grow in 2025 and beyond.
With the right niche, tools, legal setup, and marketing strategy, you can:
- Connect top talent with top companies
- Generate consistent revenue through placements
- Scale your agency into a valuable, long-term business
Your next step: Pick your niche, register your business, and start building relationships with clients and candidates.
FAQs
1. Do I need a license to start a staffing agency?
In many states, yes—especially for temporary or healthcare staffing. Check with your local labor department.
2. How much does it cost to start a staffing agency?
Startup costs range from $5,000 to $25,000, depending on your niche, software, and location.
3. How do staffing agencies make money?
Through hourly markups, placement fees, or retainers. Agencies charge clients more than they pay employees.
4. Can I run a staffing agency from home?
Yes! Many agencies start remotely with cloud-based tools and virtual meetings.
5. How long does it take to get your first client?
It varies—some agencies get a client in weeks; others take 3–6 months. Consistent outreach is key.
Also read: A Business Owner Gets a Business Up and Running: Step-by-Step Guide to Launch Successfully
