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Home » Starting a Staffing Company: 5 Mistakes Startup Staffing Agencies Should Avoid

Starting a Staffing Company: 5 Mistakes Startup Staffing Agencies Should Avoid

Phil Cohen

Making mistakes is a natural part of any new experience, and doubly so when forming your startup staffing agency. The sheer volume of details to address, combined with the time, energy, and money you have invested in building a successful company, guarantee that you will let some things slip through the cracks.

Some mistakes have a much larger impact on your staffing business than others. These are the five most common issues you should try to avoid to save your startup company.

  • Pricing yourself out of business
  • Over-hiring
  • Limiting your client base
  • Failing to listen to clients
  • Losing focus

Detailed below is advice to avoid these mistakes and protect the well being of your startup.

Five Mistakes to Avoid to Save your Startup Staffing Agency

Pricing yourself out of business

The wrong price will put you out of business before the ink is dry on your business cards. Research the pricing in your location and for your industry, and then take a step back. Setting a low price to undercut your competition may work in the short run, but it is not a viable business strategy. You will inevitably have to raise your prices to stay afloat, and your clients – already accustomed to shopping by cost – will move on to the next low-cost deal.

The better way to set your price is to stay at, or even slightly above, the industry average, and provide additional services for which you can charge additional fees. Emphasize the quality of your business in marketing to your potential clients, and show them why paying slightly more up-front will benefit them in the long run.


For staffing agencies, this has more to do with your business operations than your talent pool. How many employees do you really need in your back office? Before planning to bring on a director of human resources, an executive assistant, a payroll administrator, and an IT consultant, be realistic about your day-to-day requirements and the resources you have to support a staff of a certain size.

Every additional employee you hire increases your tax liability, your insurance expenses, and other areas of your overhead. Determine what office functions are absolutely necessary, and try to fill those functions with a few key people. There is time to expand your office when your company growth warrants it.

Money bag

Limiting your client base

Speaking of growth, you must seek out new clients if you want to expand! Temporary staffing is a rapidly changing industry. It’s great to specialize in a niche, but don’t limit your niche too much. The company who requests 25 placements one month may reduce the number of open positions they have by hiring or eliminating the positions altogether. If you only concentrate on one or two clients, then those companies have an inordinate amount of control over your success or failure. Ideally, you should work with enough clients that the loss of one will not spell immediate disaster for your agency.

Failing to listen to clients

To succeed, you have to build ongoing relationships with your clients. Not listening to the wants and needs of your market can have dire consequences for your company. After all, there’s no better expert at understanding the needs of your clients than the clients themselves. First, you may miss important information that affects your employees or your business. Second, and far more critically, you will alienate your clients, and they will lose faith in your ability to serve their needs well. They may preemptively end placements, or choose not to renew contracts as they expire.

There is also the word-of-mouth effect, and we guarantee that complaints travel faster in the industry than compliments.

Losing focus

When you have a million and one tasks to complete, talent to interview, and bills to pay, it can be far too easy to drown in the mundane and forget your purpose. If you don’t stop periodically and reestablish your goals, even a thriving business can slip away from you.

Take the time – once a week, once a month, as often as you need – to review the direction your company is moving, to evaluate and reset your goals when necessary, and to recall the passion you have for your business. After all, that passion is what will drive you during lean and frustrating weeks. Plus, it is what will motivate you to continue seeking growth. There are hundreds of other mistakes you may make, but if you are mindful of the path you are on then you will be better equipped to address them effectively.

funding for payroll

Thinking about starting your own staffing agency? Check out our free eBook to help you get going!

Factor Finders provides funding support to startup staffing agencies in a variety of industries. Our payroll factoring can get your company the working capital it needs to keep cash flowing smoothly.

Read more about Starting a Staffing Company:
Do’s and Don’ts of Starting a Temporary Staffing Company
How to Finance a Startup Staffing Firm
Which Staffing Associations Should You Join?

If you’ve just started a new staffing agency, or are thinking about starting one, factoring provides a stable source of cash flow you need to grow.

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Phil Cohen

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