startup staffing firm

5 Pitfalls Your Startup Staffing Firm Should Avoid

Ezra Cabrera | December 19, 2019


    Have you ever wondered about the reasons why certain individuals fail in the staffing industry? Some of them struggle with insufficient funds and fail at paying off their business loans. Others don’t satisfy the needs of their clients because of their lack of manpower. The point is, no business owner is immune to the usual challenges of running their own firms.

    If you’re opening a staffing service, it’s imperative you know where the bumps on the road are that you’ll probably encounter. In a nutshell, the odds of you attaining business success lies in your ability to remove or completely avoid the issues that are common to startup staffing services. So, in order to help you identify those that are particularly true for your type of business, check out the following:

    1. Using outdated strategies

    Keeping up with the latest technology and innovations can keep your staffing company from slipping behind your competition. Using various tactics and strategies that may have generated positive results a decade ago or so doesn’t necessarily ensure that these could work in the future. If you want to stay ahead of the game, you must be able to give your staffing business a competitive advantage in the here and now.

    Related: 4 Tips When Starting Your Own Staffing Agency

    2. Not securing sufficient insurance

    Other staffing firms try to save money by not getting adequate insurance coverage. This is a mistake. You’ll never know you need this kind of security until it’s too late. Plus, your clients will want to find out if you have enough insurance to cover the damages that your employees may cause. Although obtaining sufficient insurance coverage can be pricey, you could end up burning a hole in your pocket if you don’t have it. To avoid this potential problem, contact a reputable insurance company that has a clear understanding of the staffing industry.

    3. Underestimating the required time commitment

    When you’re starting up a staffing business, you’ll need to accept the fact you may have to put in 80 hours per week in order to get it off the ground. It’s important to understand from the get-go that this type of service demands longer hours compared to other types of businesses.

    4. Setting up unrealistic client expectations

    It’s important you always be transparent in all of your business dealings. Being honest with your clients will go a long way if you want to stay in business. Making your clients happy doesn’t mean you have to stretch the truth. Doing so will set you up for an impending disaster. For instance, resist the urge to lie about having fast access to a specific type of employee when you actually don’t. Instead, give them a clear idea of the types of workers you can provide.

    5. Not paying your employees on time

    You must realize that the lifeblood of your business is your team of employees. For this reason, you must always be able to meet payroll without fail. It doesn’t matter if you have to wait for a few more days or weeks for your clients to pay. You must come up with a solution to pay your employees on time. In fact, business owners are expected to pay the difference out of their own pockets until their clients pay up. However, when the cost of administrative operations soars, you may need to obtain staffing business loans to help you get the working capital you need to bridge the gap.

    Furthermore, payroll processing can be a pain to business owners who don’t have the needed expertise to do this smoothly without problems. If you’re one of them, it would be wise for you to hire a payroll administrator. Better yet, consider outsourcing it altogether. Doing so will help you ensure that your workers are going to get their paycheck on time.  Setting up a payroll system will also cause you to avoid the hassles of calculating overtime, holiday and vacation pay, as well as government remittances.

    Do You Need More Information About Staffing Business Loans?

    Did you know that the estimated number of staffing and recruiting firms in the United States is at 17,000? However, not all of these agencies will attain success. Knowing about the 5 pitfalls your startup staffing firm should avoid will make you an exception.

    When the cost of keeping up becomes too high for your business to handle, consider applying for staffing business loans. Having access to immediate working capital, you’ll be able to run your staffing company without a hitch.

    About the Author

    Ezra Neiel Cabrera has a bachelor’s degree in Business Administration with a major in Entrepreneurial Marketing. Over the last 3 years, she has been writing business-centric articles to help small business owners grow and expand. Ezra mainly writes for SMB Compass, but you can find some of her work in All Business, Small Biz Daily, LaunchHouse, Marketing2Business, and Clutch, among others. When she’s not writing, you’ll find her in bed eating cookies and binge-watching Netflix.