How Much Does It Cost to Start a Staffing Agency?

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How Much Does It Cost to Start a Staffing Agency?

How much does it cost to start a staffing agency? Learn more about the average staffing agency startup costs, plus ongoing expenses you should budget for.

What is the Typical Range for Staffing Agency Startup Costs? 

Startup costs of a staffing agency can vary, especially depending on the operation’s location, brand, and size. Entrepreneurs looking to open a staffing agency will need to consider initial setup costs, operation costs, and the capital required to sustain the business until it becomes profitable. For example, when investing in an AtWork franchise location, initial investment costs range from $153,500 to $210,500.

What Factors Dictate the Cost?

Several factors dictate the staffing agency startup costs. Location is a significant factor, as office space costs depend on the city and specific location. Other upfront costs include furnishing the office, which includes desks, chairs, and storage cabinets. Additionally, staffing agency owners might have legal and professional fees for registering for their business licenses, which vary by state.

Building a strong brand and marketing for the staffing agency’s services is essential in attracting clients and candidates for a successful launch. Part of that includes website development and hosting. Owners will need to invest in several computers and robust software programs. Investment in a robust recruitment software suite is crucial for managing client and candidate data, job postings, and applications.

Most staffing agencies are not just one-man bands, so someone looking to start a recruiting business needs to factor the costs of office staff into that initial investment. The chosen staffing niche also impacts costs, with some sectors requiring more specialized recruitment efforts and higher salaries for staff.

What Are Some Ongoing Costs?

Ongoing costs include payroll for temporary workers, office rent, utilities, marketing, insurance, and software subscriptions. Notably, payroll funding for staffing companies is a significant ongoing expense, as agencies must pay temporary workers weekly or bi-weekly, often well before receiving payment from clients.

How Long Until I Can Expect a Profit?

Success and profitability are dependent on a range of factors. First, it generally takes two to three years for any business to see a profit. Medium cites that the average profit margin for a staffing agency is about 15% to 20%.

Client retention, operational efficiency, and the pay rates of temporary employees compared to the rates charged to clients are factors that affect a staffing business’ profitability.

Consider Investing in a Staffing Franchise

Instead of starting an independent staffing business, invest in a staffing franchise like AtWork and start further ahead. At first, one might think a franchise is more expensive than an independent agency because of the franchise fee, royalty fees, and marketing expenses. However, the comprehensive training and support, proven business model, and brand recognition outweigh that initial cost. This support can significantly increase the chance of success for a staffing agency business owner.

Some franchises offer more benefits for their investment than others, so it is key that potential franchise investors do their research. AtWork provides its franchise owners with unmatched support and business services at just 7.5% total for royalty and marketing fund fees. Part of those services includes AtWork funding owners’ payroll funding. Plus, franchisees receive the Employer of Record Designation and the Work Opportunity Tax Credit (WOTC), which puts more money back into their pocket. Additionally, AtWork allows its franchisees to work with a smaller staff, saving owners money.

Wondering how much does it cost to start a staffing agency with AtWork? Here’s the breakdown:

Type of Expenditure Estimated Cost
Franchise Fee $40,000
Insurance Deposit $9,500–$12,000
Lease, Rent, and Deposit $900–$3,500
Office Improvements $500–$2,500
Office Equipment and Supplies $15,000–$20,000
Initial Training Expenses $3,000–$4,500
Advertising, Printed Materials, and Signage $5,600–$8,500
Professional Services and Misc. Startup Costs $5,000–$7,000
Additional Funds for the First 6–9 Months $66,000–$102,500
Total $153,500–$210,500

So, while an entrepreneur may think they can save some money by starting their own staffing business, investing in a brand like AtWork, even with the higher initial and ongoing costs, is worth it for the extensive support system an owner receives – including brand recognition, a proven business model, training, and ongoing business consulting. These advantages support AtWork franchisees in seeing a significant return on their investment. According to the franchise’s latest FDD, the average unit volume of more than 90 AtWork locations is $4 million.

Stop wondering how much it costs to start a staffing agency, and instead get started with AtWork.

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