You’re ready to move out on your own. You want to leverage your years of experience in the staffing industry to claim your own part of the market. However, before you launch your staffing startup, you’re struck by a sudden fear: “what if I make a mistake?”
It’s a reasonable concern. Yes, the staffing industry represents a large (and growing) chunk of the economy, with 16 million workers finding positions through recruiters each year. But strong market prospects don’t always lead to success.
After all, startups have a tendency to fail. Statistics indicate that about 90% of all new businesses eventually peter out. It can feel like the odds are stacked against you.
But don’t get discouraged. There are a lot of factors to consider. But with proper foresight, you can avoid the most likely pitfalls. With that in mind, here’s how to prevent the three most common mistakes made by staffing startups:
3 Common Mistakes Staffing Firms are Making
Mistake #1: Not Understanding the Market
Each staffing firm operates in a distinct market. An intersection of multiple variables influences these. Not understanding these complex webs can lead to mistakes in the startup process.
You’ve got to consider your geographic situation. Where are your clients and job candidates located? What are the dynamics of your local market? Who are your closest competitors?
At the same time, you need to understand your particular niche. What is the market for your specialty? What other services will you provide? How broad do you want to make your operations?
As you launch your staffing startup, use the following steps to gain more information about the market:
- Research: Find hard data about your target market. This will also help you shape your business plan.
- Talk to clients and candidates: Even after you’ve started operations, continue communicating to your clients and your candidates. They will have personal insights you might not get from other sources.
- Engage on social media: Take your conversation to the broader world. Use social media to stay in touch with your local community and with the general industry.
Mistake #2: Misjudging Your Competitive Advantage
What value do you bring to the market? That’s the heart of competitive advantage. It defines your unique place in an otherwise crowded field.
That’s why most staffing firms have a particular niche. By focusing on a specific type of staffing (medical, accounting, manufacturing, etc.), they separate themselves from other firms. Having a specialty makes it easier to establish a client base.
However, you face a delicate balancing act as you consider the target of your staffing startup. It’s possible to miss this mark in two directions.
Without a niche at all, you’ll have trouble distinguishing yourself. You’ll just get lost in a sea of competitors. At the same time, over-committing to a specialty can limit your long-term potential. You’ll become pigeonholed in a very narrow market.
Mistake #3: Forgetting the “Business” Part of Your Staffing Business
Starting a business represents a complex series of tasks. You can break these down into two major categories:
- Operations: This includes the details of providing your service. Here, you’ll deal with the nuts and bolts of running your staffing firm, connecting clients with candidates.
- Back Office: This category describes all the ancillary duties related to running a business. Think of things like paying taxes and financing the startup.
Entrepreneurs often forget the back-office concerns. You’ll want to focus on the value you can bring both your clients and your candidates for your staffing startup. However, you shouldn’t forget about the other functions. They can make or break a business as well.
Looking for Financing Help for Your Staffing Firm? Frontline Funding Can Help!
Finding expert guidance in these areas can help. On the financing front, an industry leader like Frontline Funding can give you the confidence you need to focus on your core business.
Contact Frontline Funding today to learn more.