Getting Funding

The capital required for commencement of operations is depending on a number of factors; nonetheless, the biggest expense that you will have to manage would be the salaries that you will have to pay your employees.

Growth is dependent on a delicate balance between the amount of money you have and the number of contracts you secure. At the end of the day, if you are not able to pay your employees, they will quit, leaving you with no workforce to provide service to your clients.

While the story of Company A was a very successful one, you need to keep in mind that many healthcare staffing agencies start and shutdown because of inadequate funding. Regardless of the type of business, it is always a wise idea to have enough capital to help a company survive 6 to 12 months of operation.

Consider keeping your payroll in check in the first year of business. Many new owners are shocked by the amount of money they have to pay to their employees even before they start getting paid.

The first priority of any person intending to start a healthcare staffing agency should be getting the funding needed to start operations. Let’s talk about credit and how it can help you in times of desperation and need.

If you can convince a bank to give you a loan without having to sign your entire life to them, then you are definitely a genius and have a lot of good luck with you. In olden days, banks were the only option for getting the money needed to start a business. However, there are a lot of other resources available today that can be used to get the funding, particularly for companies in the staffing industry.

One of the options that we will discuss is called factoring. This is when companies provide financing based your invoices, and they charge a certain amount of fees in return. It is an excellent way that enables startup companies to continue paying their employees until they get their payments from their clients. While there are charges that need to be paid to the factoring company, but this service comes in really handy especially when the budget is tough and times are demanding.

Factoring companies simply ‘buy’ your invoices. Take an example of a person who had $40000 for his startup company. Soon enough they realized that they could not launch the company, particularly because they had to pay salaries to the secretary, secure an office, and purchase decent staffing agency software to ensure streamlined operations from day one.

This is when a staffing agency came to realize that they needed to get in touch with a factoring company for financing. They used the services of a factoring company and were able to afford all the expenses until they were able to pay the employees from their own account receivable.

Many owners of staffing agencies right down expenses that they expect to face when starting up their company. While there is no set amount of expenditures for all startup companies (because every situation is different), the following expense sheet can give you a general idea of what to expect:

Rent or lease Software

Equipment Payroll Insurance

Phone and other utilities Salary for the owner Licensing Marketing Professional fees

Miscellaneous $500 to $2000 $500 to $5000 $1000 to $10000 $5000 to $40000 $500 to $1500 $100 to $500 $3000 to $5000 $200 to $500 $1000 to $4000 $100 to $400 $300 to $600

TOTAL $12200 to $69500

NOTE: These expenses are highly variable. Your costs will vary depending on the state you live in and the structure of your company.

Most of the healthcare staffing agencies we have provided consultancy to had plans to start with a budget of around $20000. Many of them succeeded and were getting payments from their clients within a few months. Many of these started as a one-man operation and then expanded with time as they secured more contracts and their bottom line improved. Some companies had to depend on their funds until the payment started to come in within 3 months or so, and it wasn’t uncommon to see between two to three temporary employees being used to cover various shifts, with their combined salaries equaling that one a one full-time employee. This is the most common practice utilized in many startup staffing companies.