Run a staffing agency with hard numbers. Covers temp, temp-to-hire,
--- name: staffing-agency-operations-742f9b68d09d description: Run a staffing agency with hard numbers. Covers temp, temp-to-hire, and direct placement across light industrial, clerical, healthcare, and IT verticals. --- # Staffing Agency Operations Run a staffing agency with hard numbers. Covers temp, temp-to-hire, and direct placement across light industrial, clerical, healthcare, and IT verticals. ## Billing & Markup Rates | Vertical | Bill Rate Range | Typical Markup | Temp-to-Hire Fee | |---|---|---|---| | Light Industrial | $15-22/hr | 35-55% | 15-25% annual salary | | Clerical/Admin | $18-30/hr | 40-60% | 20-30% annual salary | | Healthcare (CNA/LPN) | $22-45/hr | 35-50% | $3,000-8,000 flat | | IT/Technical | $45-150/hr | 30-45% | 20-25% annual salary | | Accounting/Finance | $25-65/hr | 40-55% | 20-30% annual salary | | Executive Search | N/A | N/A | 25-33% annual salary (retained) | ## Gross Margin Targets - Temp staffing: 22-28% gross margin (after payroll burden) - Temp-to-hire: 25-35% blended - Direct placement: 80-90% (fee minus recruiter cost) - Blended agency target: 28-32% gross margin ## Payroll Burden (on top of pay rate) | Component | Rate | |---|---| | FICA (employer share) | 7.65% | | FUTA | 0.6% (first $7K) | | SUTA | 1.5-5.4% (state-dependent) | | Workers' Comp | 1-15% (industry-dependent) | | ACA compliance (30+ hrs) | $350-550/mo per employee | | General liability | 0.5-1.5% of payroll | | **Total burden** | **12-30% of pay rate** | ## Key Metrics (Weekly Dashboard) | Metric | Target | Red Flag | |---|---|---| | Fill rate | >85% | <70% | | Time-to-fill | <3 days (light industrial), <10 days (professional) | >7 / >21 | | Gross margin % | >25% | <20% | | Temp turnover (weekly) | <8% | >15% | | Recruiter productivity | 8-12 placements/week (temp), 2-4/month (perm) | <5 / <1 | | Days sales outstanding (DSO) | <35 days | >50 days | | Client retention (annual) | >80% | <65% | | Workers' comp mod rate | <1.0 | >1.2 | ## Compliance Requirements ### Federal - **I-9 verification** — within 3 business days of start. E-Verify if government contracts. Fines: $252-$2,507 per form (first offense), $2,507+ repeat. - **ACA employer mandate** — if 50+ FTE, offer coverage to anyone averaging 30+ hrs/week. Penalty: $2,970/employee (2026). - **FLSA** — joint employer liability. You AND the client can be liable for wage violations. - **OSHA** — staffing agency shares responsibility for worksite safety. Must conduct site assessments. ### State-Specific - **Licensing** — required in: CA, FL, IL, MA, NJ, NY, TX, and others. Fees: $100-$5,000. Some require surety bonds ($10K-$100K). - **Pay transparency** — CA, CO, NY, WA require pay ranges in job postings. - **Ban-the-box** — 37 states restrict criminal history questions on applications. - **Temp worker bills of rights** — IL (2024), NJ (2023) require equal pay/benefits parity. More states following. ## Technology Stack Costs | System | Monthly Cost | Purpose | |---|---|---| | ATS (Bullhorn/JobDiva) | $100-200/user | Applicant tracking, client management | | VMS integration | $500-2,000 | Vendor management system connectivity | | Payroll/billing (TempWorks/Avionte) | $5-15/employee/month | Payroll processing, invoicing | | Background checks | $25-75/check | Pre-employment screening | | Drug testing | $30-60/test | DOT and client requirements | | Job board posting | $300-1,200/month | Indeed, LinkedIn, ZipRecruiter | | Workers' comp (PEO vs direct) | 3-12% of payroll | Coverage and claims management | ## Growth Playbook ### Stage 1: $0-$500K revenue - Solo owner-operator + 1 recruiter - Single vertical focus (pick one: light industrial OR clerical) - 15-30 temps on assignment at any time - Startup costs: $20K-$75K (licensing, insurance, payroll funding) - **Critical**: secure payroll funding line — you pay temps weekly, clients pay net-30 ### Stage 2: $500K-$2M revenue - 3-5 internal staff (recruiters + account manager) - Add second vertical - 50-100 temps on assignment - Invest in ATS, systematize onboarding - Workers' comp mod rate becomes make-or-break ### Stage 3: $2M-$10M revenue - Branch office or second market - Dedicated sales team vs recruiting team - 150-500+ temps on assignment - VMS/MSP program participation - Consider direct placement division (higher margins) ### Stage 4: $10M+ revenue - Multi-market, multi-vertical - M&A for geographic expansion - Technology platform investment - Enterprise MSP contracts - Exit multiples: 0.5-1.5x revenue, 4-8x EBITDA ## Cash Flow Warning Staffing is a **cash-intensive** business. You fund payroll before collecting from clients. | Revenue Level | Working Capital Needed | |---|---| | $500K/yr | $40-80K credit line | | $2M/yr | $150-300K credit line | | $10M/yr | $750K-$1.5M credit line | Factoring (selling invoices at 2-5% discount) is common for agencies under $5M. Transition to traditional LOC as you scale. --- *Built by [AfrexAI](https://afrexai-cto.github.io/context-packs/) — AI agents that actually know your industry. Get the full [Recruitment Context Pack ($47)](https://afrexai-cto.github.io/context-packs/) or try the free [AI Revenue Calculator](https://afrexai-cto.github.io/ai-revenue-calculator/).*--- name: staffing-agency-operations-742f9b68d09d description: Run a staffing agency with hard numbers. Covers temp, temp-to-hire, and direct placement across light industrial, clerical, healthcare, and IT verticals. --- # Staffing Agency Operations Run a staffing agency with hard numbers. Covers temp, temp-to-hire, and direct placement across light industrial, clerical, healthcare, and IT verticals. ## Billing & Markup Rates | Vertical | Bill Rate Range | Typical Markup | Temp-to-Hire Fee | |---|---|---|---| | Light Industrial | $15-22/hr | 35-55% | 15-25% annual salary | | Clerical/Admin | $18-30/hr | 40-60% | 20-30% annual salary | | Healthcare (CNA/LPN) | $22-45/hr | 35-50% | $3,000-8,000 flat | | IT/Technical | $45-150/hr | 30-45% | 20-25% annual salary | | Accounting/Finance | $25-65/hr | 40-55% | 20-30% annual salary | | Executive Search | N/A | N/A | 25-33% annual salary (retained) | ## Gross Margin Targets - Temp staffing: 22-28% gross margin (after payroll burden) - Temp-to-hire: 25-35% blended - Direct placement: 80-90% (fee minus recruiter cost) - Blended agency target: 28-32% gross margin ## Payroll Burden (on top of pay rate) | Component | Rate | |---|---| | FICA (employer share) | 7.65% | | FUTA | 0.6% (first $7K) | | SUTA | 1.5-5.4% (state-dependent) | | Workers' Comp | 1-15% (industry-dependent) | | ACA compliance (30+ hrs) | $350-550/mo per employee | | General liability | 0.5-1.5% of payroll | | **Total burden** | **12-30% of pay rate** | ## Key Metrics (Weekly Dashboard) | Metric | Target | Red Flag | |---|---|---| | Fill rate | >85% | <70% | | Time-to-fill | <3 days (light industrial), <10 days (professional) | >7 / >21 | | Gross margin % | >25% | <20% | | Temp turnover (weekly) | <8% | >15% | | Recruiter productivity | 8-12 placements/week (temp), 2-4/month (perm) | <5 / <1 | | Days sales outstanding (DSO) | <35 days | >50 days | | Client retention (annual) | >80% | <65% | | Workers' comp mod rate | <1.0 | >1.2 | ## Compliance Requirements ### Federal - **I-9 verification** — within 3 business days of start. E-Verify if government contracts. Fines: $252-$2,507 per form (first offense), $2,507+ repeat. - **ACA employer mandate** — if 50+ FTE, offer coverage to anyone averaging 30+ hrs/week. Penalty: $2,970/employee (2026). - **FLSA** — joint employer liability. You AND the client can be liable for wage violations. - **OSHA** — staffing agency shares responsibility for worksite safety. Must conduct site assessments. ### State-Specific - **Licensing** — required in: CA, FL, IL, MA, NJ, NY, TX, and others. Fees: $100-$5,000. Some require surety bonds ($10K-$100K). - **Pay transparency** — CA, CO, NY, WA require pay ranges in job postings. - **Ban-the-box** — 37 states restrict criminal history questions on applications. - **Temp worker bills of rights** — IL (2024), NJ (2023) require equal pay/benefits parity. More states following. ## Technology Stack Costs | System | Monthly Cost | Purpose | |---|---|---| | ATS (Bullhorn/JobDiva) | $100-200/user | Applicant tracking, client management | | VMS integration | $500-2,000 | Vendor management system connectivity | | Payroll/billing (TempWorks/Avionte) | $5-15/employee/month | Payroll processing, invoicing | | Background checks | $25-75/check | Pre-employment screening | | Drug testing | $30-60/test | DOT and client requirements | | Job board posting | $300-1,200/month | Indeed, LinkedIn, ZipRecruiter | | Workers' comp (PEO vs direct) | 3-12% of payroll | Coverage and claims management | ## Growth Playbook ### Stage 1: $0-$500K revenue - Solo owner-operator + 1 recruiter - Single vertical focus (pick one: light industrial OR clerical) - 15-30 temps on assignment at any time - Startup costs: $20K-$75K (licensing, insurance, payroll funding) - **Critical**: secure payroll funding line — you pay temps weekly, clients pay net-30 ### Stage 2: $500K-$2M revenue - 3-5 internal staff (recruiters + account manager) - Add second vertical - 50-100 temps on assignment - Invest in ATS, systematize onboarding - Workers' comp mod rate becomes make-or-break ### Stage 3: $2M-$10M revenue - Branch office or second market - Dedicated sales team vs recruiting team - 150-500+ temps on assignment - VMS/MSP program participation - Consider direct placement division (higher margins) ### Stage 4: $10M+ revenue - Multi-market, multi-vertical - M&A for geographic expansion - Technology platform investment - Enterprise MSP contracts - Exit multiples: 0.5-1.5x revenue, 4-8x EBITDA ## Cash Flow Warning Staffing is a **cash-intensive** business. You fund payroll before collecting from clients. | Revenue Level | Working Capital Needed | |---|---| | $500K/yr | $40-80K credit line | | $2M/yr | $150-300K credit line | | $10M/yr | $750K-$1.5M credit line | Factoring (selling invoices at 2-5% discount) is common for agencies under $5M. Transition to traditional LOC as you scale. --- *Built by [AfrexAI](https://afrexai-cto.github.io/context-packs/) — AI agents that actually know your industry. Get the full [Recruitment Context Pack ($47)](https://afrexai-cto.github.io/context-packs/) or try the free [AI Revenue Calculator](https://afrexai-cto.github.io/ai-revenue-calculator/).*
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