Looking for a staffing agency business plan? You're in the right place.
A staffing agency pays its workers every week and gets paid by its clients weeks later. A lender, an investor or a business partner will ask how that gap is funded. What is the markup on each hour billed? What does a temp really cost once payroll taxes and workers' compensation are added? How many recruiters does the volume need? What happens if a large client leaves?
This article walks through a complete sample plan for a light-industrial and warehouse staffing agency in Indianapolis, Indiana, section by section. It covers the executive summary, the SWOT analysis and, above all, the financials, including the receivables line that funds payroll.
What the sample plan lets you do:
- Bill rate against pay rate: see what an hour of temp labor costs the agency in payroll taxes and insurance, and what is left as gross margin
- Recruiter capacity: check how many placements one recruiter can make in a week, so the hiring plan matches the volume it has to serve
- Working capital: see how much cash weekly payroll ties up while clients pay in 30 to 45 days, and how a receivables line and equity cover it
- Placement and conversion fees: learn how direct-hire and temp-to-hire fees add margin that billed hours alone do not
- The five-year profit, cash flow and balance sheet: follow each hire, each line draw and each pay raise into the numbers
- The downside case and sensitivities: have an answer ready for a 20% revenue shortfall, slower-paying clients or a higher workers' compensation rate, with the ask to the bank spelled out
The agency is fictional, so keep what fits your own market and change the rest.
In this plan
- Summary: What Cardinal Row Staffing Is and What It Needs
- About the Agency
- The Indianapolis Labor Market
- Clients and Candidates
- Winning Clients and Filling Orders
- How the Agency Runs
- The People
- Financials: Billed Hours, Payroll Funding and the Receivables Line
- Equity, the receivables line and what the money buys
- Rates, hours and timing behind the figures
- Revenue by line: billed hours and fees
- Internal headcount and payroll
- Profit and loss
- Cash: equity, line draws and receivables
- Balance sheet: receivables and the line
- Margins, break-even and debt cover
- Revenue 20% lower, the size of losing a large client
- Sensitivities
- What a lender would still ask
- Sources
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Summary: What Cardinal Row Staffing Is and What It Needs
Cardinal Row Staffing, LLC supplies hourly workers to warehouses, distribution centers, packaging lines and light manufacturers in the Indianapolis area. It opens in January 2027 from a leased office on the city's southwest side, close to the logistics corridor around the airport. Revenue comes from billed temp hours, direct-hire placement fees and temp-to-hire conversion fees. Founder Marcus Hale owns 52.9% of the agency.
Opening takes $1,440,000 in all, because the agency pays its temps every week and its clients pay about six weeks later. The money arrives as $850,000 of equity ($450,000 from Marcus and $400,000 from one minority investor) and a $590,000 bank receivables line drawn in five tranches between October 2027 and February 2031. Start-up spending takes $59,500: $28,000 of equipment and $31,500 of legal, licensing and launch costs. The rest is cash held to carry payroll ahead of client payments.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $1,455,700 | $2,733,300 | $4,257,850 |
| Net income after start-up costs | ($182,630) | ($89,632) | $19,009 |
| Closing cash | $616,665 | $484,822 | $483,203 |
Year 1 averages 30 temps on assignment and ends with 44 in December, 58 at the November peak. The agency loses money in Years 1 and 2 because its recruiters, coordinators and office are paid before the billed hours can cover them, and because each added temp ties up cash. Year 3 is a break-even year with a small profit, $19,009 on $4.26 million of revenue, after the cost of offering health coverage to eligible temps once the agency becomes a large employer under the Affordable Care Act. That profit relies on a contract safety consultant covering the work of the compliance manager until month 37. Years 4 and 5 earn $48,772 and $130,585. Margins stay thin throughout: net income is 0.4% of revenue in Year 3 and 2.1% in Year 5.
A temp is billed at $25.60 an hour and paid $18.00. After employer taxes and workers' compensation, each billed hour leaves $4.54, a 17.7% gross margin on temp work. Placement and conversion fees add revenue with no payroll behind it, and are 7.5% of Year 1 revenue.
A second run of the model takes 20% off every revenue line, delays or drops hires, trims marketing and the founder's pay, and shrinks the line draws to match a smaller borrowing base. Net income stays negative through Year 3, turns positive in Year 4, and the lowest approximate year-end cash is about $51,000, in Year 3, measured at a harsh peak-month receivables factor. The result is fragile. A staffing agency carries a small margin on a large revenue base, so a lost client or a payment delay moves it quickly.
About the Agency
Legal name: Cardinal Row Staffing, LLC, an Indiana limited liability company. Owners: Marcus Hale, 52.9%; one minority investor, 47.1%. Premises: a leased office suite of about 2,000 square feet on Indianapolis's southwest side, with an applicant reception area, an orientation room and eight workstations. Opening: January 2027. Stage: pre-launch. Three clients have signed master service agreements that set bill rates and terms but promise no volume. The lease and the payroll system are still in draft.
What the agency is for
Fill hourly warehouse and production shifts with screened, oriented workers, at an agreed bill rate, within a day or two of a client's order, and pay those workers correctly every week.
Targets for the first three years
- Reach an average of 54 temps on assignment in 2028 and 82 in 2029, from 30 in 2027.
- Make 7 direct-hire placements and 18 temp-to-hire conversions in 2027, rising to 18 and 54 by 2029.
- Reach break-even in 2029 and a profit in 2030.
- Draw the receivables line in five tranches and keep the largest client under 20% of billings from the second half of Year 1.
The three revenue lines
| Line | How it is priced | Year 1 share of revenue |
|---|---|---|
| Temporary staffing, light industrial and warehouse | Hourly bill rate, about $25.60 blended | 92.5% |
| Direct-hire placements | 20% of first-year base pay, $8,400 on a $42,000 job | 4.0% |
| Temp-to-hire conversions | Flat $2,800 after 520 billed hours | 3.5% |
Registration and compliance
Indiana's Department of Revenue states that, effective July 1, 2023, private employment agencies no longer register or renew a license with it. Staffing for health care is regulated separately and falls outside this plan. Counsel confirms the current position for a general light-industrial agency before opening and at each renewal. The agency is an employer of every temp: it holds its own workers' compensation policy, files payroll taxes, completes a Form I-9 for each hire and registers for state unemployment insurance.
Health coverage under the Affordable Care Act
The IRS counts an employer as a large employer for a year when it averaged at least 50 full-time employees, with 30 hours a week as full time, in the year before. Year 2 averages about 60, since the average temp works 34 hours a week, so the agency is a large employer from Year 3. An employer that does not offer coverage to 95% of its full-time employees owes a payment for every full-time employee beyond the first 30: $3,340 each for 2026 and $3,780 for 2027, as reported from the IRS revenue procedures, about $227,000 a year on roughly 90 full-time employees in Year 3. The agency instead offers minimum-value coverage to the temps who qualify under a look-back measurement method, at a cost of $54,360 in Year 3 including administration and Form 1095-C reporting. Temps are treated as variable-hour at hire; if the IRS treats warehouse assignments as full time at hire, coverage is owed after about three months and the cost could be two to three times higher. A benefits adviser confirms the method and the figures. No client charge to recover the cost is counted.
The Indianapolis Labor Market
Hand labor in the metro area
The Bureau of Labor Statistics' May 2025 data for the Indianapolis-Carmel-Greenwood metro area list 48,100 jobs for laborers and freight, stock and material movers working by hand, at a mean wage of $20.49 an hour. Industrial truck and tractor operators number 9,540 at a mean of $22.90. Hand packers and packagers number 3,330 at $19.48. Those are all workers, direct-hired and temporary, at every tenure. Cardinal Row's planning pay rate of $18.00 an hour is a blend of entry-level general labor and forklift assignments, and it sits below each of these means. If local pay for these jobs moves up, bill rates move with it at the same markup, so margin dollars per hour rise and the percentage holds.
What clients pay for
A client uses a staffing agency to cover seasonal peaks, absences and ramp-ups without hiring permanently, and to avoid payroll, workers' compensation and screening work. The warehouse season runs hardest from October to December. Year 1 is built with that peak in October and November.
Bill rates in the market
Staffing markups vary widely by region, client size and the volume a client commits to. The $25.60 bill rate, a 42.2% markup on the $18.00 pay rate, is a planning figure that Marcus would test against written quotes from several Indianapolis clients and competing agencies before launch.
What one billed hour costs
| Year 1, per billed hour | Rate | Amount |
|---|---|---|
| Bill rate | $25.60 | |
| Pay rate | $18.00 | |
| Employer Social Security and Medicare | 7.65% of pay | $1.38 |
| Federal and Indiana unemployment tax | 3.1% of pay | $0.56 |
| Workers' compensation | 5.0% of pay | $0.90 |
| Payroll fees, protective equipment and other direct cost | 1.25% of pay | $0.22 |
| Cost per hour | 117.0% of pay | $21.06 |
| Gross margin per hour | 17.7% of bill rate | $4.54 |
Dollar figures are rounded to the cent so that the column adds. The employer share of Social Security and Medicare is 6.2% plus 1.45%, according to the IRS. The federal unemployment rate is 6.0% on the first $7,000 of each employee's pay, less a credit of up to 5.4%, which leaves 0.6%. Indiana's new-employer unemployment rate is 2.5% for most new employers in their first four calendar years. A temp's average earnings in a year are planned at under $7,000, below both wage bases: Year 1 pays $946,800 over 193 starts, $4,906 a start. The 3.1% therefore applies to nearly all pay; from Year 5 Indiana sets the rate from the agency's own experience, and it may differ. The workers' compensation rate is a planning figure: light-industrial and warehouse classes cost more than office work, the actual rate comes from a broker's quote, and a sensitivity below runs it at 8%.
Where else a client could go
| Alternative | What it offers | Why a client picks it | How Cardinal Row differs by design |
|---|---|---|---|
| National staffing firms | Large candidate pools, national contracts, one invoice for many sites | Scale and a single vendor for several plants | A local office, named recruiters and a same-day answer on orders |
| Other Indianapolis independent agencies | Local light-industrial staffing | Existing relationships | Weekly fill reporting and a dedicated account manager from the second year |
| Mobile shift-booking platforms | Workers booked per shift by app | Speed for one-off gaps | Pre-screened, oriented workers on longer assignments, with a path to hire |
| The client's own hiring | No markup | Lowest direct cost for stable roles | Conversion on the client's own timetable, after a trial, for a flat fee |
| Professional employer organizations | Payroll and benefits administration for a client's own staff | Administration without recruiting | Recruiting plus payroll, for peak and variable demand |
The table describes offers, not rankings. Rates and terms change often, and none are quoted.
SWOT
| Strengths | Weaknesses |
|---|---|
| Founder with eleven years in light-industrial staffing, five as a branch manager | Marcus alone holds the client relationships until the first account manager starts in month 12 |
| Three master service agreements signed before opening | No brand and no candidate database at launch |
| Placement and conversion fees add margin beyond billed hours | Margin is thin, so a lost client or a late payer moves profit quickly |
| Opportunities | Threats |
|---|---|
| Large warehouse and logistics employment in the metro area | Clients moving volume to a national firm or a shift-booking app |
| Clients converting good temps to hire for a fee | A workers' compensation rate increase or a serious injury claim |
| Seasonal peaks that favor an agency with a ready pool | Clients paying slower than 45 days |
Clients and Candidates
The client: a plant or warehouse that needs shifts covered
Typical accounts are third-party logistics warehouses, food and consumer-goods packaging lines, light assembly shops and distribution centers. The buyer is a plant manager or operations manager who has to cover a shift tomorrow and cannot wait for a direct hire to clear screening. By the end of Year 1 the agency has 7 active accounts, 13 by the end of Year 3 and 16 by the end of Year 5, averaging 6 to 7 temps each. From the second half of Year 1, no account is allowed to exceed 20% of billings; in the first months a single account can be larger.
What makes a client leave
A late shipment of workers, a no-show rate that stays high, an injury the agency handles badly, or a competitor with a lower bill rate. The downside case below models a loss of about that size.
The candidate: an hourly worker looking for steady shifts
Candidates come from job-board postings, referrals from current temps and walk-ins. Each completes an application, a background check and drug screen where the client requires one, an orientation and a Form I-9 before a first shift. Candidate advertising and referral bonuses cost $70 for each start, and screening costs $52.
The temp-to-hire route
Clients convert about one assignment start in ten. A conversion after 520 billed hours, about 15 weeks at 34 hours, costs the client a flat $2,800 in Year 1. A direct-hire placement for a supervisor, inventory control or dispatch role costs 20% of first-year base pay.
Winning Clients and Filling Orders
From first call to first shift
Marcus makes every sales call in Year 1. A prospect gets a plant visit, a written rate quote with the pay-rate range behind it, a master service agreement and a trial order of a handful of workers. A named recruiter fills the order. The first account manager, hired in month 12, takes over account care.
Year 1 marketing
Year 1 marketing comes to $48,000: $18,000 of launch work charged to start-up capital and $30,000 of running cost, together 3.3% of Year 1 revenue. Candidate advertising is a separate operating line. With 7 accounts won, each costs about $6,900 to win. An account averaging 6 to 7 temps yields $48,000 to $56,000 a year of gross margin at the Year 1 rate.
| Item | Year 1 spend | What it is expected to do |
|---|---|---|
| Website, branding and applicant careers page (launch) | $9,000 | A client page with a quote form and a candidate page that takes applications |
| Signage and orientation-room fit (launch) | $3,000 | A visible office for walk-in applicants |
| Job-board accounts and set-up (launch) | $3,000 | Candidate sourcing from the first week |
| Launch outreach (launch) | $3,000 | Introductions to plant managers in the corridor |
| Search ads and local search | $8,000 | Searches such as "warehouse staffing Indianapolis" |
| Direct outreach and plant visits | $4,000 | Lists, email and mail to plant and operations managers |
| Industry events and chamber membership | $5,000 | A presence at logistics and manufacturing events |
| Client meals and site visits | $4,000 | Face time with buyers during trial orders |
| Website content | $3,000 | Guides on temp-to-hire and seasonal staffing |
| Client and referral program | $6,000 | Thank-you payments and recognition for referring clients |
Pricing and terms
Rates are set per client by job type and volume, with a quoted pay-rate range behind each. Standard terms are weekly invoices on net 30, and some clients are on net 45; the average comes to 42 days including invoicing lag. Overtime hours bill at 1.5 times the bill rate and are paid at 1.5 times the pay rate, so the markup holds. They are counted in the 34-hour weekly average.
Marketing milestones
- January 2027: three master service agreements signed, 4 temps working.
- June 2027: 28 temps on assignment, the first placement fee earned in April.
- September 2027: 40 temps, second recruiter starts.
- November 2027: 58 temps at the seasonal peak.
How the Agency Runs
The office
About 2,000 square feet on the southwest side, at about $21.50 a square foot gross, comes to $43,000 in Year 1. That is a planning figure beside Cushman & Wakefield's Q3 2026 Indianapolis office read of $21.92 a square foot gross across the metro, with the Fishers submarket at $20.89; a quote on the actual space replaces it. The space holds eight workstations, a reception area and an orientation room. In Year 4 the agency expands to about 2,800 square feet at about $22.50, and rent rises to $63,000.
The weekly cycle
Orders arrive by phone and email; a recruiter fills them from the active pool and new applicants; the onboarding coordinator completes screening, orientation and the I-9; temps record hours on a time clock or client-approved timesheets; payroll runs weekly; the agency invoices the client for the same hours each week and collects on net 30 to net 45 terms. Payroll is paid before the invoice is even sent. That is the working-capital need.
How the working capital is funded
An average temp on assignment costs the agency about $716 a week in pay and employer costs (34 hours at $21.06). The client pays about six weeks later, so each temp on assignment ties up about $4,300 of the agency's cash. That is about $189,000 for the 44 temps of December 2027 at Year 1 rates and about $374,000 for the 82 temps of an average week in Year 3, at Year 3 rates of about $4,560 a temp. Equity and a bank receivables line fund it. A line of this kind lends against eligible receivables, with a borrowing base set as a percentage of them, and the bank usually checks the receivables ledger through field exams. The line is modeled as five fixed draws timed to the growth in receivables: $140,000 in October 2027, $100,000 in July 2028, $150,000 in February 2029, $100,000 in April 2030 and $100,000 in February 2031. Interest is 9.5%, paid monthly, and the full $590,000 is still outstanding at the end of Year 5.
Recruiter capacity
One recruiter, supported by an onboarding coordinator, is planned to handle up to 6 new starts a week. A start is a temp's first shift on a new assignment. The average assignment lasts 8 weeks, so an average temp on assignment generates 6.5 starts a year.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Average temps on assignment | 30 | 54 | 82 | 100 | 114 |
| New starts in the year | 193 | 351 | 533 | 650 | 741 |
| New starts a week | 3.7 | 6.8 | 10.3 | 12.5 | 14.3 |
| Recruiters at year end | 2 | 2 | 3 | 3 | 3 |
| Starts a week per recruiter (average staffed) | 2.8 | 3.4 | 4.4 | 4.2 | 4.8 |
Year 1 has one recruiter until September, then two; Marcus fills early orders himself. January and February, before the operations coordinator starts in March, are light at 4 and 9 temps, and Marcus and the first recruiter do the onboarding paperwork themselves. Through August of Year 3, with two recruiters, the average is about 5 starts a week each, close to the planning ceiling; the third recruiter starts in September 2029, ahead of the fall peak. Monthly seasonality is modeled only for Year 1, so the fall peaks in later years are not shown.
Safety, insurance and claims
The agency and its client both bear responsibility for temp worker safety under OSHA's Temporary Worker Initiative. Cardinal Row provides general safety training and checks the client's site-specific training; contracts divide the duties in writing. A compliance, safety and claims manager is hired in month 37, January 2030. In months 26 to 36 Marcus files claims and runs return-to-work calls, the operations coordinator keeps the paperwork, and a contract safety consultant runs site walks and client audits two days a month at $2,500 a month, a planning figure to confirm with a consultant's quote, with the broker's loss-control service behind them. At 82 average temps that is a part-time workload; it becomes full time in Year 4 at 100 temps. Workers' compensation is carried in direct cost at a planning rate of 5.0% of pay. Insurance for general liability, employment practices, crime, cyber and key-person cover costs $38,000 in Year 1 and is a planning figure to confirm with a broker.
Software
A staffing back-office platform covers applicant tracking, time capture, payroll processing, billing and client reporting. It costs $30,000 in Year 1 and $62,000 by Year 5, rising with temps on payroll.
Credit control
Each client completes a credit application. Credit limits are set per account, orders pause when a client passes 60 days, and a bad debt allowance of 0.6% of revenue is charged each year. Marcus reviews the aged receivables list every week.
Advisers
An employment lawyer reviews client agreements and handbook terms, a broker places the insurance, and an accountant prepares payroll tax filings and year-end accounts. Together with the line-of-credit field exams, they sit in the professional-fees and line-of-credit fee lines.
The People
Marcus Hale, founder and general manager
Marcus has worked eleven years in light-industrial staffing at a national firm, the last five as a branch manager in the Indianapolis area. He ran a team of recruiters and account managers, set bill rates with clients and managed weekly payroll and billing. His $450,000 is his savings. He leaves to run an agency where the owner stays close to clients and candidates.
Where the team is thin
Three gaps stand out. Marcus has never run payroll funding and a bank line as an owner. He has not run a safety and claims function. He will not have a second salesperson until month 12. Each has an answer: a bank-experienced adviser reviews the borrowing base reports, the compliance manager is hired in month 37, with Marcus, the operations coordinator and a contract safety consultant covering months 26 to 36, and Marcus's own client calls follow a weekly schedule.
Non-solicitation
The first three clients came from personal introductions and from companies outside his former branch's accounts. Marcus has reviewed his non-solicitation terms with counsel and will not approach clients or temps his former employer has restricted.
If Marcus is out
A recruiter and the operations coordinator can keep orders filled and payroll running for a short absence. Key-person life and disability cover on Marcus is part of the $38,000 insurance budget.
Hiring plan
| Role | Starts | Why then |
|---|---|---|
| Recruiter (first) | Month 1 | Candidate flow before the first order |
| Operations coordinator | Month 3 | Payroll, billing and onboarding for a growing pool |
| Recruiter (second) | Month 9 | Fall peak before October |
| Account manager (first) | Month 12 | Frees Marcus from account care |
| Billing and collections coordinator | Month 21 | Receivables pass $300,000 |
| Recruiter (third) | Month 33 | Starts per recruiter near the ceiling before the fall peak |
| Compliance, safety and claims manager | Month 37 | Claims and audits turn full time at 100 temps in Year 4; a contract consultant covers months 26 to 36 |
| Account manager (second) | Month 52 | Account load per manager, 16 accounts by Year 5 |
Ownership and the bank
Cardinal Row Staffing, LLC is owned 52.9% by Marcus and 47.1% by one minority investor, whose $400,000 buys no seat on payroll. The bank's receivables line rests on a lien on receivables, a personal guarantee from Marcus and a covenant for monthly receivables reporting.
Financials: Billed Hours, Payroll Funding and the Receivables Line
One model produces every table below: five years, the first month by month and the rest annually. Temp pay and its employer costs sit in direct costs, because every temp is a W-2 employee of the agency. The recruiters, coordinators and managers who run the agency are the payroll lines. Inputs come first, each with its reason, then the payroll-funding tables a lender tests hardest.
Equity, the receivables line and what the money buys
| Use of funds | Amount |
|---|---|
| Workstations, applicant kiosks, orientation room, badge printer, phones | $28,000 |
| Business registrations, E-Verify and payroll account set-up | $2,500 |
| Legal: entity, client service agreements, assignment terms, handbook | $11,000 |
| Launch: website, signage, job-board accounts, client outreach | $18,000 |
| Payroll reserve at opening, ahead of client payments | $790,500 |
| Reserve added with line draw 1 (month 10) | $140,000 |
| Reserve added with line draw 2 (month 19) | $100,000 |
| Reserve added with line draw 3 (month 26) | $150,000 |
| Reserve added with line draw 4 (month 40) | $100,000 |
| Reserve added with line draw 5 (month 50) | $100,000 |
| Total uses | $1,440,000 |
| Source of funds | Amount |
|---|---|
| Marcus Hale's savings | $450,000 |
| Minority investor (family office) | $400,000 |
| Receivables line of credit, draw 1 (month 10) | $140,000 |
| Receivables line of credit, draw 2 (month 19) | $100,000 |
| Receivables line of credit, draw 3 (month 26) | $150,000 |
| Receivables line of credit, draw 4 (month 40) | $100,000 |
| Receivables line of credit, draw 5 (month 50) | $100,000 |
| Total sources | $1,440,000 |
The $1,440,000 comes 59% from equity and 41% from a bank receivables line. Marcus puts in $450,000, 52.9% of the agency, and one minority investor puts in $400,000, 47.1%. Equipment, registrations, legal work and the launch campaign take $59,500, and $790,500 stays in the account at opening as a payroll reserve. The line is drawn in five tranches, $140,000 in October 2027, $100,000 in July 2028, $150,000 in February 2029, $100,000 in April 2030 and $100,000 in February 2031, each added to the reserve. The rate of 9.5% illustrates the example and is not a quoted lending rate, and the bank's terms would come from a quote. A real line moves with receivables, with a borrowing base of 80% to 90% of eligible invoices set by the lender; the engine has no revolving facility, so the model carries fixed draws, interest only, with no repayment inside five years. At each year end the line balance is 84%, 76%, 80%, 80% and 82% of the receivables in the engine, inside an 85% advance, so equity and not the bank carries the rest. The raise is sized to the 20% revenue shortfall below at the harsh 1.3 peak factor described in the cash section: its lowest approximate year-end cash is about $51,000, at the end of Year 3, above a $25,000 minimum, with no separate standby. The total is above $1 million because weekly payroll runs about six weeks ahead of client payments.
Rates, hours and timing behind the figures
- Temps are billed at a blended $25.60 an hour and paid a blended $18.00, a 42.2% markup on pay. The blend is general warehouse and production labor and forklift and skilled assignments. Employer costs on pay come to 17.0%: 7.65% Social Security and Medicare, 3.1% federal and Indiana unemployment tax, 5.0% workers' compensation and 1.25% for payroll fees, protective equipment and other direct cost. Each billed hour costs $21.06, 82.3% of the bill rate, and leaves $4.54, or 17.7%. Bill and pay rates both rise 3% a year from Year 2, so the margin percentage holds. The model charges the same 82.3% cost on every temp revenue dollar in every year. The 3.1% unemployment rate rests on average pay: Year 1 pays $946,800 over 193 starts, $4,906 a start, so a temp's pay in the year stays under both wage bases. From Year 5 Indiana sets the rate from the agency's own experience, so the 3.1% could be higher or lower than the new-employer rate used here.
- The average temp on assignment works 34 billable hours a week, overtime included, and an assignment lasts 8 weeks. Year 1 averages 29.75 temps on assignment and ends December at 44, after a November peak of 58. Years 2 to 5 average 54, 82, 100 and 114. At 34 hours a week and 52 weeks, the Year 1 average of 29.75 temps is 52,600 billed hours.
- A direct-hire placement earns 20% of first-year base pay, $8,400 on a $42,000 job in Year 1. A temp-to-hire conversion after 520 billed hours earns a flat $2,800. Placements run 7, 13, 18, 22 and 25 a year, and conversions run 18, 36, 54, 66 and 76. Fees rise 3% a year. Together they are 7.5% of Year 1 revenue and 7.5% of Year 3 revenue. A line of 10% of placement fees is set aside for the 90-day guarantee, covering credits for placements that leave early. Conversion fees are not refundable.
- Recruiters make up to 6 new starts a week each, with an onboarding coordinator behind them. New starts are the average temps on assignment, times 52, divided by the 8-week assignment: 193, 351, 533, 650 and 741 for Years 1 to 5. Each start costs $52 for screening and $70 for candidate advertising and referral bonuses. Recruiters and account managers earn incentive pay of 7% of gross profit on top of base salary, charged with employer tax in the same line.
- Clients pay on net 30 or net 45 terms, 42 days on average counting the days before the weekly invoice goes out. Temps are paid weekly. Wages are paid about five days after the work, and the model carries no payable to credit for that, so the payroll lag is a cushion that is not counted. Receivables are 42 days of revenue in the engine, on each year's total revenue. Bad debt is 0.6% of revenue.
- Health coverage under the Affordable Care Act is a cost from Year 3. An employer is an applicable large employer for a year when it averaged at least 50 full-time employees, counting 30 hours a week as full time, in the year before (IRS). Year 1 averages about 34 full-time employees and Year 2 about 60, since 54 temps averaging 34 hours a week are all over the line, so the agency is a large employer from Year 3. An employer that does not offer coverage to 95% of its full-time employees owes, for every full-time employee beyond the first 30, an annual amount that is $3,340 for 2026 and $3,780 for 2027 under Rev. Proc. 2025-26 and 2026-22, as published summaries report them. On roughly 90 full-time employees in Year 3 that is about $227,000 a year at the 2027 amount, before indexing, so the model offers minimum-value coverage instead. It uses the look-back measurement method, under which only temps who stay through a measurement period must be offered coverage: 20% of average temps on assignment qualify and half of those enroll, at an employer share of $4,800 a year in Year 3, rising 5% a year. That is $39,360, $50,400 and $60,329 in Years 3 to 5, plus $5,000 of set-up in Year 2 and $15,000, $15,500 and $16,000 of administration and Form 1095-C reporting in Years 3 to 5. Temps are treated as variable-hour at hire, because assignment length and hours are not known when they start; if the IRS treats warehouse assignments as full time at hire, coverage is owed after about three months and the cost could be two to three times higher (see the doubled-premium row below). The employee contribution is set under the rate-of-pay or federal poverty line safe harbor, so temps who decline create no section 4980H(b) payment. All of these are planning figures to confirm with a benefits adviser. Internal staff health cover sits inside the 27% load. No bill-rate charge to recover the cost is included, although agencies often ask clients for one.
- Each internal salary carries a 27% load for employer payroll taxes, health cover, Indiana unemployment tax and office workers' compensation. Salaries are launch-year rates and are planning figures, to be confirmed against local job postings. Raises of 3% a year start in Year 2 and are charged on their own line.
- The office is 2,000 square feet at about $21.50 a square foot gross, $43,000 in Year 1, growing 3% a year, then about 2,800 square feet at about $22.50 in Year 4. Insurance for liability, employment practices, crime and cyber is $38,000 in Year 1 and $63,000 in Year 5. Software for applicant tracking, time capture, payroll and billing is $30,000 in Year 1 and $62,000 in Year 5.
- Year 1 holds a seasonal shape, with the warehouse peak in October and November. Years 2 to 5 are annual totals spread evenly across the months by the engine, so monthly seasonality beyond Year 1 is not modeled. The engine applies one direct-cost rate, the Year 1 blend of 76.1% of all revenue, to every year. Fees are a slightly larger share of revenue in Years 2 to 5, so the engine charges slightly too much direct cost: $9,267 too much in Year 2 and under $4,000 in each later year, a cautious error that is not corrected.
- The model taxes the agency as a C corporation, at 21% federal and 4.9% Indiana, after the early losses are carried forward. An LLC that elects pass-through treatment would shift the tax to its owners' returns, so the corporate rates are a cautious stand-in. The engine's tax base ignores start-up costs and does not apply the federal 80% limit on using loss carryforwards.
- No distributions are paid in the five years. All profit stays in the agency to fund receivables growth. Retained earnings at the end of Year 5 are still a deficit of $73,895.
Revenue by line: billed hours and fees
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Light-industrial and warehouse temporary staffing (billed hours) | $1,346,500 | $2,517,000 | $3,937,000 | $4,946,000 | $5,807,000 |
| Direct-hire placement fees | $58,800 | $112,476 | $160,416 | $201,938 | $236,350 |
| Temp-to-hire conversion fees | $50,400 | $103,824 | $160,434 | $201,960 | $239,476 |
| Total revenue | $1,455,700 | $2,733,300 | $4,257,850 | $5,349,898 | $6,282,826 |
| Growth on prior year | – | 88% | 56% | 26% | 17% |
Billed hours carry the agency and supply 92.5% of Year 1 revenue and about the same share in later years. Fees are the smaller line and a much richer one, since no payroll sits behind them. Growth is 88% in Year 2, 56% in Year 3, then 26% and 17%, as the agency fills the recruiter and account-manager capacity it hired and as the base grows.
The first twelve months, from first shifts to the fall peak
| Month | Light-industrial and warehouse temporary staffing (billed hours) | Direct-hire placement fees | Temp-to-hire conversion fees | Total revenue | EBITDA |
|---|---|---|---|---|---|
| Jan 2027 | $15,100 | $0 | $0 | $15,100 | ($37,273) |
| Feb 2027 | $33,900 | $0 | $0 | $33,900 | ($32,785) |
| Mar 2027 | $52,800 | $0 | $0 | $52,800 | ($28,273) |
| Apr 2027 | $71,700 | $8,400 | $0 | $80,100 | ($21,755) |
| May 2027 | $90,500 | $0 | $2,800 | $93,300 | ($18,604) |
| Jun 2027 | $105,600 | $8,400 | $2,800 | $116,800 | ($12,993) |
| Jul 2027 | $116,900 | $8,400 | $2,800 | $128,100 | ($10,296) |
| Aug 2027 | $128,200 | $8,400 | $5,600 | $142,200 | ($6,929) |
| Sep 2027 | $150,900 | $8,400 | $5,600 | $164,900 | ($1,510) |
| Oct 2027 | $196,100 | $8,400 | $8,400 | $212,900 | $9,949 |
| Nov 2027 | $218,800 | $0 | $8,400 | $227,200 | $13,363 |
| Dec 2027 | $166,000 | $8,400 | $14,000 | $188,400 | $4,100 |
Revenue climbs every month to November, the seasonal peak, and eases in December. EBITDA is negative from January to September and positive in October, November and December. Month-end cash less 42 days of that month's revenue is lowest in September 2027, at about $389,000, just before the first line draw in October. That is approximate: the monthly view has no collection or payroll timing. On the same basis December 2027 ends at $520,410, against $616,665 of closing cash in the cash table, which holds receivables at 42 days of the whole year's revenue. The two are different measures of different dates and are not combined.
Internal headcount and payroll
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and general manager | $95,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Recruiter (first) | $46,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Operations coordinator (payroll, billing and onboarding) | $44,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Recruiter (second) | $46,000 | Month 9 | 1 | 1 | 1 | 1 | 1 |
| Account manager (first) | $58,000 | Month 12 | 1 | 1 | 1 | 1 | 1 |
| Billing and collections coordinator | $44,000 | Month 21 | – | 1 | 1 | 1 | 1 |
| Compliance, safety and claims manager | $60,000 | Month 37 | – | – | – | 1 | 1 |
| Recruiter (third) | $46,000 | Month 33 | – | – | 1 | 1 | 1 |
| Account manager (second) | $58,000 | Month 52 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $251,248 | $385,657 | $442,383 | $557,530 | $612,775 |
January has Marcus and the first recruiter. The operations coordinator starts in month 3, the second recruiter in month 9 ahead of the fall peak, and the first account manager in month 12. After that hires follow volume: a billing and collections coordinator in month 21, a third recruiter in month 33, a compliance, safety and claims manager in month 37 and a second account manager in month 52. Until the compliance manager starts, Marcus files claims and runs return-to-work calls, the operations coordinator keeps the paperwork, and a contract safety consultant runs site walks and audits two days a month, $2,500 a month, a planning figure to confirm with a consultant's quote, for months 26 to 36 on its own cost line, with the broker's loss-control service behind them. At 82 average temps in Year 3 that is a part-time workload, and it turns full time in Year 4 as temps average 100, which is when the role starts. One account manager and Marcus carry 13 to 16 accounts until the second account manager in month 52. Each role is its own row, so the headcount columns count one per role. Year-end internal headcount is 5, 6, 7, 8 and 9. Temps are not in this table: their pay and employer costs are in direct costs. Marcus's $95,000 sits inside the costs, so profit in the tables is what remains after he has been paid.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,455,700 | $2,733,300 | $4,257,850 | $5,349,898 | $6,282,826 |
| Direct costs (temp pay, employer taxes, workers' compensation) | ($1,108,169) | ($2,080,758) | ($3,241,341) | ($4,072,676) | ($4,782,878) |
| Gross profit | $347,531 | $652,542 | $1,016,509 | $1,277,222 | $1,499,948 |
| Payroll incl. on-costs | ($251,248) | ($385,657) | ($442,383) | ($557,530) | ($612,775) |
| Rent | ($43,000) | ($44,300) | ($45,600) | ($63,000) | ($64,900) |
| Utilities | ($4,800) | ($5,000) | ($5,200) | ($7,200) | ($7,400) |
| Marketing | ($30,000) | ($34,000) | ($38,000) | ($40,000) | ($42,000) |
| Insurance | ($38,000) | ($44,000) | ($52,000) | ($58,000) | ($63,000) |
| Professional fees | ($14,000) | ($14,000) | ($15,000) | ($16,000) | ($17,000) |
| Software subscriptions | ($30,000) | ($38,000) | ($48,000) | ($56,000) | ($62,000) |
| Background checks and drug screens ($52 a start) | ($10,036) | ($18,252) | ($27,716) | ($33,800) | ($38,532) |
| Candidate advertising and referral bonuses ($70 a start) | ($13,510) | ($24,570) | ($37,310) | ($45,500) | ($51,870) |
| Recruiter and account-manager incentive pay (7% of gross profit) | ($24,327) | ($46,327) | ($71,239) | ($89,554) | ($105,257) |
| Bad debt allowance (0.6% of revenue) | ($8,734) | ($16,400) | ($25,547) | ($32,099) | ($37,697) |
| Placement guarantee credits (10% of placement fees) | ($5,880) | ($11,248) | ($16,042) | ($20,194) | ($23,635) |
| Employer share of health coverage for eligible temps (ACA) | $0 | $0 | ($39,360) | ($50,400) | ($60,329) |
| ACA administration, measurement tracking and Form 1095-C reporting | $0 | ($5,000) | ($15,000) | ($15,500) | ($16,000) |
| Contract safety and claims support, months 26 to 36 ($2,500 a month) | $0 | $0 | ($27,500) | $0 | $0 |
| Line of credit fees and lender field exams | ($8,000) | ($8,000) | ($8,000) | ($8,000) | ($8,000) |
| Supplies, phones, dues and license renewals | ($9,000) | ($10,000) | ($11,000) | ($13,000) | ($14,000) |
| Equipment replacement and office expansion fit-out | $0 | ($3,000) | ($5,000) | ($22,000) | ($8,000) |
| Direct-cost mix allowance (fee share differs from Year 1) | $0 | $0 | $0 | $0 | $0 |
| Annual pay raises (3% a year) | $0 | ($11,570) | ($26,941) | ($51,698) | ($76,909) |
| EBITDA | ($143,005) | ($66,782) | $59,671 | $97,747 | $190,644 |
| Depreciation | ($4,800) | ($4,800) | ($4,800) | ($4,800) | ($4,800) |
| Interest | ($3,325) | ($18,050) | ($35,862) | ($44,175) | ($55,258) |
| Income tax | $0 | $0 | $0 | $0 | $0 |
| Net income before start-up costs | ($151,130) | ($89,632) | $19,009 | $48,772 | $130,585 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($31,500) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($182,630) | ($89,632) | $19,009 | $48,772 | $130,585 |
Before start-up costs Year 1 loses $151,130; after them the loss is $182,630. Year 2 loses $89,632: the second recruiter and the first account manager carry full-year costs, the billing coordinator joins in September 2028 and $5,000 goes to health-coverage set-up. Year 3 turns a profit of $19,009, a 0.4% net margin, after $54,360 of health-coverage and reporting cost and $27,500 of contract safety support; it is a break-even year with a small profit. The profit depends on the compliance work being covered as described, by Marcus, the operations coordinator and the contract consultant, until the compliance manager starts in month 37; hired in month 26, Year 3 would lose about $27,600. Year 4 earns $48,772 although the office expansion, a $22,000 fit-out and the compliance manager arrive together and coverage cost rises to $65,900. Year 5 earns $130,585. Interest on the line is $35,862 in Year 3 and $55,258 in Year 5, which is why net margin trails EBITDA margin. Income tax is nil in every year because the five-year taxable total is still a loss.
Cash: equity, line draws and receivables
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($345,335) | ($231,843) | ($151,619) | ($72,088) | $28,035 |
| Equipment and build-out | ($28,000) | $0 | $0 | $0 | $0 |
| Funding received | $990,000 | $100,000 | $150,000 | $100,000 | $100,000 |
| Line of credit repaid | $0 | $0 | $0 | $0 | $0 |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $616,665 | ($131,843) | ($1,619) | $27,912 | $128,035 |
| Closing cash | $616,665 | $484,822 | $483,203 | $511,115 | $639,149 |
Cash ends every year above zero, and the lowest year-end balance in the engine's own tables is $483,203, at the end of Year 3. That figure holds receivables at 42 days of each year's whole revenue. A growing agency's peak month sits well above its average month, so the table below restates year-end receivables at a peak-month run rate. For Years 2 to 5 the peak month is that year's average month, times 1 plus half the year's revenue growth, times 1.3 for the fall season, a planning figure that the first November sits above. Receivables are 42 days, 42 divided by 30, of that month, and the approximate cash is the engine's closing cash less the receivables above what the engine carries. Year 1 uses December 2027's actual revenue.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Closing cash, engine | $616,665 | $484,822 | $483,203 | $511,115 | $639,149 |
| Receivables in the engine | $167,505 | $314,517 | $489,944 | $615,605 | $722,955 |
| Receivables at peak-month run rate | $263,760 | $596,466 | $825,870 | $915,455 | $1,035,979 |
| Approximate year-end cash, peak basis | $520,410 | $202,872 | $147,277 | $211,265 | $326,125 |
| Same, revenue 20% lower (downside below) | $515,594 | $192,115 | $50,653 | $66,944 | $126,869 |
The Year 1 column is the December 2027 month-end on the monthly basis. The lowest Year 1 month-end is September 2027, before the first draw, at $389,222, and $425,352 in the downside. The downside is higher because fewer billed hours mean fewer receivables to fund. Each 0.1 added to the 1.3 factor lowers the base-case figures by about $46,000, $64,000, $70,000 and $80,000 in Years 2 to 5, and the downside figures by about four-fifths of those amounts. At a factor of 1.5, the downside figure for Year 3 would be about -$51,000 and the base-case figure about $20,000, which the line would meet only if drawn ahead of the schedule shown, against receivables that exist. No distributions are paid. Cumulative net income over the five years is a loss of $73,895, so the investor's return comes from a later distribution or a sale and not from the first five years.
Balance sheet: receivables and the line
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $616,665 | $484,822 | $483,203 | $511,115 | $639,149 |
| Accounts receivable | $167,505 | $314,517 | $489,944 | $615,605 | $722,955 |
| Equipment and build-out (net) | $23,200 | $18,400 | $13,600 | $8,800 | $4,000 |
| Total assets | $807,370 | $817,738 | $986,747 | $1,135,519 | $1,366,105 |
| Receivables line of credit | $140,000 | $240,000 | $390,000 | $490,000 | $590,000 |
| Paid-in capital | $850,000 | $850,000 | $850,000 | $850,000 | $850,000 |
| Retained earnings | ($182,630) | ($272,262) | ($253,253) | ($204,481) | ($73,895) |
| Total liabilities and equity | $807,370 | $817,738 | $986,747 | $1,135,519 | $1,366,105 |
Margins, break-even and debt cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -9.8% | -2.4% | 1.4% | 1.8% | 3.0% |
| Net margin (before start-up costs) | -10.4% | -3.3% | 0.4% | 0.9% | 2.1% |
| Payroll incl. pay raises as share of revenue | 17% | 15% | 11% | 11% | 11% |
| Revenue per full-time equivalent at year end | $291,140 | $455,550 | $608,264 | $668,737 | $698,092 |
| Average monthly revenue | $121,308 | $227,775 | $354,821 | $445,825 | $523,569 |
| Monthly revenue needed to cover operating costs | $171,225 | $251,086 | $333,992 | $411,705 | $457,023 |
| Debt service cover (EBITDA / interest + principal) | -43.0x | -3.7x | 1.7x | 2.2x | 3.5x |
The last two rows of the ratios table compare average monthly revenue with the revenue needed to cover operating costs. Years 1 and 2 fall short, at $121,308 against $171,225 and $227,775 against $251,086. Year 3 clears the bar, with $354,821 against $333,992, and so do Years 4 and 5. Debt service cover is negative in Years 1 and 2 because EBITDA is negative while interest is paid; the line is interest only, so the figure is EBITDA over interest. From Year 3 it is at least 1.7x.
Revenue 20% lower, the size of losing a large client
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,164,560 | $2,186,640 | $3,406,280 | $4,279,918 | $5,026,261 |
| Net income before start-up costs | ($180,698) | ($142,114) | ($82,739) | $3,159 | $71,544 |
| Net income after start-up costs | ($212,198) | ($142,114) | ($82,739) | $3,159 | $71,544 |
| Closing cash | $592,598 | $417,675 | $319,393 | $306,824 | $377,288 |
In this case all five years come in with billed hours and fees 20% below the base case, the size of losing a client that carries a fifth of billings. The owner's response has nine parts. The second recruiter and the first account manager start three months late, in December 2027 and March 2028. The billing coordinator and the compliance manager, both planned after month 12, start six months late, in March 2029 and July 2030. The third recruiter and the second account manager are never hired, because 20% fewer starts keep two recruiters at about 5.7 starts a week in Year 5, under the ceiling of 6; in the fall of 2027 one recruiter and Marcus cover about 5.8 starts a week at the peak. Marcus takes a 10% pay cut, from $95,000 to $85,500, from July 2027. Marketing is cut 20% from Year 2, since launch-year spend is committed. Because the compliance manager starts six months later, the contract safety consultant stays on for six more months in Year 4, $15,000. Screening, candidate advertising, incentive pay, the bad debt allowance, guarantee credits and the employer share of health coverage fall 20% with volume; coverage administration is not cut. The Year 4 office move is not made, so rent stays at $46,968 and $48,377 in Years 4 and 5 and the fit-out line falls from $22,000 to $3,000. Every line draw is 20% smaller, $112,000, $80,000, $120,000, $80,000 and $80,000, because a smaller book of receivables supports a smaller line. Insurance, software, professional fees, utilities and line fees are not cut. Net income is negative through Year 3 and turns marginally positive in Year 4, at $3,159. Net income and closing cash sit below the base case in every year. Year-end cash never drops below $306,824, at the end of Year 4, on the engine basis; on the peak-month basis in the cash section the lowest is $50,653, at the end of Year 3. Equity at the end of Year 1 is $637,802. Debt service cover is -65.1x, -8.5x, -1.7x, 1.2x and 2.7x in Years 1 to 5.
The ask to the bank follows from those figures: no debt service test for Years 1 to 4, since the downside reaches only 1.2x in Year 4, and a test of 1.25x from Year 5, when the downside clears it at 2.7x and the base case at 3.5x; a minimum month-end cash balance of $25,000, against a lowest approximate $50,653 in the downside and $147,277 in the base case; and no distributions while the line is drawn. The raise already carries the cushion that a standby would give, so none is asked for. Only Year 1 has a monthly view, so the covenant would be tested on year-end figures in Years 2 to 5.
Sensitivities
Every row below is a fresh engine run with the base-case funding, the same hires and no management response. Revenue-linked costs move with every revenue row: bad debt at 0.6% of revenue, incentive pay at 7% of gross profit and guarantee credits at 10% of placement fees; screening, advertising and the employer share of health coverage scale with volume only in the first row, since the other revenue rows leave temp volume unchanged. The workers' compensation, employer-cost and bill-rate rows change the temp direct-cost rate on purpose, by the same amount in every year; the fee row changes the engine's blended rate because the mix changes, also in every year. The lowest cash columns are the engine's lowest year-end balance and the approximate lowest on the peak-month basis at the 1.3 factor described in the cash section, using 55 days for the slower-payment row.
| Case | Year 1 net income | Year 3 net income | Year 5 net income | Lowest year-end cash | Approximate lowest, peak basis |
|---|---|---|---|---|---|
| Base case | ($182,630) | $19,009 | $130,585 | $483,203 | $147,277 |
| Revenue 10% lower, all lines | ($211,134) | ($60,919) | $12,322 | $310,103 | $40,238 |
| Workers' compensation 8% of pay, not 5% | ($211,033) | ($64,068) | $7,999 | $241,921 | ($65,655) |
| Employer costs on pay 2 points higher | ($201,565) | ($36,376) | $48,861 | $331,652 | $31,802 |
| Bill rates 3% lower, pay unchanged | ($219,955) | ($90,158) | ($30,491) | $144,428 | ($159,920) |
| Clients pay in 55 days, not 42 | ($182,630) | $19,009 | $130,585 | $320,570 | ($108,350) |
| Placement and conversion fees 30% lower | ($211,137) | ($64,781) | $6,833 | $253,509 | ($45,598) |
| Internal wages 10% higher | ($207,755) | ($27,924) | $61,617 | $338,412 | $35,497 |
| Office rent 10% higher | ($186,930) | $14,449 | $124,095 | $469,913 | $133,987 |
| Health-coverage premium cost doubled | ($182,630) | ($20,351) | $70,256 | $421,355 | $107,917 |
| Opening two months later | ($271,282) | $20,277 | $132,457 | $396,632 | $60,706 |
Revenue 10% lower, bill rates 3% lower, fees 30% lower, higher workers' compensation, higher employer costs, 10% higher internal wages and a doubled health-coverage premium cost each turn Year 3 into a loss. Only higher rent and a late opening leave it a small profit. The result is fragile. The agency's margin is a few points on a large revenue base, so most single shocks consume it. Slower client payments leave net income unchanged and cost cash only: with no extra line draws the approximate cash goes negative, which in practice means a larger line against the same receivables. The slip row moves revenue, with fees and direct costs, by two months in Year 1 only, so the Year 1 ramp starts in March, the October peak is reached in December and every hire and the office stay on their original dates. Bad debt, incentive pay and guarantee credits follow the shifted revenue; screening, advertising and health coverage stay at the base amounts. Its peak-basis column holds the Year 2 to Year 5 growth rates at the base case's; the stated method applied to the slipped Year 1 would give -$40,478 for Year 2 because the lower Year 1 inflates Year 2 growth. Its Year 1 loss grows by $88,652 and its lowest Year 1 month-end is $375,274, still above zero, so the reserve covers that exact case.
What a lender would still ask
- Whether the line can be sized to eligible receivables: year-end balances are 76% to 84% of the engine's receivables, and the question is the bank's advance rate and what the guarantee and equity cover in the gap.
- The workers' compensation quote and loss history, since a rate of 8% of pay turns Year 3 into a loss.
- The health-coverage plan: the measurement method, the 20% eligibility and 50% enrollment figures and the premium share, since the agency is a large employer from Year 3.
- Concentration: the aged receivables list and the largest account, against the 20% limit.
- Marcus's non-solicitation terms and the three signed service agreements.
- Safety records and the claims procedure before the compliance manager starts in month 37, and whether the contract consultant, Marcus and the operations coordinator cover months 26 to 36, since an injury at a client site can pass to the agency.
- The investor's return, with no distribution in five years and a deficit in retained earnings at the end of Year 5.
- Covenants, a personal guarantee and key-person cover on Marcus.
- The lease terms, including the Year 4 expansion.
Sources
- Bureau of Labor Statistics, Occupational Employment and Wages in Indianapolis-Carmel-Greenwood, May 2025: employment and mean hourly wages for hand laborers and material movers, industrial truck operators and hand packers.
- Indiana Department of Workforce Development, new employer premium rate: 2.5% for most new employers in their first four calendar years. The taxable wage base is a planning figure to confirm with the Department.
- IRS, Topic 759, Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return: 6.0% on the first $7,000 of pay, with a credit of up to 5.4%.
- IRS, Topic 751, Social Security and Medicare withholding rates: employer share of 6.2% and 1.45%.
- Indiana Department of Revenue, Information Bulletin 11, adjusted gross income tax: 4.9% corporate rate.
- Indiana Department of Revenue, private employment agencies: no DOR registration required from July 1, 2023.
- Cornell Law School, 26 U.S.C. 11(b): 21% federal corporate rate.
- IRS, Employer shared responsibility provisions and Identifying full-time employees: the 50-employee and 30-hour tests, the 95% offer rule and the look-back measurement method.
- IRS, Rev. Proc. 2025-26 ($3,340 for 2026) and Rev. Proc. 2026-22 ($3,780 for 2027): indexed amounts under section 4980H, as published summaries report them.
- OSHA, Protecting temporary workers: shared responsibility of staffing agencies and host employers.
- USCIS, Form I-9, Employment Eligibility Verification: employer duties.
- Cushman & Wakefield, Indianapolis MarketBeat Office, Q3 2026: $21.92 per square foot gross asking rent across the metro, $20.89 in Fishers.
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