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Temporary Help Agency
Minimum Start-Up: $10,000
Average Start-Up: $100,000
Revenue; $100,000 - $2.5Mil
Profits; $25,000 - $250,000
One Person Business: Yes
The high cost of maintaining a full-time employee contributes to the growth
of the temp-help business.
Advancement in computer hardware and software enables companies to staff
mean and lean, preferring to hire temps during peak seasons rather than lay
off workers during slower times. On any given day, over 1 million people
work on temporary assignments. By 1995, trade statistics estimate that
1.25 million jobs will go by way of "temps", creating an aggregate annual
payroll of about $10 billion.
These figures suggest that the temporary help business is here to stay. It
is one to watch through the turn of the century. Unlike the temp boom of
the late 70s, today's temp-help has gone beyond clerical help, with 37% of
placements involving professionals.
A temporary-help service acts as a matchmaker between businessses seeking
temporary help and induviduals who want a job. The temporary agency pays the
employee on a weekly basis a set rate, and in turn bills the business/client
a predetermined rate, usually 10% to 15% more than was paid the employee.
If there is a single hurdle that makes starting a temporary-help agency
"difficult", it has to do with your ability to cover the payroll up front.
As a temp agency, the demand for cash flow presents a two-sided problem.
While you are expected to pay your workers on a weekly basis, you are also
expected to extend your clients 30 to 60 days credit. So while you're
waiting to get paid, you need to have enough cash to cover your payroll.
For example, if you place 10 workers at 40 hours each for the week, at a
rate of $8 an hyour, it would require $3,200 cash for the week. That's
$12,800 in 4 weeks!
To avoid this problem, it is advisable to hire your workers as independent
contractors. You can act as their agent, and collect your commission when
they are paid.