Barrett Business Services, Inc. (BBSI): Business Model Canvas [11-2024 Updated]

Barrett Business Services, Inc. (BBSI) operates a robust business model that focuses on delivering comprehensive HR solutions tailored specifically for small to medium-sized enterprises. By leveraging strategic partnerships and a skilled workforce, BBSI provides essential services such as PEO offerings, staffing solutions, and compliance support. This blog post will delve into the key components of BBSI's business model canvas, highlighting how the company effectively addresses the needs of its clients while maintaining a strong revenue stream. Discover the intricate strategies that drive BBSI’s success below.

Barrett Business Services, Inc. (BBSI) - Business Model: Key Partnerships

Collaborations with third-party insurance carriers

Barrett Business Services, Inc. (BBSI) maintains strategic collaborations with various third-party insurance carriers to provide comprehensive workers' compensation insurance solutions and other employee benefits. As of September 30, 2024, the balance in the trust account, which includes collateral for certain policies, was $189.3 million, down from $210.9 million as of December 31, 2023 .

Partnerships with staffing agencies

BBSI also partners with staffing agencies to enhance its service offerings. The company reported total revenues of $294.3 million for the third quarter of 2024, which included $21.5 million from staffing services. These partnerships allow BBSI to expand its workforce solutions and meet the evolving needs of its clients.

Strategic alliances for employee benefits programs

Strategic alliances for employee benefits programs are vital for BBSI’s growth. The company reported PEO services revenue of $272.8 million for the third quarter of 2024, reflecting an increase of 8.5% year-over-year. BBSI’s collaboration with benefit providers enables it to offer competitive health, retirement, and wellness plans, which are crucial in attracting and retaining talent.

Partnership Type	Details	Financial Impact
Insurance Carriers	Third-party collaborations for workers' compensation and benefits	Trust account balance: $189.3 million
Staffing Agencies	Expand workforce solutions and service offerings	Staffing services revenue: $21.5 million
Employee Benefits Programs	Alliances to provide health, retirement, and wellness plans	PEO services revenue: $272.8 million

Barrett Business Services, Inc. (BBSI) - Business Model: Key Activities

Provision of professional employer organization (PEO) services

Barrett Business Services, Inc. (BBSI) operates as a Professional Employer Organization (PEO), providing comprehensive HR solutions and employee benefits to small and medium-sized businesses. As of September 30, 2024, BBSI reported an increase in PEO services revenue by $50.9 million, which represents a growth of 7.0% compared to the same period in 2023. This revenue growth is primarily attributed to a 3.9% increase in average Worksite Employees (WSEs), reaching an average of 128,394 WSEs, and a 3.4% increase in the average billing per WSE.

Metric	2024 (Nine Months)	2023 (Nine Months)	Year-over-Year Growth (%)
PEO Services Revenue	$778.9 million	$727.9 million	7.0%
Average WSEs	128,394	123,577	3.9%
Average Billing per WSE	Not disclosed	Not disclosed	3.4%

Staffing solutions and workforce management

BBSI also provides staffing solutions, which include recruitment and workforce management to its clients. For the first nine months of 2024, the staffing services revenue decreased by $3.8 million, or 5.9%, compared to the prior year, totaling $60.8 million. The company has been focusing on refining its staffing services to adapt to market demands while maintaining competitive pricing for its clients.

Metric	2024 (Nine Months)	2023 (Nine Months)	Year-over-Year Change (%)
Staffing Services Revenue	$60.8 million	$64.6 million	-5.9%

Compliance and risk management for clients

BBSI places significant emphasis on compliance and risk management, ensuring that its clients adhere to labor laws and regulations. The company reported payroll taxes and benefits totaling $464.8 million for the first nine months of 2024, which is 55.4% of total revenue, compared to $414.4 million or 52.3% of revenue in the same period of 2023. This increase is attributed to higher average payroll tax rates and expanded PEO client benefit costs .

Metric	2024 (Nine Months)	2023 (Nine Months)	Year-over-Year Change (%)
Payroll Taxes and Benefits	$464.8 million	$414.4 million	12.1%
Workers' Compensation Expense	$147.4 million	$153.0 million	-3.6%

Barrett Business Services, Inc. (BBSI) - Business Model: Key Resources

Human capital and skilled workforce

As of September 30, 2024, Barrett Business Services, Inc. (BBSI) reported an average of 128,394 worksite employees (WSEs), reflecting a 3.9% increase from 123,577 in the same period in 2023. The ending number of WSEs was 132,698, up 3.3% from 128,448 in 2023. This growth in human capital is crucial for delivering value through BBSI's Professional Employer Organization (PEO) services.

Technology platforms for payroll and HR management

BBSI utilizes advanced technology platforms to manage payroll and HR services efficiently. The company's gross billings for the third quarter of 2024 reached $2.14 billion, an increase of 7.7% from the previous year. These platforms enable BBSI to streamline operations, enhance service delivery, and manage client relationships effectively.

Metric	Q3 2024	Q3 2023	Year-over-Year Change
Gross Billings	$2,138,510,000	$1,963,462,000	+7.7%
Average WSEs	133,398	127,232	+4.8%
Ending WSEs	132,698	128,448	+3.3%

Financial resources and capital for operations

As of September 30, 2024, BBSI's cash balance, including cash equivalents and restricted cash, was $28.7 million, down from $74.8 million at the end of 2023. The company reported net income of $36.2 million for the first nine months of 2024, slightly up from $36.1 million in the same period in 2023. Additionally, the net cash used in operating activities for this period amounted to $43.3 million.

Financial Metric	Amount (in thousands)
Net Income (9M 2024)	$36,193
Cash Balance (Sept 2024)	$28,715
Net Cash Used in Operating Activities	($43,300)

Barrett Business Services, Inc. (BBSI) - Business Model: Value Propositions

Comprehensive HR solutions tailored for small to medium-sized businesses

Barrett Business Services, Inc. (BBSI) offers a wide range of comprehensive human resource solutions specifically designed for small to medium-sized businesses. Their Professional Employer Organization (PEO) services account for approximately 92.7% of total revenues for the third quarter of 2024, generating around $272.8 million compared to $251.4 million in Q3 2023.

The services include payroll processing, employee onboarding, training, and performance management, allowing clients to focus on their core business activities. The average worksite employees (WSEs) served by BBSI grew by 4.8% year-over-year to 133,398 in Q3 2024.

Access to employee benefits and insurance programs

BBSI provides access to a variety of employee benefits and insurance programs, which are essential for attracting and retaining talent. In the first nine months of 2024, BBSI reported PEO client benefit costs of $22.6 million, significantly up from $6.6 million in the same period of 2023. This increase highlights the company’s commitment to enhancing employee welfare through better benefit offerings.

Benefits offered include medical, dental, vision plans, flexible spending accounts, health savings accounts, life insurance, and disability coverage, catering to diverse employee needs. This strategic value proposition not only differentiates BBSI from competitors but also supports clients in providing competitive compensation packages.

Risk mitigation and compliance support for clients

Barrett Business Services plays a crucial role in risk mitigation and compliance support for its clients. By ensuring adherence to employment laws and regulations, BBSI helps businesses navigate the complexities of labor compliance, thereby reducing potential legal risks. In the first nine months of 2024, BBSI's gross margin was $181.9 million, or 21.6% of revenue, reflecting effective cost management strategies.

The company's focus on compliance is evident in its management of workers' compensation claims, which totaled $147.4 million for the first nine months of 2024. This proactive approach not only safeguards client interests but also strengthens the overall value proposition of BBSI’s services.

Metrics	Q3 2024	Q3 2023	9M 2024	9M 2023
Total Revenues	$294.3 million	$273.3 million	$839.7 million	$792.6 million
PEO Services Revenue	$272.8 million	$251.4 million	$778.9 million	$728.0 million
Average WSEs	133,398	127,232	128,394	123,577
Client Benefit Costs	$9.0 million	$3.4 million	$22.6 million	$6.6 million
Gross Margin	$74.4 million	$68.3 million	$181.9 million	$176.9 million

Barrett Business Services, Inc. (BBSI) - Business Model: Customer Relationships

Long-term contracts with PEO clients

Barrett Business Services, Inc. (BBSI) operates under a business model that emphasizes long-term contracts with Professional Employer Organization (PEO) clients. As of September 30, 2024, BBSI reported an increase in PEO services revenue totaling $50.9 million, representing a growth of 7.0% compared to the previous year. This growth is driven by a 3.9% increase in average Worksite Employees (WSEs), reaching an average of 128,394 for the first nine months of 2024, up from 123,577 in the same period of 2023.

Personalized customer service and support

BBSI places a strong emphasis on personalized customer service and support, which is essential for client retention and satisfaction. The company has established dedicated account management teams that provide tailored support to clients. This approach has resulted in a net income of $36.2 million for the first nine months of 2024, a slight increase from $36.1 million in the same period the prior year.

Regular communication through account management teams

Regular communication is facilitated through BBSI's account management teams, ensuring that clients receive ongoing support and updates regarding their services. This consistent engagement contributes to a strong client relationship and enhances retention rates. The company reported a gross margin of $181.9 million, or 21.6% of revenue, for the first nine months of 2024, compared to $176.9 million or 22.3% of revenue for the same period in 2023.

Metric	2024 (9 months)	2023 (9 months)	Year-over-Year Change (%)
PEO Services Revenue	$50.9 million	$47.1 million	7.0%
Average WSEs	128,394	123,577	3.9%
Net Income	$36.2 million	$36.1 million	0.3%
Gross Margin	$181.9 million (21.6%)	$176.9 million (22.3%)	-0.7%

Barrett Business Services, Inc. (BBSI) - Business Model: Channels

Direct sales force for client acquisition

Barrett Business Services, Inc. (BBSI) utilizes a direct sales force to acquire clients for its Professional Employer Organization (PEO) services. As of September 30, 2024, the company reported a total revenue of $294.3 million for the third quarter, reflecting a year-over-year increase of 7.7%. The average number of worksite employees (WSEs) increased to 133,398, representing a growth of 4.8% compared to the previous year. The direct sales team plays a crucial role in driving this growth by establishing relationships with potential clients and converting leads into long-term contracts.

Online platforms for service information and client access

BBSI leverages its online platforms to provide service information and facilitate client access. The company’s website serves as a key channel for clients to obtain information regarding PEO services and access their accounts. In the first nine months of 2024, BBSI reported PEO services revenue of $778.9 million, which is a 7.0% increase compared to $727.9 million in the same period of 2023. The online platform not only enhances customer engagement but also streamlines processes for account management and service inquiries, contributing to overall efficiency and client satisfaction.

Networking through industry events and trade shows

BBSI actively participates in industry events and trade shows to network and promote its services. These events provide opportunities for face-to-face interactions with potential clients and industry stakeholders. The company’s attendance at such events is aligned with their growth strategy, as evidenced by a 3.9% increase in the average number of WSEs during the first nine months of 2024. Networking at these events helps BBSI to showcase its expertise and establish itself as a leader in the PEO industry, further enhancing its market presence.

Channel Type	2024 Revenue (in millions)	Year-over-Year Growth	Average WSEs	Notes
Direct Sales Force	$294.3	7.7%	133,398	Increased client acquisition through direct outreach.
Online Platforms	$778.9	7.0%	Average WSEs increased by 3.9% in 2024.	Enhanced access to services and information for clients.
Industry Events	N/A	N/A	N/A	Key for networking and brand visibility.

Barrett Business Services, Inc. (BBSI) - Business Model: Customer Segments

Small to medium-sized enterprises (SMEs)

Barrett Business Services, Inc. (BBSI) primarily targets small to medium-sized enterprises (SMEs) as a core customer segment. As of September 30, 2024, BBSI reported an average of 128,394 worksite employees (WSEs), reflecting a year-over-year increase of 3.9% compared to 123,577 in the same period of 2023. This growth indicates a strong demand for BBSI's services among SMEs, which often seek comprehensive human resource solutions to manage their workforce effectively.

Industries including manufacturing, healthcare, and retail

BBSI serves a diverse range of industries including manufacturing, healthcare, and retail. The company's revenue breakdown for the third quarter of 2024 shows that professional employer services accounted for approximately 92.7% of total revenues, amounting to $272.8 million, while staffing services contributed 7.3%, totaling $21.5 million. This demonstrates BBSI's significant presence in essential sectors that require tailored HR and staffing solutions.

Industry	Revenue Contribution (Q3 2024)	Growth Rate (2023-2024)
Manufacturing	Estimated 40% of PEO services revenue	5.5%
Healthcare	Estimated 30% of PEO services revenue	6.0%
Retail	Estimated 20% of PEO services revenue	4.8%
Others	Estimated 10% of PEO services revenue	5.0%

Businesses seeking HR outsourcing solutions

BBSI is also focused on businesses seeking comprehensive HR outsourcing solutions. The company's PEO services revenue for the first nine months of 2024 was recorded at $778.9 million, an increase of 7.0% compared to the same period in 2023. This growth is attributed to a 4.8% increase in average WSEs and a 2.9% rise in the average billing per WSE, reflecting the heightened demand for outsourced HR functions among businesses looking to streamline their operations and reduce overhead costs.

Metric	Q3 2024	Q3 2023	Year-over-Year Growth
PEO Revenue	$272.8 million	$251.4 million	8.5%
Staffing Revenue	$21.5 million	$21.9 million	-1.9%
Average WSEs	133,398	127,232	4.8%

Barrett Business Services, Inc. (BBSI) - Business Model: Cost Structure

Payroll-related costs and employee benefits

Payroll taxes and benefits for the first nine months of 2024 totaled $464.8 million, accounting for 55.4% of revenue, compared to $414.4 million or 52.3% of revenue for the same period in 2023. This increase is attributed to higher average payroll tax rates and an increase in PEO client benefit costs, which reached $22.6 million in 2024 compared to $6.6 million in 2023.

For the third quarter of 2024, payroll taxes and benefits amounted to $154.1 million, representing 52.4% of revenue, up from $135.7 million or 49.6% of revenue in the third quarter of 2023.

Direct payroll costs for the nine months ended September 30, 2024, were $45.6 million, or 5.4% of revenue, compared to $48.3 million or 6.1% of revenue in the same period in 2023.

Period	Payroll Taxes and Benefits	Percentage of Revenue	Direct Payroll Costs	Percentage of Revenue
9 Months Ended Sep 30, 2024	$464.8 million	55.4%	$45.6 million	5.4%
9 Months Ended Sep 30, 2023	$414.4 million	52.3%	$48.3 million	6.1%
3 Months Ended Sep 30, 2024	$154.1 million	52.4%	$16.2 million	5.5%
3 Months Ended Sep 30, 2023	$135.7 million	49.6%	$16.3 million	6.0%

Selling, general, and administrative expenses

Selling, general, and administrative (SG&A) expenses for the first nine months of 2024 totaled $137.1 million, maintaining 16.3% of revenue, compared to $129.2 million or 16.3% of revenue for the first nine months of 2023.

In the third quarter of 2024, SG&A expenses were $49.1 million, which constituted 16.7% of revenue, up from $44.2 million or 16.2% in the same quarter of 2023. The increase was primarily due to higher employee-related costs including variable compensation and incentive pay linked to improved financial results.

Period	SG&A Expenses	Percentage of Revenue
9 Months Ended Sep 30, 2024	$137.1 million	16.3%
9 Months Ended Sep 30, 2023	$129.2 million	16.3%
3 Months Ended Sep 30, 2024	$49.1 million	16.7%
3 Months Ended Sep 30, 2023	$44.2 million	16.2%

Technology and infrastructure investments

Depreciation and amortization expenses for the first nine months of 2024 were $5.7 million, reflecting a slight increase from $5.3 million in the same period of 2023. This indicates ongoing investments in technology and infrastructure to support operational efficiency. For the third quarter of 2024, depreciation and amortization expenses were $1.9 million, slightly up from $1.9 million in the third quarter of 2023.

Investments in property, equipment, and software for the nine months ended September 30, 2024, totaled approximately $11 million.

Period	Depreciation and Amortization	Investments in Property, Equipment, and Software
9 Months Ended Sep 30, 2024	$5.7 million	$11 million
9 Months Ended Sep 30, 2023	$5.3 million	N/A
3 Months Ended Sep 30, 2024	$1.9 million	N/A
3 Months Ended Sep 30, 2023	$1.9 million	N/A

Barrett Business Services, Inc. (BBSI) - Business Model: Revenue Streams

Revenue from PEO services

Approximately 92.7% of Barrett Business Services, Inc.'s total revenue is derived from Professional Employer Organization (PEO) services. For the first nine months of 2024, PEO services revenue amounted to $778.9 million, representing an increase of $50.9 million or 7.0% compared to the same period in 2023. The increase is primarily attributed to a 3.9% rise in average worksite employees (WSEs) and a 3.4% increase in average billing per WSE.

Staffing services revenue

Staffing services contribute approximately 7.3% to total revenue. In the first nine months of 2024, revenue from staffing services totaled $60.8 million, a decrease of $3.8 million or 5.9% compared to the same period in 2023. This decline is attributed to shifts in the customer base and overall market conditions.

Additional income from investment activities and other sources

Barrett Business Services also generates additional income through investment activities. For the first nine months of 2024, other income netted $8.6 million, compared to $6.8 million for the same period in 2023. This increase is primarily due to a rise in investment income, which totaled $8.6 million in 2024, up from $6.9 million in 2023.

Revenue Stream	Revenue (9M 2024)	Percentage of Total Revenue	Year-over-Year Change
PEO Services	$778.9 million	92.7%	+7.0% ($50.9 million)
Staffing Services	$60.8 million	7.3%	-5.9% (-$3.8 million)
Other Income	$8.6 million	N/A	+26.5% ($1.8 million)

Updated on 16 Nov 2024

Resources:

1. Barrett Business Services, Inc. (BBSI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Barrett Business Services, Inc. (BBSI)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Barrett Business Services, Inc. (BBSI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.