Branch Break-Even
What does a branch need to generate to cover its own fixed cost?
This is the GP the branch itself needs to generate to cover its own fixed cost, converted to active temp headcount where you've supplied a conversion figure.
Why this comes up
A branch carries its own fixed cost, rent, a branch manager, local systems, separate from the agency-wide overhead the main break-even engine covers. Whether a specific branch is pulling its own weight is a different question from whether the agency as a whole is profitable, a branch can look fine buried in consolidated numbers while actually running below what it needs to cover its own dedicated cost. This engine isolates that branch-level break-even so it doesn't get lost in the aggregate.
How we calculated this
Branch Required GP = Branch Fixed Cost / (1 - Branch Variable Internal Cost Rate) Required Active Temps = Branch Required GP / Average GP Per Active Temp
Worked example, using the calculator's own defaults: $45,000 branch fixed cost, a 5% branch variable internal cost rate, and $1,299 average GP per active temp.
Branch required GP = 45,000 / (1 - 0.05) = 45,000 / 0.95 = $47,368 Required active temps = 47,368 / 1,299 = 36.5 temps
This branch needs about 36.5 active temps on assignment, at this average GP per temp, just to clear its own fixed cost, before contributing anything toward agency-wide overhead or profit above that.
What this means
- Branch required GP is a break-even floor specific to this branch's own fixed cost, it says nothing about whether the branch is hitting a profit target, only that it's covering its own overhead.
- Required active temps converts that floor into a headcount a branch manager can actually track week to week, which is usually more actionable than a dollar figure alone.
- A branch running below its required active temps for an extended period is a branch running at a structural loss, not a temporary dip, worth escalating before it compounds.
Limitations
This is a break-even level only, not a profit target; feed it intoGross Profit Required for Target Profitfor that. It also assumes average GP per active temp is representative for this specific branch, if the branch serves a different client or role mix than the agency average, use a branch-specific GP-per-temp figure rather than the agency-wide one.
Common mistakes
- Using agency-wide average GP per active temp for a branch whose actual client or role mix runs meaningfully different margins.
- Leaving branch variable internal cost rate at zero when the branch genuinely carries variable cost beyond its fixed overhead, like local commission structures.
- Treating a branch above its required active temps as automatically profitable at the level the owner wants, rather than checking it against an actual profit target.
Frequently asked questions
What belongs in "branch fixed cost"?
Costs specific to this branch and not already counted in agency-wide fixed overhead: branch rent, branch manager salary, local systems or licenses, anything that exists because this branch exists.
How is this different from agency-wide break-even?
Agency-wide break-even (Agency Break-Even Active Temps) covers overhead shared across the whole agency; this engine isolates cost specific to one branch so it doesn't get diluted in the consolidated view.
What if I run multiple branches?
Run this once per branch with that branch's own fixed cost and GP-per-temp figure, since both usually differ branch to branch.