I'm just having conversations with executives within some of our partners here at ALKEME, and BBSI has been a strong partner with ALKEME over the last few years. Had a few questions I wanted to ask you today, and hopefully you're ready. But I appreciate the time, and thanks for taking a few minutes to meet with me today. Thanks, Jim, for having me, and thanks for ALKEME for being a partner. It's been a tough time to be a business owner. If you think of, if you think of everything that's changed in the last... since COVID, right? You've exhausted the COVID relief funds. You've had inflation and rising material and labor costs. You've had tariffs that were driving things depending upon your business. You've had, you know, shifting demand for the consumer for product base. We've had AI come out. Is AI gonna eat the world? What's gonna happen to the business owner? We have a good pulse on the economy. And just in general, you know, when it's... when things are hard, PEOs are more valuable. We work with our clients more than just running payroll. We work with them on the HR, we work with them on hiring, firing, we work with them on business strategy, how to be a good employer. We can help them with a good employment package where we bring that small, you know, we bring the big benefits buying power down to the small business. We can bring the scale down to the small business and help them. So typically when times are tougher, we do better. That's great. We're certainly seeing that across the industry right now. So when you think of BBSI, and I'm going to assume there's people that are going to listen to this who have never even heard of BBSI, how would you frame up today versus how you would have framed up BBSI, let's say three or four years ago? Sure. So we are, if you're unfamiliar with BBSI, we are a PEO. We're national. We have pretty much a hundred sales offices. We're in almost every state. It's easier to say the states we're not in. The states we're not in, it's because they don't have a heavy population like North Dakota. So we're a national PEO. We are broker-friendly. We like to treat our producers as our clients as well, make sure we have five-star service that we provide. But our differentiator is we have all the tools and the trades of a PEO from payroll to workers' comp to benefits to tech, all of those things. But our real differentiation is our people. In all of our markets, you will have a local business team, and that business team is made up of a business unit. And in there you have a business consultant, which is like the tip of the spear. You have a senior HR person. You have a senior risk person that can deal with, you know, risk, safety, OSHA, things of that nature. And then we also have a payroll data person. So that's the core team. And then if you buy benefits, we have a benefits consultant that can help you on the benefits side as well. You know, if the client has an issue or you have a question, we are the opposite of the "1-800, what's your account number." Our differentiation is you have everybody's email address, everybody's cell phone, you know where our branch is, you can pop in at any time, and that's really our value prop of, you know, if something hits the fan, you don't have to call an 800 number and sit in the queue. You could just stop by the branch or you can call your person that's at the branch. Yeah. Which I think is fantastic. I've visited a lot of your BBSI offices, and what I've come to realize is that they sit all together. So if there's something that comes up, they can reach over to somebody across the cubicle and get an answer, or they can help resolve a client situation that's coming up or a challenge that they're dealing with. And, I love the fact that you do have the local offices, which kind of leads me into what you alluded to, Gary, as your broker strategy and really how BBSI differentiates yourself from the rest of the PEOs out there. I believe that you have a more, I'll say, distinctive go-to-market strategy or model, and it's more broker-centric, as you mentioned, rather than kind of direct to employer. Would you kind of walk through kind of the philosophy behind that, is why is the broker... why is the broker the right partner for BBSI versus just going direct? Yeah. So you know, we've had a cognitive strategy that we wanted to be broker-friendly, right? Brokers have the trust of the small business. And we're not trying to usurp that trust. First and foremost, we're broker-friendly. We pay commissions similar to the way the insurance market's going to pay, right? If you can, if you're going to get a commission on a comp at Carrier X, we're going make sure that we can, you know, be in the same market as that price for the commission. So you don't lose anything by going with BBSI on the commission side. The second thing is we view you as clients as well, right? So we make sure that when we bring, you know, when we onboard a new client, we have a conversation with you as the broker of, how much do you want to be involved. Do you want to be involved in everything? Do you want to be involved in some things? Do you want to be involved in the important things? We'll make sure we do the renewal with you when we get, you know, when we get our indications. But we will create a service plan for you to make sure that you're getting what you need from our side. We have the highest net promoter score in the industry. So clients recommend us to other friends. Number one. And then number two, I don't have publications on this, but we have probably the highest retention in the industry. So our clients who join us stay with us. And typically when they leave, it's because they sell, or M&A, or that type of thing. That's our number one runoff reason. But I say that because if you put the business with us, we will take care of it. We will keep you in communications. And if you want, you can not be involved in the day-to-day and go sell more. So it's really... you put it with us, our average client stays with us for about nine years. Strategy of we will take good care of the client. We'll make sure you continue to get paid. We'll make sure that you're in the loop for everything. But if you want to be in the loop, great. If you don't want to be in the loop, we'd love you to go sell more BBSI. I have a lot of producers that love PEOs, and they understand the value proposition. They understand the differentiation that BBSI brings, but there's still a lot of brokers out there that look at PEOs as being a threat to the relationship. Maybe you could share a little bit about that. You did earlier, being that you're very broker-centric, I should say, but how would you address that for those skeptics out there, I'll say? If you have a client or a prospect and they're on one of the big competitor of ours' payroll platform, their model is direct sales: get them on for payroll, and then inside sales, they're just dialing, dialing, dialing and selling on their inside sales. So if you have a prospect or a client that's with one of the other bigs for payroll, you know that their PEO division is going to call them to try to take that business from you. So that's what the market does. We don't do that. We don't have a direct sales team. Our sales team is responsible for working with referral partners and referral partners only. If you bring a client to BBSI, we give a BOR to you. We make sure we protect it. Somewhere down the road, say the client's going to BOR somewhere else, or they're asking for a loss run, we're going to go to you and say, hey, they're asking for a loss run. When's the last time you talked to them? Or hey, we got a BOR. We're going to cool off for ten days to see if you can get the business back. So we really try to protect it for you. We have SOPs on our side for what our expectations are for how we treat referral partners as a client. We want to make sure you have the same five-star experience that we want to deliver to our clients as well. Yeah, I wanted to shift a little bit to why brokers don't bring in PEOs because we see that. You have some that are very pro PEO, like I mentioned before, you have some that, they won't. I find that the hesitancy that the brokers have in leading with PEO is one, I think there's a lot of misinformation out there. Unfortunately not all PEOs are created equal, and sometimes they've experienced... they found the bad apple, right, and so because of that they base their ongoing experience, based on maybe working with one PEO versus another. When you think about, they might have a client who clearly needs one, but they don't introduce a PEO, what do you think is typically going through that broker's head that has like maybe objections and potentially some anxiety about bringing in a PEO. What are you hearing most often out there? Yeah. You know, when you're in the discovery, and you're hearing those pain points and... we're not gonna be a great fit for everybody. We're a great fit for most, but not everybody. But if you're hearing those pain points of, more than just, you know, an insurance pain point... is it an HR pain point? Is it a payroll? Is it a hiring? Is it a, you know, attracting of employees? Right? Those pain points are things that are triggers for us. For folks that are apprehensive to it, I think it literally gets back to that, you know, that you haven't... until you've seen it, until you brought a client along, until you've seen the onboarding, until you go to our stewardship meeting and you understand all the work that we're doing and the value we provide, it's really getting that first one in, us doing it well, and then you seeing it. Then after that, that's when the volume starts to increase. Like, typically when we have a new relationship, they want to... nobody wants to send you their crown jewel for their first one. Right? They're gonna send you... they're gonna send you the thing with hair; they're gonna send you the client that's a pain or the, you know, this or that, and see how you do to test you out. And we're fine with that. We know that we'll service it well. And by doing that, we'll earn your trust. Let's talk about a question that I probably, Gary, should have led with, and that's money. You know, brokers, no surprise to you, they're worried about bringing in a PEO potentially because they live and breathe in their livelihood around residual income on things like health, workers' comp. Depending on how you answer that, why hasn't the rest of the industry followed BBSI's lead on this? In general, we pay commission. We look at what the insurance market pays for either comp and benefits, and we try to mirror that on our side. So we will pay you a commission on the comp if you bring us the comp. We'll pay you commission on the comp and benefits if you bring us both. Say you don't know anything about benefits and you're a P&C broker. Bring us the P&C. If we write the comp, we'll pay you on the comp. If we write the benefits, we'll pay you on the benefits even though you're not even a benefits person. So if you think about it, if it's done well, it's an additional revenue stream for you as the agent. No, and I think that's what the brokers really value is, your going to have that flexibility, which is really good. When I'm talking to a lot of clients, and I think we're seeing it across the United States, we're seeing that the labor markets have been a bit volatile lately and the search for talent and labor. We've seen things like wage pressure. We're still seeing a lot of hesitancy to return to office tension. Right? And then you have these generational shifts. What are you guys telling clients about their workforce challenges right now, and how are... is BBSI kind of helping navigate some of those real challenges? I mean with wage pressure, return to office, you got the generational shifts that I mentioned. What are you guys telling clients? I'm a big believer in, you've got to practice what you preach. So if we want to teach our clients or coach our clients for how to be an employer of choice, we better be an employer of choice. So what we've been able to do is take that scale and break it down to that small business and say, alright, if you're having trouble hiring, why? Do you have a good benefits program? Do you have a good work culture? Do you have a good hiring practice? What's your interviewing like? We can help you on the interviewing side. If you can't hire somebody, we can do recruiting for you. We have recruiters that can go and do the recruiting. So we've got a whole, you know, a whole suite of products that are there to help them be successful if they want our help. We're a public company, and I would say that my pain is your pleasure, right? So we've got an independent board, we're SOC-1 compliant, ESAC compliant. We've got Deloitte as our auditor, to de-risk the organization. You know, even though we take, we lay off all of our insurance risks, we either share and layer it or we've got some of the different programs that we don't take the insurance risk. We don't have any debt. So I say that because we are a very clean organization. We're run very financially conservative. And I say that because, you know, if you put somebody with BBSI, like say, we have this thing that we call boot camp where all of our new hires come in, right? I view that we run this company conservatively so that this can be a place you can retire. So for you placing a client with BBSI, ultimately, I think it's a, you know, that client can stay with us until they want to exit their business. Which is great. That full life cycle. So I really appreciate you taking the time. I know you're, like I said, a busy guy. You got a lot of things you could have done with this hour, but you spent it with ALKEME and our producers and educating them on what's happening in the industry. And for that, I greatly appreciate, and I think they will as well, hearing from somebody like yourself on the perspective of BBSI in the industry. So thank you. I appreciate the opportunity, and we greatly appreciate the partnership with ALKEME. We do very well with you, and I view, you know, this relationship as only in its infancy, so I would love to love to do more with you.
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