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NOW UPDATED FOR 2006!
The most recent benchmarking data for Electrical Contractors is now available, both in print and in downloadable PDF format, with your purchase of the Electrical Contractors Business Benchmarking Guide. (NOTE: 2006 updates not yet available in online HTML subscription version of this guide - please call MAUS Sales Centre on 1 300 300 586 for further info.)
This Small Business Profile presents the results of a survey of Electrical Contractors for the financial years up to June 30, 2004. The survey was based on 91 businesses.
Here is a sector where the classic profitability measures, such as higher personnel productivity and lower overheads, are still important yet their impact is multiplied by the ownership structure of a firm.
Put simply, the ownership of firms are tightly held, normally only one or two active owners per firm, irrespective of the turnover level. As the turnover increases, extra profits generated by the extra people are concentrated in the hands of virtually the same number of owners. As a result, the profit per owner increases quickly even though net profit margins generally fall for the larger firms.
Survey Results
These are the results of a survey of electrical contractors. These results should not be considered to be representative of all electrical contractors in Australia. However, they will allow business owners to identify strengths and weaknesses in the ability of their business to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of business performance and comparing them with benchmark performance levels currently being achieved by the sample of businesses in this survey.
Most of the electrical contractors participating in the survey were from the eastern states of Australia. New South Wales was the most heavily represented area.
50% of the participating electrical contractors were from country towns with less than 20,000 population. The remaining electrical contractors were divided between larger regional centres (population over 20,000) and suburban/major regional cities.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 7th highest and 7th lowest actual result for each performance indicator. The range of values shown therefore covers the middle 80% of reported results.
| Indicator | Average | Low | High |
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| Materials Used | 37.63% | 22.06% | 51.19% | | Sub Contractors | 0.91% | 0.00% | 2.30% | | Gross Profit | 61.46% | 47.23% | 74.93% | | Wages and Salaries (staff only, not owners) | 18.41% | 0.68% | 34.43% | | Other Depreciation, Lease and Hire Purchase | 1.71% | 0.21% | 4.10% | | Vehicle Operating Costs | 5.21% | 2.39% | 8.94% | | Net Profit (bos)* | 24.93% | 9.93% | 40.24% | | Days' Stock on Hand | 23 | 0 | 44 | | Days' Debtors | 37 | 0 | 65 | | Hourly Charge Rate Qualified Trades Staff | $43 | $35 | $50 |
*(bos) before owners' salaries
and benefits
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your business falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 2% of total income on average; however some businesses reported some larger results for such items as:
- Advertising & Promotion of up to 6.60%;
- Accounting & Legal Fees of up to 2.44%;
- All Insurance of up to 2.78%;
- Interest Charges up to 3.79%;
- All Occupancy Costs of up to 4.05%;
- Repairs & Maintenance up to 5.26%;
- Staff On Costs up to 5.49%;
- Telephone & Fax up to 3.69%; and
- All Other Expenses of up to 10.12%.
To summarise this, larger businesses had:
- Higher profits per working owner
- Much lower net profit margins, resulting from higher salary costs and lower non-salary overheads
- Far more employees being supervised per active owner
- A less productive asset base, including slower recovery of amounts owed by customers
- Less capacity to fund their growth.
The more profitable businesses:
- Were larger on average
- Had higher personnel productivity levels
- Spent less of their turnover on non-salary overheads
- Had a personnel structure with far more employees and a reasonably constant number of owners. This pushed the wages cost up in the high profit firms, but this is not a weakness of those firms
- Used relatively more assets in the business than the low profit firms
- Held less stock but waited longer to be paid by customers.
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