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NOW UPDATED FOR 2006!
The most recent benchmarking data for Plumbing Contractors is now available, both in print and in downloadable PDF format, with your purchase of the Plumbing 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 Plumbing Contractors for the financial years up to June 30, 2004. The survey was based on 57 businesses.
Running a plumbing business requires more than just buying the right materials and joining them together properly. Owners are faced with the demands of finding enough work to keep themselves and staff busy for enough hours of the week. This is a key starting point in driving the revenue line of the business. Then there are the pricing decisions: how much to charge for labour and how much to mark-up those materials.
Other overheads just crop up, and they need to be kept well under control. Keeping on top of unpaid accounts might not sound much like plumbing, but it is important, too. Large write-offs because a customer doesn't pay means that the firm has done all that work literally for nothing! These are the management challenges facing the plumbing industry, so use the guide as a checklist of each separate function.
Survey Results
These are the results of a survey of plumbing contractors. These results should not be considered to be representative of all plumbing 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 plumbing contractors in our survey were from the eastern states of Australia. New South Wales was the most heavily represented area, while there were no firms located in Tasmania in our sample.
Businesses from regional towns and cities (population over 20,000) and rural areas (population under 20,000) represented around 68% of the entire group. The rest were city-based businesses.
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 |
|---|
| Materials Used | 41.89% | 21.04% | 69.89% | | Sub Contractors | 3.05% | 0.00% | 7.76% | | Wages & Salaries (staff only, not
owners) | 16.75% | 0.94% | 32.81% | | Gross Profit | 55.06% | 28.67% | 71.17% | | Other Depreciation, Lease and Hire Purchase | 1.49% | 0.14% | 4.24% | | Vehicle Operating Costs | 4.82% | 1.37% | 8.29% | | Hourly Rates for Trades Staff | $40 | $33 | $45 | | Net Profit (bos*) | 21.78% | 7.25% | 36.29% | | Average Jobs Completed per Trades Person per
Year | 143 | 44 | 208 |
*(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 2.36%;
- Interest, Bank Charges etc of up to 3.85%;
- All Occupancy Costs of up to 3.63%;
- Repairs & Maintenance of up to 3.35%;
- Staff On Costs of up to 5.36%;
- Telephone & Fax of up to 3.76%;
- All Other Expenses of up to 8.77%.
To summarise this, larger businesses had:
- Higher net profit per working owner;
- A personnel structure where employees were a higher proportion of the overall personnel mix;
- Lower non-salary overhead costs which compensated in part for their lower gross profit margins;
- Better asset productivity in spite of waiting longer to be paid by their customers.
The more profitable businesses:
- Had higher personnel productivity, reflected in several different ratios; and
- Had a personnel mix where the owners tended to be a lower percentage of the total personnel.
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