Contractor Industry Trends

Sep 18th, 2014

The Benchmarking team has over the years seen a consistent pattern observed in contractor industries. They have found that, as turnover increases, net profit margin tends to decrease. An even more interesting fact is that the net profit dollar per working owner increases, rather than decreasing with profit margins.

They explain this in terms of a smaller company with a higher profit margin (eg $250,000 with 10%) than a larger company (e.g. $1,000,000 with 5%), will still not have the same amount of profit available to its owners (in this example $25,000 versus $50,000).

One of the take home messages from this observation is that owners in larger companies have the ability to work less hours, whilst still earning the same net profit $ per owner as their smaller counterparts.

If you’re in the Contractor Industry and working long hours or not happy with the business performance, you may need to look at what your competitors are doing differently. One option is to Benchmark your business against industry peers, to boost net profit and understand what others are doing to work less and earn more.

There is a tool used by Savvy business owners, accountants and business advisory firms called the Benchmark Suite. It’s an independent online platform recommended by leading business professionals. To gain a competitive edge in your business, go to our “Business Owner” section on the homepage to find out more about the tool.

Are you an Accountant or Business Advisor? Fill out the below form for a FREE TRIAL of the Benchmark Suite.

Recent Articles

Getting the Most out of Personnel Productivity Benchmarks

09th September 2019

As with any ‘ratio’, personnel productivity is best measured by linking an ‘input’ to an ‘output’. The key ‘input’... Read More

Manage Your Client’s Margin – Spend Better Before Spending More

06th September 2019

If your client has a gross profit margin problem, what is the natural reaction you are going to get... Read More

Why Advisors Should Benchmark Their Clients Against Competitors

09th August 2019

As a business owner, competition can be intimidating.  However, it can also drive to achieve impressive results. The important... Read More

Categories