In praise of participation
24 April 2008
We wish to commend our member companies that capitalized on one of the most valuable benefits the association offers by participating in the SC&RA 2006 Financial Benchmarking Study.
Although these members paid nothing to participate, they gained invaluable information about their company's financial performance compared to that of other companies in their industry. To make the study even more relevant, the actual statistics and analyses were separated into three service types – specialized transport, crane rental and rigging.
The 79-page study contains plenty of interesting facts and figures available nowhere else, but it offers much more than that. Used properly, the study becomes a powerful management tool for improving profit and cash flow. The helpful suggestions for gaining maximum benefit from the study function much like a user's manual.
The study becomes even more useful when combined with the company consulting report. These individualized reports, seen only by the company covered, allow participants to measure their own specific results against benchmarks established by all companies responding to the survey.
The study measures financial performance in four basic areas:
•profitability – gross profits, net profits, and expense control
•productivity – of staff and equipment
•financial position – managing assets and controlling debt
•cash flow – managing the working capital (cash flow) cycle.
How big a difference can the study make? Consider the specialized transport sector, where top performers have 8.5% in profit before tax. Factor in owner compensation of 2.7% for total profit to owners of 11.2%. Next, compare that to 8.6% total profit for all specialized transport companies.
To see the importance of this 2.6% difference, multiply it by the median sales for all companies surveyed – $5,680,029. The result is more than $147,000 in additional profit dollars for those who can match the expense controls of the top half. “Their profit advantage comes from managing direct labor, equipment expenses and, to a lesser extent, sales, general, and administrative expenses,” notes the study, which includes similar analyses for the crane rental and rigging sectors.
Even top-performing companies that use the study to begin the process of improving their financial performance can boost profits in a meaningful way. These are proven strategies for identifying problems and possible causes as the basis for developing goals and action plans.
Business Resource Services (BRS), Seattle, WA, has continued to refine the techniques it introduced to SC&RA six studies ago. BRS also has worked with some of the nation's largest and most respected corporations, including Anheauser-Busch, Chase Manhattan Bank, and Harley Davidson.
If you missed the opportunity to participate in the study, you may still purchase a copy of the report for $495. Although you would not have access to an individualized consulting report, the SC&RA 2006 Financial Benchmarking Study is packed with useful information. To order, call 703-698-0291.
The study also will serve as the cornerstone of SC&RA's Financial Management Seminar, October 11-12, in La Jolla, CA. This year, the association has expanded the seminar to include seven additional sessions on such topics as international expansion, alternative risk financing, and negotiating favorable contracts.
The enhanced seminar exemplifies SC&RA's determination to help member companies maximize and protect their profits.