Financial Benchmark Survey Now Underway

If you’re like most ACPA members, you recently finalized your 2015 financials, and with the help of your accountant, have satisfied the tax man with the required information and payments. Happy to be done with such an unpleasant task, you filed away the reports and returned your attention to the “real” business. But wait! Not so fast! Those reports contain a wealth of information to answer questions that have been nagging you all year. If only you had the time and a process to put the information to work for you.

That’s where the ACPA Financial Benchmark Survey comes in. Survey collection is now underway, and those who submit their information by April 30 will gain CFO-level tools, insights and conversations that would cost thousands of dollars to receive from an outside consultant. Here are six ways members can benefit from investing their time and energy to participate.

1) Learn what other companies your size are making.

The study contains financial profiles for companies of various sizes, based on their 2015 concrete pumping revenue. From the profiles, you can determine just how much gross profit margin companies your size typically earn, see how much of each revenue dollar is spent on expenses like advertising, rent, repairs and maintenance, staff costs and more, and learn just how much falls to the bottom line. Our most recent study showed that in 2013, companies with revenue between $2 and $6 million earned 10 percent at the bottom line after paying compensation to owners. It also showed that companies this size had the lowest average equipment repairs and maintenance costs, at 8 percent of revenue.

2) Bring people up in the business.

The process of transferring your numbers to the survey form leads you to see your business in a new light. The instant assessment that prints directly from the survey provides immediate eye-opening feedback. Assigning this task to next gen management builds financial awareness. Reviewing the study results together is a great exercise in collaboration for leaders and protégés, as they assess the strengths and weaknesses of the company, identify priorities and brainstorm solutions for a go-forward business improvement plan. Participating in the study process gives everybody a better understanding of the financial side of the business. With all the players on board, teams achieve more. And engaging future leaders in this way sets the stage for prioritizing financial focus and results in your management process.

3) Test your new ideas.

Perhaps you’ve recently taken a new direction or approach to your market, your processes, your staffing plan or your equipment investment strategy. Or you simply want to determine the impact of a proposed price increase. Industry comparisons provide business intelligence that can support or challenge your strategic directives. Assessing the costs, staffing and equipment profiles available in the study lifts your own understanding of industry conditions and trends. This understanding transforms the reports of your own business metrics from a list of statistics and percentages to objective feedback that puts your results and strategies in perspective.

4) Improve financial communications about branch profitability.

Members with multiple locations may submit a survey for each location, and receive both branch and consolidated company analysis. This enables managers responsible for a division or location to show owners how they stack up against industry standards. And the study’s “Guide to Benchmarking” provides a structure for financial conversations that helps non-financial users make sense of the reports. Applying the steps outlined in the Guide improves the quality of financial feedback and communication between owners and managers, so you can take your business to the next level.

5) Justify business value.

If you’re buying or selling a business, industry benchmarks provide the business intelligence to assess the financial efficiency and profit potential of the subject company. Sellers who are outperforming industry averages may be a more attractive target, and may be in a position to negotiate for a premium price for their fleet. Buyers who compare the target company’s results to industry benchmarks can reveal opportunities for improvement, which may leverage their return on investment.

6) Borrow better.

If you’re not completely comfortable talking about financial information with lenders, you’re not alone. Building a longstanding relationship based on mutual respect and good communication can make the interactions more comfortable. Still, many people feel they are at a disadvantage when negotiating for the financing they need. You can strengthen your standing by establishing a supportive relationship with your lender. Sharing industry financial information is a tremendous starting point. Use the ACPA Financial Benchmark Study to show how you stack up against your peers, and to demonstrate that you have your thumb on the pulse of your industry. If the study shows that you are a strong performer, you may be able to negotiate a better interest rate based on your standing in the industry. If you’re underperforming, don’t be afraid to talk about your challenges. Turn a negative into a positive by talking about how you have—or are planning to—change your operations to improve profit and cash flow. You can borrow more effectively when you and your lender both understand your business better, and when you can demonstrate that you manage by the numbers.

Study participants receive a report on industry trends that contains metrics that assess equipment utilization, labor costs, profit, cash flow, debt control and return on investment, to name a few. They also receive a confidential financial assessment, comparing their own results to the benchmarks from the study.

So pull those 2015 financials out of the file and use them to guide your pathway to a better business. The ACPA Benchmark Survey, and the reports you’ll receive if you participate in the project, can help make the most of your year-end reports, and deliver valuable insight for making 2016 your most successful year ever.

About the ACPA Financial Benchmark Survey: The project is produced by an independent financial benchmarking firm, Profit Soup. Members’ information is completely confidential. It is not shared with the ACPA or any other party. Only aggregate figures are included in the report. To receive a survey or more information, contact ACPA[at]profitsoup[dot]com.

Because they believe the future of the industry depends on the financial success of each member, the cost of this project is fully funded by our valued industry partners, Fritz-Pak Corporation and Schwing America, Inc.

About the Author:

Barbara Nuss is president and founder of Profit Soup, ACPA’s financial benchmarking partner. Her primary focus is on helping clients gather and use information to build value in their business. She draws from her management and CPA backgrounds, along with her years of experience working with industry leaders in franchising and trade associations to build and implement maximum value benchmark initiatives. She is skilled at analyzing and presenting financial information, so her clients can use it to learn from the past to set direction for the future.