Rising flow

28 February 2008

Thirty-five member companies of SC&RA gained a financial “snapshot” of their industry by being part of the association's 2007 Financial Benchmarking Study. The 68-page study focuses on the aggregate responses of the companies to a confidential survey of their operations, based on their fiscal years ending between 30 June 2006 and 31 May 2007.

Although the 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 Financial Benchmarking Study contains plenty of interesting facts and figures available nowhere else, but it offers considerably more than that,” said Joel Dandrea, SC&RA executive vice president. “When it is 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.”

In practical terms the study will help companies answer a number of important questions: Exactly how much more money could I be making if I managed my cost of services as efficiently as my top-performing peers? How does my operating profit compare to others in my type of operation? What specific action plans can I put in place at my company to get my numbers in line with the profit leaders? How do my cash flow and liquidity levels compare to others? Exactly how much more cash would I have in the bank if I achieved improvements in this area? Am I making the most efficient use of my assets and equipment? Are my employees as productive as others in the SC&RA? Are my staff costs in line?

The study becomes even more useful when combined with the company consulting report. These individual 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 profit, net profit, and expense control

productivity – of staff and equipment

financial position – managing assets and controlling debt

cash flow – managing the working capital cycle.

The studies are one of the most valuable benefits that the association offers because they can make a huge difference for all three of the service types, according to Dandrea.

Consider profitability

Among specialized transport companies surveyed, the top half of companies had 10.5% in profit before tax, plus owner compensation of 2%, for total profit to owners of 12.5% (compared to 8.2% for all specialized transport companies surveyed). Multiplying this 4.3% difference by the median sales for all companies of US$8,782,357 results in more than $377,000 in additional profits for those who can match the expense controls of the top half.

Among crane rental companies surveyed, the top half of companies had 13% in profit before tax, plus owner compensation of 4% for total profit to owners of 17.8% (compared to 10.2% for all crane rental companies surveyed). Multiplying this 7.6% difference by the median sales for all companies of $8,614,623 results in more than $654,000 in additional profits for those who can match the expense controls of the top half.

Among rigging companies surveyed, the top half of companies have 8% in profit before tax, plus owner compensation of 4.3%, for total profit to owners of 12.3% (compared to 8.6% for all rigging companies. Mutliplying this 3.7% difference by the median sales for all companies of $12,852,652 results in more than $475,000 in additional profit for those who can match the expense controls of the top half.

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, Washington, US, has continued to refine the techniques it introduced to SC&RA seven studies ago. The study author, Barbara Carper, CPA, has compiled previous Financial Benchmarking studies for SC&RA. BRS also has worked with some of the nation's largest, most-respected corporations, including Anheuser-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 $495.00. Although you would not have access to a tailored consulting report, the SC&RA Financial Benchmarking Study is packed with useful information, including action plans for success. To order telephone: +1 (703) 698 0291.

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