The “big” in Big50 doesn’t affect eligibility for the award, but our Big50 benchmarks show that size matters. Typically, owners of larger companies earn larger salaries, although owner compensation is a much smaller percentage of total revenue. Smaller companies often generate higher profit percentages but fewer dollars all around.
But business risk is also a factor, particularly in this economy, and risk is much higher in large companies. The sweet spot this year appears to be companies with revenue in the $3M–$5M range. Although their risk ratio (revenue divided by owner compensation) is somewhat higher, they earn about 50% more on average than the owners of smaller companies with lower risk ratios.
While average revenue across all companies was down 9.5%, expanding and contracting companies were about equal in number. The 22 companies that shrank in 2009 earned 32.6% less revenue than in 2008, averaging about $2.9 million.
At the same time, 20 companies managed to grow by a healthy average of 25.1%, earning average revenue of about $4.9 million. Revenue for the remaining eight companies averaged $2.6 million and changed less than 1%.
—Sal Alfano, editorial director, REMODELING.
Notes: All values are averages unless otherwise indicated. All values are based on reported 2009 actuals unless an earlier year is specified.
1. The <$1M and $1M–$2M categories contained a large enough number of companies to warrant separate breakouts; the $300,000–$2M category provides easy comparison to previous years, when these categories were combined.
2. Averages in the “ALL” category do not include values from the four >$10M companies.
3. Risk Ratio measures compensation in relation to revenue (revenue ÷ compensation); the target value is 10 or lower.