Although this year's class of Big 50 remodelers displays great variety in size, business structure, target market, project focus, and geographic location, the averages tell a fairly consistent story. Here's a look at the statistical highlights.
It's misleading to think that volume is what puts the "big" in the Big50. While four in five winners this year are among the 4.1% of all remodeling firms producing more than $1 million worth of work annually, net profit is what really matters, numbers-wise. By this measure, small- and large-volume companies in this year's Big50 class performed about the same, with most averaging net profit of between 8% and 9%. In fact, the highest overall net profit of 19% was achieved by a company with less than $1 million in sales and a gross margin of 42%. Two other companies showed a net profit of 17% and 16% on sales of about $1.9 million, and overall, 18 companies achieved a net profit of more than 10%.
Slippage. Those numbers would have been higher had slippage not raised its ugly head. Slippage is the difference between estimated margin and actual produced margin, and while many companies set a target margin of 40% or more, only 14 companies in this year's class achieved or surpassed it. Another 19 companies reported produced margins of between 30% and 40%. Average slippage for the group was 4.5%.
People and productivity
Despite vast differences in volume and number of employees, the average field/office ratio is remarkably consistent at between 2.1:1 and 2.4:1. Average productivity, both in the office and in the field, was also fairly consistent. The exception is companies with more than $3 million in volume, which on average had nearly twice the productivity of most smaller companies.
Risk and reward
Many company owners receive more than a salary. They also benefit from the value of using a company vehicle, deducting the expenses of an in-home office, or additional revenue from leasing a personally owned commercial space back to the company as office space. Average total compensation for Big50 company owners follows a fairly regular progression. But a look at the Risk Ratio, which relates compensation to total sales, shows that owners of larger companies risk more -- often two or three times more -- than owners of smaller companies.
Average Volume & Margin
|Company Size||Total Sales||Produced Margin||Net Profit||Slippage|
|$1M - $2M||$1,554,959||35.5%||9.0%||-5.4%|
|$2M - $3M||$2,401,121||33.1%||8.8%||-3.8%|
|Company Size||Revenue per Office Emp.||Revenue per Field Emp.||Field/Office Ratio|
|$1M - $2M||$493,056||$252,689||2.4:1|
|$2M - $3M||$546,125||$281,107||2.1:1|
Average Owner Compensation & Risk
|Company Size||Total Owner Compensation*||Risk Ratio|
|$1M - $2M||$153,092||15.4|
|$2M - $3M||$200,788||15.4|
|*Includes salary, company vehicle, home office tax deductions, lease-back of company office, etc.|