NOW UPDATED FOR 2006!
The most recent benchmarking data for Metal Fabricators & Engineering Works is now available, both in print and in downloadable PDF format, with your purchase of the Metal Fabricators & Engineering Works Business Benchmarking Guide. (NOTE: 2006 updates not yet available in online HTML subscription version of this guide - please call MAUS Sales Centre on 1 300 300 586 for further info.)
This Small Business Profile presents the results of a survey of Metal Fabricators & Engineering Works firms for the financial years up to June 30, 2004. The survey was based on 53 businesses.
In this sector, ownership of firms is normally held tightly - typically one or two owners - and growth is achieved with extra employees. This structure can deliver rapid growth in profit per owner when the business runs well. However, it does come at a cost - finer gross profit margins in the larger and in the more profitable firms; higher outlays on wages.
This gives less scope for the firm to cope with a sudden 'shock". So it's all the more important to closely monitor indicators such as costs, new jobs, and of course, personnel productivity. Accurate quoting is a key skill to develop, so too is delivering the goods within the budget! Higher premises productivity also helps to improve profit, but it can't always be fixed quickly. So this sector calls for close management attention. If that is achieved, the financial results will flow.
These are the results of a survey of metal fabricators and engineering works. These results should not be considered to be representative of all the metal fabricators and engineering works in Australia. However, they will allow business owners to identify strengths and weaknesses in the ability of their business to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of business performance and comparing them with benchmark performance levels currently being achieved by the sample of businesses in this survey.
Most of the firms in our survey were from the eastern states of Australia. Queensland was the most heavily represented area, while there were no firms located in Tasmania or the Northern Territory in our sample.
Businesses from metropolitan areas of capital and major provincial cities (Newcastle, Geelong etc) represented around 37% of the entire group. A further 40% were businesses from larger regional cities and towns (population over 20,000). The remaining businesses were from small rural centres (population less than 20,000).
Around 74% of businesses that participated in the survey rented their premises.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 6 th highest and 6 th lowest actual result for each performance indicator. The range of values shown therefore covers the middle 80% of reported results.
|Cost of Goods Sold including Sub Contractors||38.70%||20.63%||57.26%|
|Wages & Salaries (staff only, not
|Rent of Premises#||2.95%||1.30%||5.19%|
|Depreciation, Lease and Hire Purchase||3.54%||0.97%||7.25%|
|Vehicle Operating Costs||2.16%||0.69%||3.49%|
|Net Profit (bos)*||15.33%||4.42%||27.63%|
|Gross Profit (Income less materials & payments
to independent sub-contractors) per person||$63,183||$42,210||$82,322|
|Assets per person||$52,167||$29,781||$66,740|
# calculation is
based on only the firms with a rental expense *(bos) before owners' salaries and
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your business falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 3% of total income on average; however some businesses reported some larger results for such items as:
- All Insurance of up to 4.31%;
- Interest, Bank Charges etc of up to 4.77%;
- Other Occupancy Costs of up to 7.57%;
- Repairs, Maintenance, Hire of Plant, Tool Replacement of up to 11.42%;
- Staff On Costs of up to 6.28%;
- All Other Expenses of up to 10.53%.
To summarise this, larger businesses had:
- Higher profits per owner
- The lowest average net profit margins, due in part to lower gross profit margins
- A staffing structure where the number of owners per firm did not increase much, but the number of employees increased rapidly.
The more profitable businesses:
- Were much larger on average
- Had a very tightly-held ownership structure, concentrating profits among a small number of owners
- Had lower non personnel overheads, which offset the impact of their lower gross profit margin
- Had higher personnel productivity, which kept the rate of increase in salary cost to a minimum
- Had higher asset turnover, in spite of a higher asset base per person
- Used their floor space more intensively.