E X A M P L E S
Importers / Distributors / Agencies / Business to Business Merchants etc
C O R E B U S I N E S S M O D E L S
Source a product, add a margin to cover overheads for sales personnel, warehousing, logistics and profit, then sell it fast enough to manage the gap between when you pay for the goods and when you get paid for the goods.
B E N C H M A R K I N G E X A M P L E S
Check out the details below and think about how you’d compare your business to the data referenced here.
ENGINEERING SURVEYING SERVICE
DEFINITION
Engineering Surveyors assemble and assess land and geographic information which is used for planning and regulation of the land, the sea and related structures
OVERVIEW
Recently the Surveyors industry employment level has grown by 53.5%. This is reflective of the growth that the economy has undergone, stimulating demand and employment numbers in the industry.
BEST PERFORMERS
The challenging economic conditions in which businesses now operate require owners and advisors to carefully examine business performance with regard to profit drivers, expense structures and their competitiveness in the market place. The following differentiators are what the top performers are doing:
Monitor & control overheads
Manage debtors
Improve staff retention
Develop and execute a marketing plan
Review pricing strategy annually
INDUSTRY SPECIFICS
The following have been identified as the specific differentiators of the high profit / high performing businesses (top 25%) that set them apart from the low profit businesses (bottom 25%)
More profitable practices are larger practices
Total Practice Income
Profit per working owner*
$845,652
Low Profit
$95,346
Low Profit
$3,818,801
High Profit
$399,524
High Profit
Average profit per principal is greater in large practices than it is in small ones. With size comes “critical mass” enabling practices to engage more employed professionals and to enjoy greater economies of scale. Larger practices are also more expensive to operate, therefore it is essential that you have a constant supply of work to utilise your available capacity.
More profitable practices have a constant supply of work and utilise their leverage effectively
Fee Earners per Owner
Total Income per Fee Earner
1.74
$336,222
10.19
$1,285,753
bps – before principals’ salaries and benefits
Total Personnel
3
4.4
The Professional Services industry as a pure business model sells time. Advantages accrue to those who can buy additional units of time (employed professionals) and on-sell their human capital at a profit. The leverage structure for a Professional Service firm is driven by the type of service that they provide. Firms providing ‘unique services’ or specialising in a niche will find it difficult to increase their leverage of human capital due to the specialised nature of their service, whilst firms which produce commoditised or homogeneous services will find the process of increasing their leverage cheaper and easier to do. The appropriate leverage structure needs to be considered when taking on work to ensure that the cost of production is managed as efficiently as possible. High profit firms have managed to balance their leverage of human capital to maximise productivity.