Dispatch #55 - Best in Class: Benchmark Your Firm

Each year, the Construction Financial Management Association (CFMA) publishes its annual benchmarker─a way to understand your firm’s financial performance by comparing it to other contractors.

Here are a few average values among the 1,450 contractors that supplied data to CFMA regarding their 2019 fiscal year:

• 10.9% growth in backlog

• 56 Days Sales Outstanding (DSO)

• 16.8% gross profit margin

• Profit Before Tax (PBT) margin of 5.4%.

The typical specialty trade contractor reported $20 million in revenue and is structured as an S Corporation. What was surprising to me is that 11.5% of the companies have an Employee Stock Option Plan (ESOP). And regarding their bottom line? Typical PBT was 6.5%, but the best in class reported 12.8% PBT.

The takeaway? Let’s set the bar high and be Best in Class.

Need help with this or other financial matters faced by construction contractors? Let’s talk!

David Stern CFO makes every effort to provide useful and accurate information. This content, however, is not intended as a substitute for specific business-related financial advice. We disclaim all warranties and liabilities from its use.