How does your building company compare to the rest of the industry?
Are you adding more or less profit than your competitors?
Are you paying yourself a market rate for running the company?
And are you generating enough net profit that will allow you to grow your building company safely and securely?
Research has shown that the same ratios appear in building companies that operate in similar sectors across Australia, New Zealand, Canada and the United States.
Understanding the benchmarks for a residential building company is a key factor in determining where your own business can be improved.
And it’s not just margins you need to be looking at…
Factors That Determine Success
Other factors that determine how successful your building company will become over the next 12 months and for years into the future include:
- advertising spend.
- marketing strategy
- fixed expense ratio.
- systems implemented.
- staff training.
But how do you know the optimal amount of money that should be spent on advertising in order to generate more leads?
Or which marketing strategies your competitors are using?
Or the fixed expense ratio other building companies are operating on in order to deliver a net profit that hits the industry benchmark?
What are the systems that other building companies have already implemented and how many of them are ahead of where you are right now when it comes to systemising your own building company?
And crucially, how much time other builders are investing in their own self-development?
Don't Fall Behind
If you are behind the benchmark on this one, then your building company will fall further back from the pack year on year until the others are so far ahead you can no longer compete.
Until recently, there has never been a way for owners of residential building companies to access this level of information.
Instead, all they were able to do was take a guess at the percentage profit they should be adding to their jobs by listening to ‘that person’ that always has an opinion on just about everything.
The problem is, those people rarely understand what they are talking about. And even if they have owned a building company themselves, then how successful were they really?
Did they scale their business, or did they hit a glass ceiling and spend the subsequent years jogging along at the same level?
Did they generate industry benchmark net profit that either remained in the company or was used to acquire income producing assets or did they draw it all out as their wages?
And did they systemise their building company so that they could delegate the day-to-day running of their business to others while they took longer and more frequent holidays?
Or, did they do everything themselves claiming that they made more money from doing less jobs?
In order to identify who you should be taking advice from, it's important to know the facts about the industry's key performance indicators (KPIs).
That way you can separate the well meaning, but flawed advice from consultants, builders and accountants. And instead, double down on the strategies that have already been proven to work for other successful builders.
The State Of Residential Construction Industry
Since 2020 the Association of Professional Builders (APB) has been surveying professionally operated residential building companies in four countries, documenting the results and studying resulting data in order to help improve the industry for everyone.
The 2022 report revealed a significant trend emerging in the industry with owners of building companies developing a greater understanding of their financials and implementing more and more systems into their businesses.
And now, as we enter the final months of 2022, we have begun to compile the data for the State of Residential Construction Industry (SORCI) 2023 Annual Report which will enable every owner of a residential building company to once again benchmark their business against others in the industry.
The SORCI Annual Report 2023 will be more comprehensive than ever before with APB, Buildertrend, Buildxact, Builda Price, CBUSA, HazardCo, Builder Lead Converter, Builder Nuggets and Professional Builder Magazine all combining to gather the data that will reveal what is really going on in our industry.
If you are the owner of a residential building company, and you would like to understand how your business compares with others in the industry, then click on the link below and take part in this year's report.
It will take around 10 minutes to answer all of the questions, but when you finish, you will have a far greater understanding of where the gaps are in your operation, which means you will have a clear understanding of where the opportunities lie in the months ahead.
Additionally, you will be provided with grading that will allow you to benchmark your company against others in the industry.
And when the final report is compiled early in 2023, you will instantly receive a free copy via email!
So go ahead, click on the link, and take part in the SORCI 2022 Survey, the most comprehensive international survey of residential building companies.