10.07.2008 — They say, "Denial is not just a river in Egypt." Unfortunately, many integrators have been in denial for the first nine months of 2008 about the condition of the market.

I've heard from many saying that the economic slowdown has "not affected business at all." Some of these integrators haven't lost revenue, but their backlogs have shrunk.

Others are claiming to have established solid niche markets or to have been nimble enough to branch into different areas (such as commercial or retrofit work).

In reality, every business has seen costs increase, even if revenues haven't dipped. In fact, one CE Pro 100 integrator recently told me that his company is doing all it can "to stay in business on daily basis."

Now is the time to be using benchmarks to ensure your company is operating efficiently. See where you stand against some of these yardsticks:

4.5 Billable Hours Per Day

Industry veteran Tom Coffin recently conducted a Webinar, sponsored by Simply Reliable Software, and he quoted the average integration company as billing only 4.5 hours per technician per day.

That equates to only 56 percent efficiency. Pretty crummy.

Technicians Per Job

Guardian Home Technologies, a security-based integrator, attributes some of its success with homebuilders to the fact the company knows when to hire new sales and installation teams.

Guardian maintains one sales representative per 20 new rooftops and one technician per 10 new rooftops per month.

57% Gross Margin

Steve Firszt of Fast-Forward Business Coaching in St. Louis, says among his clientele, a gross margin (total revenue including labor, minus the cost of goods before labor) of 57 percent is being achieved.

64% Cost of Labor

How much of your total labor billing should be spent to pay your labor?

The average is 64 percent among Firszt's clients.

50% Total Compensation

A key metric for the custom business is the measurement of total company compensation (including a reasonable salary for the owner, direct labor, subcontractors, commissions and benefits) as a percentage of gross profit.

"A really good number is 50 percent," says Firszt.

Benefits Cost

For every dollar of gross payroll, businesses must also pay additional costs, including FICA & Medicare, unemployment tax and perhaps health insurance and 401(k) benefits.

Fast-Forward clients are averaging 14.6 cents per payroll dollar.

4%-8% Sales Expense

These include freight costs, fuel, vehicle maintenance, marketing and promotion, referral bonuses and any other costs that tend to vary with sales.

This should range from 4 percent to 8 percent of sales, says Firszt.

8% Net Profit

Fast-Forward's clients are achieving 8 percent net profit in 2008. That's pretty decent in this business environment.

How do your numbers compare in 2008? Are you on target, or are you floating down "Da Nile"?