One Hour to Greater Profits...

Benchmarking Study Reveals How
Winners Remain Winners in Industry!

By John Stewart, Executive Director, NPOA   

In 1983 I was fortunate enough to work with industry guru Larry Hunt and fellow printer Abe Corton (since deceased) on the industry's first attempt to gather information and publish financial data that would help fellow printers improve their profitability. We worked to produce a document that would really analyze the nuts and bolts of how some printers were extremely profitable year after year, while others struggled just to survive. Those were the boom days for many, so much so that I remember addressing audiences and telling them that the financial opportunities in our industry were so good, that "you had to be really stupid to fail," and I followed up that remark by saying, "but some folks proved it could be done if they worked hard enough!"

For many years, the studies were referred to as Operating Ratio Studies. Beginning In 2010, the name of the studies was changed to Financial Benchmarking Studies in the hope that the change in name would better clarify what they were all about. No such luck! To be honest, when I first got involved in the industry in the late 1970's I didn't know what an "operating ratio" or "benchmarking ratio" was all about, and I was too embarrassed to ask! It wasn't until I had the opportunity to meet and learn from Larry Hunt that I had an opportunity learn about key ratios and I learned that it really wasn't as complicated as some would have you believe. So I started helping Larry gather the numbers and the key ratios required in our industry. Larry was the numbers guy and I just plugged the numbers into a spreadsheet program called Visicalc, which was the forerunner of today's Excel.

The rest is history - Larry and I have continued to work on various projects for more than 30+ years, the most important of which has been the publication of the biennial financial benchmarking studies. During the ensuing three decades, Even after all these years and being involved in publishing dozens and dozens of studies, I still believe there is no study published in the industry as important as the benchmarking studies!

Although not as "flashy" or "sexy" as some of the other studies produced by NAQP, NAPL or NPOA, I have come to appreciate the fact that these benchmarking studies are clearly the most valuable publications produced by this or any association. They are packed with information found no where else in the industry. You can't get this information from bankers or from CPA firms, or even some of the older printing associations - today there is only one place you can go to get critical information for helping you turn your business around (if it needs turning around), or just help you increase your current profit margins - The NPOA Benchmarking Study.

I used to advise consulting clients that, "If you do nothing more than read the Larry Hunt's 'Executive Summary' that appears in the front of every benchmarking study, and you ignore everything else in the study, you would still know more about this industry and what it takes to make a profit than 80-90% of your competitors." Don't get me wrong - it will definitely take more than just reading the information and studying the charts to boost your profits, but that is a good start. You will also have to make some very hard, very painful decisions in order to really turn your business around, but then again that's what owning your own business is all about!

There is a myth floating around the industry, especially among younger owners, that it is a far different industry than it was 30 years ago, and while that may be true in some aspects, there are some things that haven't changed whatsoever. On average, owners still report the same percentage for cost of goods today as they did 32 years ago! Overhead expenses have actually dropped as a percent of sales by almost 5%. Labor costs, however, have jumped 9% during this time. As a result, this industry's overall profitability has dropped considerably from almost 18% in 1983 to 13.7% in 2013. (P.S. the 2014-2015 Financial Benchmarking Study contains 12 revealing charts, tables and graphs regarding profitability in our industry - information found no where else!


There is good news - Fortunately, there is good news as well. The "profit leaders" in our industry, those who constitute the top 25% of this industry in terms of "owners compensation," never seemed to get the news about all the doom and gloom in our industry. The "profit leaders" in our industry continue to perform quite well, despite the naysayers at the bottom who claim the sky is falling and that profits are non existent.

The NPOA 2014-2015 Financial Benchmarking Study is truly an information-packed study. It contains 104 pages of profit & loss statements, balance sheets and key ratio pages. You will find a variety of breakouts in this study based upon size of firm, franchise affiliation and even the percent of brokered sales. Most important of all, however, are the "Profit Leader" analyses contained in this study.... analyses that succinctly spell out the differences between how the leaders in our industry stack up as compared to the laggards. 

NOPA members can purchase this complete study for only $107.40, a 40% discount off the regular retail price of $179. NPOA members can also download for FREE an abbreviated Executive Summary of the Benchmarking Study by signing-in, then visiting Membership > Member Services. The study can be purchased by visiting NPOA's Bookstore.

One hour to greater profits - Spending 25 minutes or so digesting Larry Hunt's Executive Summary and another 35 minutes analyzing the key ratios reported by the profit leaders could easily turn out to be the best time you spent all year, but only if you read the information with an open-mind, and avoid the tempting rationalizations that your firm is somehow different from the rest.