The 2007 CODB: Better Than Ever - On The Numbers
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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SECTION: On The Numbers

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The 2007 CODB: Better Than Ever


Article Date: 08-01-2007
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.

The report is out - time to drill down and match up your own performance.

The 2007 Cost of Doing Business (CODB) report hit the streets in late June. If you participated you should have received either an electronic or hard copy of both your personal Performance Analysis Report and the standard CODB. If you are missing yours please check your e-mail to see if it was blocked. If that does not work you can contact either AED or the Profit Planning Group and they will send another copy. The 157 dealers who participated helped generate a great representation for each category we present. This was especially true for the over-100-hp category.

With a desire to increase participation ever further, let me remind you of AED's ability to map your trial balance or statements to the CODB survey. Please, please, please send us that data so we can map your company to the survey. With that accomplished you can reduce the time you spend on the survey. We would still need some soft data and demographic information, but that will take a lot less time than you are spending now. You can contact me at or Bill Hermanek at, and we can help you out.

Trending Insights
Now that we have been using the services of the Profit Planning Group for four or five years, you will see a new section added to the CODB: a four-year trend analysis. It is really quite interesting to see how the numbers have changed as the industry was emerging from the last downturn. Make sure you check this out. It will bring back both fond and foul memories. This trend analysis tracks the industry data in the standard CODB report, but also your company data in the Performance Analysis Report.

What would you expect the 2007 survey, reporting 2006 results, to say? Here is a sample...

  • Sales increased in 2006, but not as much as they did in 2005.
  • Interest rates are up, causing profits to fall.
  • The average size participant in 2006 does $43,500,000 in volume.
  • All profit categories slipped against the 2005 results, but with high-profit dealers still pushing out results 50 percent better than a typical dealer.
  • Sales per employee are up in 2007 and gross margin per employee is in the same range as the prior year.
  • Service sales per tech are up across the board. Rates to compensate for the cost of techs must have increased.
In summary, it appears participating members took on the additional sales increase without a corresponding increase in personnel. Typical sales increases in 2005 were 18 percent and 10 percent in 2006.

To get a better handle on what is going on, I review the trend analysis, paying more attention to
2005 and 2006. Then I go back through the 2006 and 2007 reports to drill down further, comparing the reports to the company's internal financial statements or Performance Analysis Report, especially the Performance Scorecard at the beginning of the report. The results of all this work provide an outline of potential problems prioritized to provide the greatest impact on profits and cash flow, which, in a lot of cases, results in balance sheet changes, as well as operating changes.

I always like to remind members that the CODB presents the median of the results for each line item. Consequently, you need to be careful when reviewing a section of the report because the medians may not add up to the totals as shown. The CODB is a great tool to help you manage your company, but should only be used as a preliminary indication of where to look further.

Another reminder: Of the 157 participants, 49 fall into the high-profit category. In short, it can be done if you follow the critical path recommendations and include balance sheet management in your efforts.

Well, I am not going to give away all of the details of the report. We need you to buy one to support the efforts. Better yet, we need you to participate to strengthen the data pool. Participants get both the Performance Analysis Report and the CODB free.

We have numerous new members and I encourage them to use this report and participate in the survey because it is one of the key benefits derived from membership.

Call us - we are here to help.

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Article Categories:  Financial