The 2019 Cost of Doing Business (CODB) Report is coming soon. This annual report, available exclusively through AED, provides members with the most up-to-date comparative financial performance information and enables them to evaluate their operating results.
THE 2019 CODB REPORT INCLUDES THE FOLLOWING:
• Comparison to evaluate operating ratios against the medians of other distributors Balance sheet and income/expense statement performance
• Distributor performance by sales volume
• Employee performance measures
• Sales mix of high-performance dealers
• Gross margins for new and used equipment, rentals, parts and service departments Operating ratios, including debt to net worth
• Year-by-year trend analysis
Dealers who regularly participate in this new reporting platform can start to compare performance year over year and to analyze trends in a way they weren’t able to before:
• Static reports: the full, industry-wide report as well as a personalized Company Performance Report (CPR)
• Report card: provides an objective, qualitative evaluation of the business’s performance; participants can see how their company “grades” compared to the industry on several key financial metrics
• Performance graphs: visually track company data versus industry data on significant financial metrics
• Interactive peer report: allows participants to create company performance reports on demand; participants choose the data cuts they would like to compare against
• Searchable results: allows participants to dig deeper into the data by creating custom aggregations of the survey results
The company performance reports are what is truly remarkable about the new CODB format. The CPR displays each distributor’s own ratios and data computed in a manner consistent with those appearing in the full report, and the results are displayed alongside the appropriate industry comparatives. As shown on any given line of the CPR, a company’s own data are included along with reported norms for all respondents and for companies of similar sales volume, line of business, and region. Thus, the individual owner/manager is provided invaluable information without needing to spend time and effort performing the calculations manually. In addition, these highly confidential reports contain a qualitative assessment of a company’s situation. Better yet, says AED’s Senior Director of Education and Programming Liz McCabe, “Members who participate in the survey get a copy of the final report and their personalized company performance report for free!”
This is the third year that AED has worked with Industry Insights to produce the CODB Report. Industry Insights, based in Columbus, Ohio, has decades of experience providing survey research solutions. The company is an independent professional research and consulting firm that specializes in conducting financial surveys, compensation studies, market assessments, customer satisfaction research, educational programs and other forms of customized research.
Michael Becher, CPA and vice president at Industry Insights, told CED, “Since taking over the study we have added many new features for respondents to slice and dice the data in an online platform, while also providing a fresher industry-wide report and individual company performance report that includes the respondent’s own data.” Becher commented, “We have been conducting similar studies for associations since 1980 and currently work with over 200 national associations – primarily doing research projects on financial operations, compensation/benefit practices, and member satisfaction.”
While these studies are standard procedure for Industry Insights, AED knows that some members are initially hesitant to give up some of their dealership’s financial information – with good reason. Aside from the digital piracy that occurs more and more frequently these days, there are competitive concerns and hesitancies with regard to antitrust compliance. So let’s tackle these potential misgivings head on. Because this report will only get better throughout the years with AED member participation.
Every day, it seems, another person or company is hacked by digital pirates. To respond to such looming threat, Becher says, “We hold confidentiality and security of the utmost importance. In about 40 years of working with associations and their members, we have not had a security breach. We continue to work with the data anonymously and in the aggregate form and continue to update our databases and websites to make sure we are within all appropriate standards.”
As mentioned by Becher, to maintain confidentiality all data is worked with on a completely anonymous basis (all company identifying information is removed, and each company is assigned a unique code). No individual company responses are shared with AED or with any other person or organization. That’s right – not even AED sees the company-specific information used to compile the Cost of Doing Business Report. Additionally, all data is shown in aggregate form, with a minimum of five responses needed to show any metric.
AED members might have qualms about exchanging price or other sensitive business data among competitors. The FTC’s publication Spotlight on Trade Associations sheds light on this major concern: “Any data exchange or statistical reporting that includes current prices, or information that identifies data from individual competitors, can raise antitrust concerns if it encourages more uniform prices than otherwise would exist.” Note the emphasis on current prices, which the CODB report does not cover. The FTC goes on, “In general, information reporting cost or data other than price, and historical data rather than current or future data, is less likely to raise antitrust concerns. Dissemination of aggregated data managed by an independent third party also raises fewer concerns.” These are precisely the means used by AED and Industry Insights in preparing the CODB report.
There seems to be a lot of synergy between AED, its dealer members and Industry Insights; 118 companies, representing approximately 25 percent of AED’s dealer members, participated in the compilation of the CODB Report last year. “This is a robust report,” says McCabe, “that contains information that can’t be found anywhere else. Dealers can utilize the tools in the online platform to benchmark themselves against other dealers by region, sales volume, line of business, and more. It really is an invaluable tool for dealers to use to evaluate their results.”
Becher says, “We are very happy with our partnership with AED on this project. AED is clearly very appreciative of their members and wants to provide them with the best information possible. We are also very encouraged with our increased participation since taking over the study, which makes the data even more robust than in the past. All in all, we expect continued growth in participation numbers and continued success for those that participate.”