June 19, 2008 (Des Plaines, Ill.) (Paramus, N.J.) – The National Association of Quick Printers has just released the NAQP 2008-2009 Operating Ratio Study. Currently in its 25th year, the biennial study offers a definitive look at the health of the quick and small commercial printing industry.
This year’s Operating Ratio Study is the largest, most comprehensive financial document ever produced by NAQP. In addition to featuring a variety of profit and loss statements and balance sheet reports, the study provides tools that allow the reader to compare his or her firm against others within the industry, based on more than a dozen criteria.
“Part of NAQP’s mission is to share real-world industry data with our members so they can make informed business decisions about how to remain competitive and achieve greater profitability,” says NAQP president and CEO Steve Johnson. “This latest Operating Ratio Study is a valuable measurement tool for the industry for that very purpose.
“Overall, the 2008 – 2009 Operating Ratio Study underscores how much the printing industry has matured. While the industry has grown in terms of sales volume, payroll costs have risen as a percentage of sales and this has almost single-handedly cut into industry profitability,” Johnson points out. Specifically, while net owner’s compensation rose on average from $60,100 in 1983 to $148,440 in 2007, it is down significantly as a percentage of total revenues (17.9 percent to 12.6 percent over the period).
Among the study’s other key findings are:
Average net profit per employee in 2007 was $9,043. However, for those companies that comprise the top 25 percent of the industry in terms of profits, net profit per employee was $25,876.
Average sales for all companies rose 9.5 percent, in just the last two years alone, to $1.18 million. This is compared to the annual sales growth rate, which has ranged from 2 percent to 6 percent over the past several studies.
The vast majority of respondents (93 percent) were single-shop operations.
While franchise owners had lower costs of goods and lower payroll costs on average, totaling approximately 4.2 percent of sales, their total overhead costs (including franchise fees of 4 percent) were about 4.3 percent higher than independents.
Of the 340 companies responding to this question, 151 (44.4 percent) had at least one outside sales rep, reflecting a 10 percent increase from 2005.
The profit leaders (the top 25 percent) had a 23 percent net owner’s compensation figure based on total gross sales of $919,281. The profit laggards (the bottom 25 percent) had a net owner’s compensation figure of just 3.3 percent based on total gross sales of $1,293,550.
The study serves as a business planning tool, giving small and quick printers a benchmark for determining how their operating practices compare with peers. For those who see the study results as an incentive to improve their operations, NAQP, through its affiliation with the National Association of Printing Leadership, provides one-on-one consulting services to guide members on implementing strategies for improvement and growth.
“Our team comprises the industry’s foremost experts on a wide range of business management issues including financial management, operations, and sales and marketing,” says Tim Fischer, NAPL executive vice president and head of NAPL’s Consulting Group. “We are pleased to be able to offer these affordable and tailored services to NAQP’s membership.”
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.