Whether a firm specialized in digital printing or it relied on offset printing as a primary source of income, the level of profitability remained almost identical, despite the fact that the distribution of key expense ratios varied significantly between the two groups. Here are some key ratios you should aspire to if you want to be a profit leader in this industry:
Average Sales $1,127,066
Percent Offset Printing 21.5%
Percent Digital Printing 46.5%
Cost of Goods 20.1%
Payroll (excluding owner) 23.1%
Overhead Expenses 25.2%
Net Owner’s Comp. 31.6%
Offset Printing Firms
Average Sales $1,228,080
Percent Offset Printing 42.1%
Percent Digital Printing 8.3%
Cost of Goods 25.9%
Payroll (excluding owner) 27.2%
Overhead Expenses 18.2%
Net Owner’s Comp. 28.7%
You can be a profit leader offering either digital printing or more traditional offset printing services. Virtually all of the differences in the key ratios noted above can be readily explained or justified based upon product concentration.
What is most important to note is that the key ratios presented above are from real-world companies in this industry, and they are indeed attainable, even in what we may term a fragile economy.
If you are curious about other ratios or other comparisons including the impact of outside sales reps or sales volume on profits I strongly suggest that you contact NAPL at www.napl.org and ask about purchasing a copy of the 15th edition of the Financial Benchmarking Study.
Senior contributing columnist John Stewart is president of Q.P. Consulting Inc. Contact him at 2110 S. Dairy Road, West Melbourne, FL 32904, call 321-727-2444, email firstname.lastname@example.org. Be sure to check out John’s blog on his website at www.quickconsultant.com.