Profit seems like an absolute concept. A hard number. One that says unequivocally… unambiguously…as clearly as can be how
well your business is doing.
And that’s true to some extent. You’d rather have
a 5 percent net profit than a 2 percent net profit.
The bigger number is better. But, by itself,
by Rick Long
your company’s profit doesn’t really tell
you everything you need to know about
how well the business is doing. For that,
you need to know more. You have to
make some comparisons.
conducted an annual Distributor Profitability Survey
of PEI members for the last 27 years. The survey
provides crucial benchmarking data that helps
participants truly understand where they stand.
Where Is It Headed?
compare to others in the industry? In
other words, are you keeping pace with your
competition or falling behind? Where you stand
relative to the competition says a lot about the
near- and long-term prospects for your business.
last year’s? Are your individual trends moving
in the right direction?
relative to other distributor-based professions?
Does opportunity lie here—or somewhere else?
By itself, your company’s profit doesn’t really tell you everything you need to know about how well the business is doing.
To provide this kind of in-depth context,
the Profit Planning Group of Boulder, Colo., has
What can and can’t be done in a cross-industry
pro;t comparison? Al Bates, president of the Pro;t
Planning Group, puts it this way: “Unlike compensation,
it is not possible to make direct comparisons across
different industries on factors such as gross margin.
Some industries are high-margin ones and others are
low-margin ones. Pro;t is pro;t.”
Second Quarter 2012 | PEI JOURNAL | 6 3