bizminer competitive market narrative · 2020. 6. 16. · competitive market narrative abc plumbing...

ContentsP2 Competitive Analysis Summary Table P2 Market Area Population and Economic DemographicsP3 The Industry Market: Competitor AnalysisP6 Employment and ProductivityP7 COVID IMPACTP8 Industry Vitality: Entrepreneurship and Cessation RatesP10 ABC PlumbingCompetitive AnalysisP10 ABC PlumbingProductivity IndiciesP11 Population and DemographicsP16 Glossary and MethodologyP17 Data Sources

Bizminer© 2020

Competitive Market Narrative Series[238220] Plumbing, Heating, and Air-Conditioning Contractors

Birmingham AL Metro Area

Developed By: CheckPoint CPA LLC

Developed For: ABC Plumbing

ABC Plumbing

Competitive Market NarrativeABC Plumbing operating in the

Plumbing, Heating, and Air-Conditioning Contractors segment NAICS [238220]

in the Birmingham AL Metro Area market area

Competitive analysis scoring relies on developer inputs affecting each of the metrics listed below.Variances indicate the difference from market area Plumbing, Heating, and Air-ConditioningContractors average values:

ABC Plumbing Competitive Analysis Summary

Sales Rank March 2020: 348 of 691

Sales Percentile March 2020: 50

Sales Change (3 years): 2017 to 2019 5.56 (greater than area average)

March 2020 Variance from Market Area Industry:

Average Site Sales: -45.68 %

Median Site Sales: 21.45 %

Average Small Business Sales: -1.84 %

Average Industry Wage: -24.05 %

Sales per Employee: -39.27 %

Efficiency Index (SPE/Avg. Wage): 0.80 x

Rent per Employee: -37.93 %

Market Area Population and Economic DemographicsThis competitive industry market area analysis includes the Birmingham AL Metro Area.

Total population in the market area is 1,147,054 including 440,651 households with a median age of39. 29.71% of the population boasts a bachelor’s degree or higher; another 30.49% holds an associatedegree.

Median housing value in the market area is $156,900, while the median rent level is $ per month.

Per capita income in the market area is $30,024, while average (mean) household income is $54,742and median household income is $54,291. 23.92% of market area households earn over one hundredthousand dollars per year.

Population demographics are applied from the Census Bureau's American Community Survey. Datafor zip-county-metro-state and US markets are applied directly. Demographic totals for radius-basedmarkets are applied at the level of aggregated zip codes which are co-joined to the selected marketradius.

The Industry Market: Competitor Analysis

March 2020 Industry Market Area Operations

In this market area, the Plumbing, Heating, and Air-Conditioning Contractors industry includes 691competitor business operations; 627 independent firms and 64 branch establishments. Among theindependent firms, 590 fall within the small business definition of single site firms with fewer thantwenty-five employees. Total industry employment is 6,180; average industry operation employmentstands at 9.

Industry operations in the market area account for a total market volume of $1,017,685,320. Of that,the industry's small business segment in the market area earns $480,848,080.

March 2020 Industry Market Share (%)

Industry

Small Business

Startup

ABC Plumbing

0 20 40 60 80 100

Average annual industry site sales are $1,472,772, including branch operations controlled fromoutside the market area. Median site sales are $658,696.

By contrast, US average industry site sales are $8,377, with average industry small business salesregistering at $4,383. The US industry small business market share is 47.3%.

Market area small business sales average $814,997, or 44.66% below industry market area siteaverage and 19.18% above median market area industry sales. Average annual industry sales haveincreased by 17.25% in the three calendar years 2017 to 2019; market area small business salesincreased by 9.60% during the same period. The small business share of the total market hasincreased from % to 47.24% since 2017.

March 2020 Annual Sales ($)

Average Site

Median Site

Small Business

Startups

ABC Plumbing

$600,000 $1,110,000 $1,620,000 $2,130,000 $2,040,000

Market volume and average firm sales calculations are developed with firm-level data which isintegrated with BizMiner's internally generated Sales per Employee projections. SPE data is bothindustry- and location-specific, and is updated monthly by the application of US Census data and fiveindustry and consumer price and productivity indices from the Bureau of Labor Statistics and otherfederal agencies.

The Plumbing, Heating, and Air-Conditioning Contractors industry captures $890 in sales per personwithin the market area, while national levels are at $4. Market area sales per household are calculatedat $1,990; by contrast, US industry sales per household are $10.

March 2020 Market Penetration ($)

Market Sales/Person

US Sales/Person

Market Sales/Household

US Sales/Household

$0 $620 $1,240 $1,860 $2,480

Of particular note for B2B firms, industry market area sales per business site (all private industry,economy-wide) is $0.00 compared to $0.00 at the national level. These indicators may suggestwhether the local industry market is saturated or under‐served, or whether it is outperforming orunderperforming national levels. Although all three penetration metrics are presented, only one or twomay be relevant to the specific industry or firm, depending on its customer target.

Employment and ProductivityIn 2019, the Plumbing, Heating, and Air-Conditioning Contractors industry supported 6,206 employeesin the market area, up from 2017. Of these, 3,336 are employed in small business operations of fewerthan 25 workers.

Sales per Employee levels are a common efficiency indicator calculated outside of traditional financialratio metrics. Industry average sales per employee in this market area are calculated at $164,674,below the US industry average of $210,709. (Value-added differentials can significantly affect salesper employee variations.) Average market area industry wage levels are $52,669, behind the US level of$61,190.

In a separate, targeted efficiency benchmark, local industry market Rent per Employee is calculated at$3,021, compared to the US per employee rate of $3,866.

Sales Per Employee ($)

Mar-20

US 210,709

MarketArea 164,674

Average Annual Wage ($)

Mar-20

US 61,190

MarketArea 52,669

Efficiency Rate

Mar-20

US 3.44x

MarketArea 3.13x

COVID IMPACTBizminer reports now adjust our raw data to better reflect the most recent changes in local andnational industry markets. We accomplish this by integrating additional Census Bureau data with ourproprietary content, allowing us to accelerate and refine month-to-month trends. Our content displaysthe new data in three ways:

Our employment data is adjusted to better reflect the most recent realities at local and nationallevelsUpdates of industry market sales averages and total market volume are accelerated by onemonth and renamed as Trailing Twelve Month (TTM) valuesNew content will display monthly (not annual) industry sales and employment from year-end2019 through both Preliminary Update and Advance Projection months.

These enhanced protocols will be most obvious in our Industry Market Trend series, including a new“Monthly Change” tab in each report. Similarly, snapshot reports like the SWOT-XPRESS, CompetitiveMarket Narrative and Company Insight series will reflect our new update protocols and add contentfor Preliminary Update and Advance months.

Shorter projections are more detailed and accurate than longer-term projections. Preliminary Updatedata is calculated on a more accurate and detailed basis than the Advance Projection month, whichwill adjust as it moves to “update month” status the following month. Interpret and utilize this contentaccordingly.

Month-to-Month Employment-Sales

Dec-19 Mar-20 April-20 Advance

Employment 6,206 6,035 5,770

Monthly Industry Market Volume 84,249,001 84,010,049 80,268,540

Average Monthly Site Sales 121,222 121,577 116,163

% Change from Dec-19

Mar-20 April-20 Advance

Employment -2.75% -7.02%

Monthly Industry Market Volume -0.28% -4.72%

Average Monthly Site Sales 0.29% -4.17%

Industry Vitality: Entrepreneurship and Cessation RatesHow vigorous is industry entrepreneurship in the market area? Defined as operations in business fortwo years or less, 16 independent industry startups and new branch operations were identified in themarket area in March 2020, creating a new operation rate of 2.46% in the most recent analysis year,less than the national rate of 3.20%. Unusually low new operation rates can indicate market saturationor lack of perceived opportunity, while high rates suggest both opportunity and the recognition of it.Startup rates are calculated by dividing the number of industry market startups by the total number ofoperations for which an age is known. (Due to the limited number of new operations at any given time,this indicator may be less useful in small local market areas.)

Industry startup operations hold a 2.57% share of the total local industry market, with average sales of$1,636,448. Due to the variations in scale, startup sales often diverge from the industry and smallbusiness average.

Over 2018-2019, 15.17% of industry establishments (firms and branches), 15.64% of all firms and14.95% in the industry small business segment ceased operation. US industry cessation rates were12.22% for all establishments; 12.02% for firms and 12.22% for small businesses

Cessation rates track the experience of business establishments, firms, small businesses, branchesand startups doing business at the start of the time series, and still in operation today. Firms whichrelocate but maintain independent operations are considered survivors if they do not move out of thejurisdiction being analyzed. Firms which become subsidiary locations, or whose location isterminated, are grouped with others which ceased operation. Any business entity which does notevidence ongoing operations (for example, by registering with government agencies, credit reportingservices or business directories) is considered to have ceased viable operations and is classified inthe "ceased operation" category.

2018 -2019 Cessation Rates

Establishments (%)

Firms (%)

Small Businesses (%)

0 20 40 60 80 100

ABC Plumbing Competitive AnalysisABC Plumbing sales for the 12 months ending March 2020 were $800,000, compared to the marketarea industry average of $ 1,472,772 and the median of $658,696. Company annual sales havedecreased by 5.56% in the three calendar years since 2017.

As of March 2020 company annualized sales vary from the local industry average by -45.68%.Variance from the small business bracket average is higher at -1.84%, while variance from mediansite sales is 21.45%. The variance from median indicates the percentage level of annual sales relativeto median sales—the level at which the number of operations above and below is the same.

ABC Plumbing sales rank 348 of 691 industry operations in the market area, giving the firm a 50percentile rating (the percentage of competitors with sales that fall below ABC Plumbing sales). ABCPlumbing holds a 0.08% share of market sales, which decreased 0.01 percentage points since 2017.

ABC Plumbing sales per employee are $100,000, -38% above the local industry market level, comparedto a -49% differential against the national average. At $40,000, average annual firm wages are 24.05%below the local industry market average and lower than the Plumbing, Heating, and Air-ConditioningContractors segment nation-wide. ABC Plumbing Rent per Employee, an expense-specific efficiencymetric, is $1,875, while the average industry market rent per employee figure is $3,021. Overallefficiency indices for ABC Plumbing are developed by dividing sales per employee by average wages,and then comparing the results against both market area and national averages. In this instance, theEfficiency Index (SPE/Avg. Wage) for ABC Plumbing is 0.80x of the market area industry level and0.72600126240455x that of the national industry.

In the three years 2017 to 2019, ABC Plumbing : US Sales per Employee Index remained flat; the ABCPlumbing : Industry Market SPE Index remained flat. By contrast, ABC Plumbing : US Efficiency Indexwas 0.78x in 2017 and 0.65x in 2019, while the Market Area Efficiency Index went from 0.85x to0.68x.

The Efficiency Index divides sales per employee by average annual worker salary to yield an overallefficiency metric expressed as a percentage above or below the industry in the benchmarked area.Non‐wage factors may also affect efficiency but are not represented by this index.

2019 Mar-20

ABC Plumbing:US Sales per Employee Index 0.53 x 0.47x

ABC Plumbing:Market Area Sales per EmployeeIndex 0.65 x 0.61 x

ABC Plumbing:US Efficiency Index 0.65 x 0.72600126240455x

ABC Plumbing:Market Area Efficiency Index 0.68 x 0.80 x

Population and Demographics

Total population 1,147,054 100.00%

Male 552,345 48.15%

Female 594,709 51.85%

5-9 Years 74,189 6.47%

10-14 Years 74,036 6.45%

15-19 Years 72,954 6.36%

20-24 Years 71,058 6.19%

25-34 Years 156,071 13.61%

35-44 Years 147,983 12.90%

45-54 Years 149,914 13.07%

55-59 Years 78,222 6.82%

60-64 Years 72,977 6.36%

65-74 Years 104,121 9.08%

75-84 Years 52,156 4.55%

85+ Years 19,730 1.72%

Median Age 39

Total Population

Age

White 755,881 65.90%

Hispanic (all) 50,031 4.36%

African American 329,444 28.72%

Native American 2,728 0.24%

Asian 15,980 1.39%

2-plus Races 19,489 1.70%

Population (16+ years) 912,211 100.00%

Labor force 554,996 60.84%

Civilian labor force 554,225 60.76%

Civilian employment 518,685 56.86%

Unemployed 35,540 3.90%

Work at home 17,249

Total Commuters 493,224 100.00%

Commute < 15 Minutes 192,574 39.04%

Commute 30-44 Minutes 118,514 24.03%

Commute 45-89 Minutes 70,725 14.34%

Commute > 90 Minutes 7,483 1.52%

Race / Ethnicity

Employment

Total Households 440,651 100.00%

Below $10k Income 33,189 7.53%

$10k-14.9k Income 23,952 5.44%

$15k-24.9k Income 46,508 10.55%

$25k-34.9k Income 44,169 10.02%

$34k-49.9k Income 55,597 12.62%

$50k-74.9k Income 77,584 17.61%

$75k-99.9k Income 54,272 12.32%

$100k-149.9k Income 60,283 13.68%

$150k-199.9k Income 22,589 5.13%

>$200k Income 22,508 5.11%

Median HH Income ($) 54,291

Mean HH Income ($) 54,742

Per Capita Income ($) 30,024

Population 25+ Years 781,174 100.00%

High School Graduate 221,778 28.39%

Some College/Associate's Degree 238,168 30.49%

Bachelor's Degree 145,969 18.69%

Graduate/Professional Degree 86,154 11.03%

High School Graduate or Higher (total) 692,069 88.59%

Bachelor's Degree or Higher (total) 232,123 29.71%

Income

Education

Total Housing Units 514,103 100.00%

Occupied Housing Units 440,651 85.71%

Type of Housing

1 Unit Detached Housing Structures 356,765 69.40%

1 Unit Attached Housing Structures 13,101 2.55%

2 Unit Housing Structures 7,304 1.42%

3-4 Unit Housing Structures 13,261 2.58%



20+ Unit Housing Structures 26,147 5.09%

Mobile Home Housing Units 48,830 9.50%

Boat-RV-Van Housing Units 358 0.07%

Age of Housing

Housing Built 2010 or Later 23,687 4.61%

Housing Built 2000-2009 83,348 16.21%

Housing Built 1990-1999 86,978 16.92%

Housing Built 1980-1989 66,569 12.95%

Housing Built 1970-1979 80,147 15.59%

Housing Built 1960-1969 57,166 11.12%

Housing Built 1950-1959 54,689 10.64%

Housing Built 1940-1949 25,288 4.92%

Housing Built 1939 or Before 36,231 7.05%

Occupants per Unit

Units with less than 1 Occupant Per Room 434,242 84.47%

Units with 1.1-1.5 Occupants Per Room 4,886 0.95%

Units with 1.51-plus Occupants Per Room 1,523 0.30%

Housing

Median Value of Owner Occupied Units ($) 156,900

Owner Occupied Units: Value < $50k 33,779 24.82%

Owner Occupied Units: Value $50k-$99.9k 58,101 42.70%






Owner Occupied Units: Value >$1 Million 2,979 2.19%

Owner-Occupied Units with Mortgage 187,181 137.56%

Owner-Occupied Units without Mortgage 117,395 86.27%

Occupied Units Paying Rent 136,075 100.00%

Median Rent Paid 860

Occupied Units Paying <$500 Rent 16,827 12.37%

Occupied Units Paying $500-$999 Rent 64,716 47.56%




Occupied Units Paying $2500-$3000 Rent 551 0.40%

Occupied Units Paying $3000 or More Rent 478 0.35%

Rent Paid < 15% of Income (Households) 16,786 12.34%

Rent Paid 15%-19.9% of Income (Households) 16,534 12.15%




Rent Paid 35%-plus of Income (Households) 48,638 35.74%

Glossary and MethodologyEstablishments: Firms plus Branch operations.

Firms: Independent companies.

Small Businesses: In order to focus the analysis on the small businesses of greatest interest to ourusers, the analysis defines small businesses as single site firms with fewer than 25 employees. Allsmall businesses are also “firms”.

Branches: Subsidiary facilities of firms; non-headquarters operations.

The Employment Concentration compares the percentage of local industry employees in the marketarea economy to the corresponding data at the national level. The Sales Concentration is the industrypercentage of total economy-wide sales, local and national. In each case, the trend indicates theincreasing or decreasing importance of the industry in the economic area under review.

Cessation Rates: Cessation rates track the actual experience of industry establishments and smallbusinesses doing business at the start of the time series, and still in operation at the end of theanalysis period. "Mature firms" are business operations within a given category which havemaintained operations throughout the time series. Mature Firm measures isolate and report on theseongoing firms. As a result, Mature Firm benchmarks display experience-rated measures, rather thansnapshots of the industry at a particular point in time. Firms which have experienced a transfer inownership but continue as independent firms are considered "survivors". Firms which relocate butmaintain independent operations are considered survivors if they do not move out of the jurisdictionbeing analyzed. Firms which are purchased or merge and become subsidiary locations, or whoselocation is terminated, are grouped with the "failures". Any business entity which does not evidenceongoing operations (for example, by registering with government agencies or credit reportingservices) is considered to have ceased viable operations and is classified with the "failures". TheCessation rate analysis is developed for discrete business segments by segregating the original poolof tracked firms by industry classification, location, and population segment (all establishments, smallbusinesses, etc.) That beginning universe is segregated and tracked to develop the failure rate forthat group. As a result, failure rates occasionally reflect performance above 100% or below 0% due tobusiness migration among industries (changes in primary business line) or (in the case of location-specific failure rates) due to business relocations during the analysis period.

New Business Vitality: This metric includes percentage measurements for both entrepreneurialactivity and new branch development. The Startup Rate measures the percentage of all industry firmswhich indicated one year or less of operation during the one –year period reflected by the time seriesand which maintained operation through its end point. These startup firms are compared to thenumber of firms in the industry for which ages can be identified. The New Branch Rate measures thenumber of new branches developed in the final year of the time series and which maintained operationthrough the end of the time series. These are compared to the total number of industry branches. Thetwo measures are combined into a unified New Business Operation Rate displayed at local andnational industry levels.

Industry Market Size and Market Share : Reported Annual Market Volume includes industry salesfigures from multi-site firms classified in the selected industry, generally including branch revenues.The Market Volume figures include sales of US firms and US-reporting subsidiaries of firmsheadquartered outside the US. The volume figures are for the industry (firms identifying this as theirprimary classification) not the product or service. As an example, a report for retail furniture storesanalyzes sales of stores whose predominant revenue stream is furniture sales; that data would notinclude furniture sold at a general department store, for example. Consequently, more detailedindustry segments may underreport volume due to the choice of companies to identify a higher levelparent classification as their primary line of business. Market Volume projects sales volume based onthe number of local industry employees and sales per employee data developed by BizMiner. Thisnumber includes headquarters operations inside the area, as well as branches of any industry firms

located within the selected area. It excludes branch operations located outside the area.

Average Annual Sales: Average Annual Sales indicates average dollar sales for all industry sites(including branches), firms, and small businesses. While there is significant overlap of firms in eachcategory between years, results can be affected by business failures, mergers and the migration ofcompanies between the three categories. Migration between business classifications has a muchlesser impact in most cases.

Sales per Employee: A common indicator of productivity, sales per employee data is presented for theUS and local market industry. The Sales per Employee Index compares client sales per employee (ifinputs for sales and employment are made) to the market, expressed as x.xx where 1.00 indicatesequal SPE.

Efficiency Rate and Index : The Efficiency rate of a firm or industry market is calculated as Sales perEmployee/Average Annual Wage. The Efficiency index compares markets or a firm and a market,expressed as x.xx where 1.00 indicates equal Efficiency Rate

About the DataRaw data analyzed for BizMiner reports is sourced from an array of the nation's government andprivate statistical sources. None of these raw data sources creates the final measures reflected inBizMiner industry profiles. In total, BizMiner accesses over a billion sourced data points from 15million business operations for each of its twice annual updates covering a 3-5 year time series.Historical data and BizMiner algorithms are used to inform and test projections for non-reportingfirms. Data elements are sourced specifically from:

IRS SOI Corporation Tax BookIRS Statistics of IncomeUS Economic CensusUS Census Quarterly Financial ReportsUS Census County Business PatternsBureau of Labor Statistics Monthly Employment ReportsBureau of Labor Statistics Monthly Unemployment ReportsBureau of Labor Statistics Annual Wage SurveyBureau of Labor Statistics Industry Productivity ReportsBureau of Labor Statistics Price IndicesNational Agricultural Statistical ServiceUS Census Quarterly Financial ReportsUS Census Retail Trade ReportInfoGroup, Inc.Credit Reporting AgenciesBusiness DirectoriesAmerican Community Survey

While 100% firm coverage is desirable for analysis purposes, the greatest value of BizMiner reportsrests in discerning patterns of activity, which are reflected in the large samples used to develop ourreports. The overall current coverage of the databases surpasses 13 million active businessoperations at any point in time.

As is the case with any databases this large, some errors are inevitable. Some firms are missed andspecific information on others is lacking from the database. Not all information received is uniform orcomplete, resulting in the need to develop projection algorithms for specific industry segments andmetrics in some report series. No representation is made as to the accuracy of the databases utilizedor the results of subsequent analyses. Neither the Brandow Company nor its resellers has undertaken

independent primary research to confirm the accuracy of the data utilized in the Profile analyses.Neither the Brandow Company nor its resellers are responsible for conclusions drawn or decisionsmade based upon this data or analysis. In no event will the Brandow Company or its resellers be liablefor any damages, direct, indirect, incidental or consequential resulting from the use of the informationcontained in BizMiner reports.

bizminer competitive market narrative · 2020. 6. 16. · competitive market narrative abc plumbing...

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