Economic Indicators: Great Recession Benchmarks

BY Brian Loftus
4/21/2020 - HVAC Market Intelligence , COVID-19

We do not believe 2020 is the beginning of a multi-year period like the Great Recession, but what if it is?  What if COVID-19 is stubborn, causing the severe restrictions to persist and reducing demand like was experienced from 2006 through 2009?  One way to prepare for the worst while hoping for the best is to look at the operating benchmarks of HARDI members during that period.  Another way is to participate in  our annual benchmarking survey: the Distributor Performance Dashboards (DPD).

HARDI distributor members will have access to the fiscal 2019 DPD report if you complete the survey by  May 6th.  We encourage you to do so for the following reasons:

  1. It will help you plan for 2021 after this unusual 2020;
  2. The survey allows you to maximize your operating efficiency, profitability and valuation;
  3. The CoMetrics platform is easy to use and access is available to you as part of your membership.

Please visit the web page to learn more and download the survey or contact Brian or Sarah for assistance.

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5.2-1

Through the Great Recession, average sales per order declined for two years before some snap-back in 2009.  This period included declining lines per order which implies a higher cost to serve per order from 2007-09 versus 2005-06.

5.3

5.4

It looks like members were hesitant to write-off some bad debt in 2007.  That write-off in 2008 is equivalent to almost 10% of gross profit.  When we partnered with CoMetrics and launched DPD, HARDI members told us one of their favorite operating metrics was the Personnel Productivity Ratio.  That is why it is one of the key metrics used to calculate participant’s CoScore and compare your overall performance to other members.  The stable performance of this metric, Personnel Expenses as a percent of Gross Profit, illustrates the variable component of personnel expenses at HARDI distributors, and the importance of monitoring this important relationship.

HARDI distributors have access to our annual operating benchmarking program, DPD Powered by CoMetrics, as a member benefit.  You can use this information to guide your decisions during 2020, as a clean perspective later this year as you prepare for 2021, and to show your financial partners how you operate in a normal environment.  The fiscal 2019 survey is available at our web page and due in early May.  Please contact Brian or Sarah if you have any questions about access to this valuable member benefit. 


This article was featured in our monthly Data Driven Newsletter. If you would like to receive these monthly emails, click here to sign up.

If you have any questions, or would like to suggest a featured topic for next month's DDN, contact Brian Loftus at bloftus@hardinet.org.