Signs of the Times - July 2017 - 42

THE 2017
STATE OF
THE INDUSTRY
REPORT
COMPANIES EXPECT SALES AND PROFIT
MARGINS TO CONTINUE GROWING.
BY MARK KISSLING

MANAGING EDITOR

HEN we sent out this year's industry
survey to tens of thousands of signmakers, we wanted to know what
was on their minds - and whether
they thought sales and profits were
set to stumble or soar. We were
pleasantly surprised that this year's
respondents, at a nearly ten-to-one ratio, felt optimistic
about their financial prospects in a key area, compared to
those who felt pessimistic.
In fact, for every respondent who predicted a sales
volume decrease for this year compared to last, an average
of 9.6 respondents expected a climb. We also found that
the vast majority of responding companies are growing,
buying equipment and offering diversified services -
all signs of an industry in fine health with prognosis
positive.

RESPONDENTS AND EMPLOYEES
We conducted our survey from May 24-June 9 and received
316 responses, significantly more than the two 2015
surveys used for some comparisons here. Among them,
71% identified as independently owned sign companies,
8% as franchise sign companies and 4% as national sign
companies (Table 1). Another 17% selected "Other" and
comprised mainly print companies and in-house shops.
Because we wanted to survey sign companies only, the
survey ended there for those companies.
Of the 184 responses to our question about the number
of full-time-equivalent employees (Table 2), the average
was 19.7 employees/company. However, because 142
responses were below the average - and 110 (nearly 60%)
respondents reported 10 or fewer employees - we have
42

SIGNS OF THE TIMES

JULY 2017

to consider the average skewed by a few, large firms. Our
2015 surveys provide some helpful background here:
Electric sign companies averaged more than 34 employees
each while commercial companies averaged just under 12.
So while a smaller number of large, electric sign companies
pulls up the overall average, it's accurate to say a comfortable majority of all sign companies can count their
employees using one or two hands.
SALES AND PROFITS
Respondents reported an increase in sales volume from
2015 to 2016 (Table 3), versus those reporting a decrease, by
nearly 6:1. Nearly 30% of companies reported their sales
stayed the same or declined; the other side of that coin
is that more than 70% of companies reported increased
sales last year over the previous. And when asked about
this year's sales (Table 4), respondents reporting an
expected sales increase outnumbered those expecting a
decrease by more than 73% to 8%!
We received 151 responses to our question about 2016's
profit margin (Table 5) with an average of 27.8%. With 71
responses above the average and 80 below, the average falls
close to the median. Notably, more than 19% of respondents
reported a profit margin of 10% or less, indicating that
this small but significant number of companies is facing
some financial risk. As for 2017's expected profit margin
(Table 6), almost as many (149) responded, with 29.3% as
the anticipated average. Here, 75 responses fell above the
average and 74 below, so the average nearly equals the
median. For comparison, our 2015 electric survey found a
27.2% anticipated profit margin for 2016 and our commercial
survey, an expectation close to 40%, which was, it seems,
a bit too buoyant.

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