Double-Digit Growth

Editor’s Note: Each year Signs of the Times magazine publishes a State of the Industry report for the commercial sign industry. We bring you the highlights from that survey here at SignWeb. For this year’s complete report, purchase the August 1999 issue of Signs of the Times online.

The CAS/commercial sign industry enjoyed a robust 1998 by growing an estimated 11% in total sales volume to reach the $4 billion mark, according to research conducted by Smyth Marketing Resources, Cincinnati. This 11% figure is quite conservative because it’s based on an average reported growth of 27.2% and a median growth rate of 15%, over the same time period (1997-1998).

Average sales per employee increased by 11% as well, from $61,800 to $68,400, the highest increase seen in this study’s three years. Because these results again were tabulated from phone interviews, the 500 replies used matches last year’s number.

The average sales volume for respondents remained virtually the same as well, inching downward from $267,000 in 1997 to $263,000 in 1998. Similarly, profit margin declined for the second year in a row, having been 18.8% in 1996, 16.5% in 1997 and 13.8% most recently. Preview:

 

Distribution of CAS/Commercial Respondents by Sales-Volume Classification
Sales Volume	Number of Shops	Percentage of Total Shops	Total Sales	Percentage of Sales	Average Sales per Respondent
$500,000 or More	61	12.2%	$74,753,000	56.8%	$1,225,500
$250,000 to $499,999	72	14.4%	$22,624,000	17.2%	$314,200
$100,000 to $249,999	171	34.2%	$25,084,000	19.1%	$146,700
$50,000 to $99,999	98	19.6%	$6,713,000	5.1%	$68,500
Less than $50,000	98	19.6%	$2,405,000	1.8%	$24,500
Totals	500	100.0%	$131,580,000	100.0%	$263,200

As shown above, the average sales volume for 1998 respondents ($263,000) stayed virtually the same as in 1997 ($267,100). The first year of this study, 1996, still rates as an aberration because it included some information from wholesalers and outdoor advertisers, who aren’t this study’s target audience. The 1998 median sales volume of $119,000 approximates the figure from the first two studies. Medians are unaffected by a handful of aberrations.

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Three-Year Comparison of Net Profit Margin
				Change
	1996	1997	1998	1996 to 1998
$500,000 or More	13.2%	11.7%	11.1%	-2.1%
$100,000 to $499,999	17.4%	14.6%	15.4%	-2.0%
Less than $100,000	22.2%	18.2%	20.4%	-1.8%
Average Per Respondent	18.8%	16.5%	13.8%	-5.0%

The most negative statistic in this year’s study is the 13.8% profit margin, the lowest in this study’s three years. The composite income statement tells us why. Payroll. Pure and simple. After having been static the first two years, it shot up from 22.8% to 29% in one year. Not surprisingly, so did fringe benefits — typically an adjunct to payroll — which more than doubled from 2.6% to 6.2%. Consequently, profit margin has spiraled downward in consecutive years.