Industry Trends

Businesses Relying Less on Services

Sageworks Staff — Mon, 07 Dec 2009 17:21:29 +0000

Businesses may be temporarily turning away from services such as advertising, web-design, legal services, and landscaping to rely more on in-house resources for their needs as part of their overall cost cutting strategy. Employees with these skills may have been able to hang on to their jobs over the downturn if they can add additional value to be tapped by their employers …at relatively lower costs.

Advertising and marketing services are especially at a low point in sales growth, dropping down into negative figures after posting a healthy sales growth rate of 8.90% at the onset of recession in late 2007.

The table below lists the average sales growth for 10 service-oriented industries. The data is for year end 2008 through October 2009.

Services in a slump: What has happened to our service-based economy?
Industry	Sales % Change
Industry	2007	2008	2009
5411 - Legal Services	4.97%	3.67%	-13.07%
5418 - Advertising and Marketing Services	8.90%	3.36%	-11.92%
8111 - Automotive Repair and Maintenance Services	4.93%	2.62%	-2.70%
5415 - Computer Systems, Programs & Web Site Design Services	13.02%	11.23%	-1.62%
5413 - Architectural, Engineering, and Related Services	7.35%	4.63%	-0.33%
54194 - Veterinary Services	9.01%	6.03%	-0.17%
6212 - Offices of Dentists	6.07%	6.17%	0.06%
5412 - Accounting Services	10.08%	8.59%	1.45%
5617 - Services to Homes & Buildings - Landscaping, Cleaning, etc.	7.22%	4.46%	4.49%
6211 - Offices of Physicians	7.60%	5.77%	9.97%
*Source: Sageworks, Inc.

Companies are carrying less debt now as a result of the financial crisis

Melinda Crump — Thu, 29 Oct 2009 18:57:34 +0000

The data below show that business loans have been contracting.

The contraction is likely the result of companies paying down debt and shrinking inventories over significantly slower sales throughout the downturn. Tightened credit terms have also contributed to the trend.

The table here lists the debt to equity ratio since 2003 for the overall private sector and three large sectors, construction, manufacturing, and retail. Overall, debt to equity decreased in the private sector and in the broad manufacturing and retail trade sectors over the downturn in 2008.

Industry	Financial Metric	2003	2004	2005	2006	2007	2008	2009
Average for All Privately-Held Companies	Debt To Equity	2.6	2.64	2.69	2.71	2.72	2.57	2.56
23 - Construction (private)	Debt To Equity	2.36	2.37	2.41	2.42	2.38	2.12	2.16
31, 32, 33 - Manufacturing (private)	Debt To Equity	2.11	2.18	2.2	2.28	2.29	2.2	1.79
44, 45 - Retail Trade (private)	Debt To Equity	2.41	2.6	2.63	2.65	2.59	2.7	2.26

Retail Data - What IS Selling

Jackie Peluso — Fri, 23 Oct 2009 22:13:22 +0000

We heard last week that retail sales declined 1.5% from last month; here is a look at small business retailers and what is selling:

Industry	Financial Metric	2007	2008	Last 12 Months
4541 - Online Stores and Mail-Order Houses	Sales Pct Change	6.32%	5.91%	6.80%
4451 - Grocery Stores	Sales Pct Change	5.61%	6.18%	6.64%
4452 - Specialty Food Stores	Sales Pct Change	7.11%	6.79%	6.64%
4511 - Sporting Goods & Stores	Sales Pct Change	3.27%	3.18%	3.90%
4461 - Health and Personal Care Stores	Sales Pct Change	4.13%	4.17%	3.88%
4442 - Lawn and Garden Equipment and Supplies Stores	Sales Pct Change	5.02%	2.76%	2.43%
4453 - Beer, Wine, and Liquor Stores	Sales Pct Change	6.01%	1.59%	0.88%

The data shows that consumers are still opening their wallets for necessities like food and shampoo, but there are some surprises in there as well. Online-only stores have seen sales growth of almost 7% over the past year. The increase in this sector jives with what we heard about Amazon’s earnings today.

One Year Later

Sageworks Staff — Tue, 29 Sep 2009 21:37:01 +0000

It’s been a year now since the collapse of Lehman Brothers and the subsequent/concurrent fallout in real estate and consumer spending. Below is a list of the 20 industries that have been affected the greatest, for better and for worse.

Oil drillers, food & medicine manufacturers, and trade schools were some of the best.
Real estate, wood products and auto dealerships fared the worst.

Sageworks: Best-Performing Privately-Held Companies Over the Last 12 Months, by Sales Growth
Industry	Sales % Change
2111 - Oil and Gas Extraction	29.7%
4245 - Farm Product Raw Material Wholesalers	21.2%
3254 - Pharmaceutical and Medicine Manufacturing	19.9%
5182 - Data Processing, Hosting, and Related Services	16.8%
1111 - Oilseed and Grain Farming	16.3%
3119 - Other Food Manufacturing	14.9%
3118 - Bakeries and Tortilla Manufacturing	14.1%
4235 - Metal and Mineral (except Petroleum) Wholesalers	13.7%
4885 - Freight Transportation Arrangement	13.0%
6115 - Technical and Trade Schools	12.8%
Sageworks: Worst-Performing Privately-Held Companies Over the Last 12 Months, by Sales Decline
2372 - Land Subdivision	-13.79%
3212 - Veneer, Plywood, and Wood Product Manufacturing	-13.45%
5312 - Offices of Real Estate Agents and Brokers	-11.91%
4411 - Automobile Dealers	-10.24%
4422 - Home Furnishings Stores	-7.81%
4233 - Lumber and Construction Materials Wholesalers	-7.40%
4441 - Building Material and Supplies Dealers	-6.03%
3273 - Cement and Concrete Product Manufacturing	-5.75%
4531 - Florists	-5.25%
4412 - Other Motor Vehicle Dealers	-5.01%

Consumers Find the Time & Money to Indulge

Sageworks Staff — Tue, 29 Sep 2009 21:15:18 +0000

Here is a brief list that was just compiled by the financial information company, Sageworks, outlining a handful of interesting recession-time behaviors, all of which are small indulgences that have seen growth in the last 12 months. People may not be spending on large luxuries like cars, jewelry and vacations but they are still keeping room in the budget for small luxuries like gym memberships and dining out.

Indulgences that Are Helping Consumers De-Stress in the Recession
Recession-Time Indulgences	NAICS - Industry	Last 12 Months Sales Growth
1. Shopping Online	4541 - Electronic Shopping	8.6%
2. Belonging to a Gym	71394 - Fitness & Recreational Centers	6.7%
3. Going Out for a Drink	7224 - Bars & Drinking Places	5.8%
4. Playing Sports & Hobbies	4511 - Sporting Goods & Hobby Stores	4.7%
5. Dining Out	7221 - Full-Service Restaurants	3.1%
6. Getting Haircuts & Manicures	8121 - Personal Care Services	2.5%
Source: Sageworks, the leading provider of private company data.

The Upside of a Down Economy

Jackie Peluso — Tue, 29 Sep 2009 21:02:09 +0000

Sageworks compiled this list of 4 favorable changes in the business world over the last year, showing the upside of the down economy for businesses. The data is elaborated on by Sageworks CEO, Brian Hamilton, on this Fox Business segment.

The Upside of a Down Economy:
4 Ways Businesses Have Improved Over the Last Year
Businesses Have…	Data/Reason
1. Become More Efficient	Profit margins have increased in 10/15 major business sectors looking at private companies.
2. Become Less Reliant on Debt	Debt levels have decreased. The average debt/equity ratio for private companies is at its lowest levels in at least 6 years.
3. Gained Access to a Larger Pool of Talent for Recruiting	There is more talent available for hire. After seeing growth greater than 10% every year from ‘04-’07, sales have been flat for employment services firms in ‘08 and ‘09. This suggests that, as we know, companies are hiring less and when they do hire, they are more easily able to find talented prospective employees on their own.
4. Negotiated Better Deals from Suppliers	Unlike many other sectors, wholesalers have seen decreased profit margins, suggesting that they aren’t making as much off of every dollar sold. Declining prices may have something to do with it.
*Source: Sageworks, Inc. Sageworks is a financial information company.

Which Retailers are Holding Inventory the Longest?

Lindsay Mangus — Thu, 25 Jun 2009 14:04:24 +0000

Sageworks released a study this morning outlining what types of retailers are holding their inventory the longest over the past 12 months, compared to pre-recession 2006. Jewelry stores are holding their inventory 19 days longer in the last 12 months, compared to 2006, the largest increase of any retail sector. Nurseries and lawn equipment stores are second on the list, with an increase of 14 days. As we all know, the longer it takes for inventory to turn, the more serious the implications are on cash flow and profits.

Sageworks Study: Retailers’ Inventory Days, 2006 vs. Today
NAICS - Industry	2006	2007	2008	Last 12 Months	Change From 2006
4483 - Jewelry, Luggage, & Leather Stores	82	87	102	102	19
4442 - Lawn & Garden Equipment Stores	70	78	81	84	14
4453 - Beer, Wine, & Liquor Stores	52	56	64	64	12
4441 - Building Material Retailers	62	68	71	71	8
4422 - Home Furnishings Stores	43	46	51	51	8
4481 - Clothing Stores	76	80	80	83	7
4511 - Sporting Goods & Hobby Stores	76	77	84	83	7
4411 - Automobile Dealers	64	68	71	71	6
4431 - Electronics & Appliance Stores	50	55	53	55	5
4412 - Other Motor Vehicle Dealers	83	86	82	88	5
4452 - Specialty Food Stores	23	25	28	27	4
4461 - Health & Personal Care Stores	39	39	42	43	4
4541 - Electronic Shopping & Mail-Order Houses	53	53	56	56	3
4471 - Gasoline Stations	11	11	12	13	1
4532 - Office Supplies & Stationary Stores	52	50	55	52	0
4451 - Grocery Stores	28	27	26	28	0
4421 - Furniture Stores	72	71	70	69	-3
4413 - Automotive Parts and Tire Stores	58	56	54	54	-4

Successful Service Businesses

Lindsay Mangus — Thu, 25 Jun 2009 13:59:31 +0000

Below is a list of successful small businesses that those who are unemployed may want to consider starting. These businesses have been very successful despite the downturn and are a particularly good idea for new entrepreneurs to consider because they are service based and have low barriers to entry. They offer great opportunity for growth and profits, and carry little to no overhead expense.

Computer program design – People have big ideas but don’t necessarily know how to make them happen. This is where computer systems designers come in; they design technology to fit their customers’ needs. Computer systems designers have seen their sales increase by 10.4% over the last 12 months.

Child day care – While day care can be a big expense for a family, it is also one of the most important. Believe it or not, people are still working and leaving their children in daycare. Sales of daycare providers have grown by about 4.3% over the last 12 months.

Consulting – This is especially a great option for industry experts in any given topic (real estate, retail, advertising, etc.) that have recently been laid off. People always need advice, especially when trying to navigating out of tough economic times. Management and technical consulting firms have experienced growth of 5.4% over the last 12 months.

Hair and nail services – People haven’t been letting their looks go by the wayside and it is unlikely that they will start now, with signs of an upturn imminent. Personal care service providers saw their sales grow by 5.1% over the last 12 months.

Home & office painting – While many people aren’t moving right now, they are taking care of what they currently own or rent. Painting contractors experienced sales growth of just over 5% over the last 12 months.

Surprising Up-tick in Construction

Melinda Crump — Mon, 22 Jun 2009 12:38:43 +0000

The commerce department reported a 0.8% unexpected gain in construction spending for April, marking a two month consecutive increase despite predictions that spending would drop 1.2%.

Sageworks Index data also supports a rise in construction activity, but for an additional consecutive month as the data below indicate that sales rose 4.55 % in May after rising 2.94 % in April and 1.66 % in March.

Date	NAICS - Industry	Sales Pct Change	Quarterly Index Change
5/1/2009	23 - Construction	4.55%	7.19%
4/1/2009	23 - Construction	3.94%	-10.32%
3/1/2009	23 - Construction	1.66%	-24.15%
2/1/2009	23 - Construction	0.92%	-25.58%
1/1/2009	23 - Construction	3.27%	-7.15%
12/1/2008	23 - Construction	5.18%	-0.54%
11/1/2008	23 - Construction	6.11%	9.39%
10/1/2008	23 - Construction	6.82%	8.52%
9/1/2008	23 - Construction	7.84%	-3.13%
8/1/2008	23 - Construction	9.75%	-11.76%
7/1/2008	23 - Construction	10.27%	-2.23%
6/1/2008	23 - Construction	9.12%	6.48%
5/1/2008	23 - Construction	9.54%	9.39%

Housing starts also showed a surprising 17.2 % increase in May after a 12.9% drop in April. While housing starts provide an outlook for future construction activity, the large number of unsold homes on the market will be a limitng reactant for new growth in residential construction.

Bankruptcy-Prone Industries

Jackie Peluso — Wed, 17 Jun 2009 16:40:11 +0000

With all of the talk of large bankruptcy filings, Sageworks released a list of 10 types of private companies that are most likely to file for bankruptcy in the coming months. The list is based on the average debt-to-equity ratio in the industry over the last 12 months. A high debt-to-equity ratio generally means that a company has been aggressive in using debt to finance growth.

10 Bankruptcy-Prone Industries
According to Sageworks, Inc. Figures are based on the last 12 Months.
NAICS	Industry	Debt/Equity Ratio	Net Profit % Change
4411	Automobile Dealers	4.45	-19.38%
4412	Other Motor Vehicle Dealers	4.42	-10.75%
6231	Nursing Care Facilities	4.11	-1.37%
7211	Hotels & Traveler Accommodations	3.94	6.61%
4511	Sporting Goods & Hobby Stores	3.91	1.67%
2372	Land Development & Subdivision Companies	3.85	-41.63%
5616	Investigation & Security Services	3.48	-4.27%
2361	Residential Building Companies	3.45	-20.87%
3363	Motor Vehicle Parts Manufacturers	3.45	-15.97%
3231	Printing Companies	3.02	-12.95%
*Sageworks is the leading provider of private company data.