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

Contents

P2 Competitive Analysis Summary Table
P2 Market Area Population and Economic Demographics
P3 The Industry Market: Competitor Analysis
P6 Employment and Productivity
P7 COVID IMPACT
P8 Industry Vitality: Entrepreneurship and Cessation Rates
P10 ABC PlumbingCompetitive Analysis
P10 ABC PlumbingProductivity Indicies
P11 Population and Demographics
P16 Glossary and Methodology
P17 Data Sources

Competitive Market Narrative

ABC 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-Conditioning Contractors average values:
ABC Plumbing Competitive Analysis Summary
Sales Rank July 2020: 333 of 671
Sales Percentile July 2020: 50
Sales Change (3 years): 2017 to 2019 5.56 (greater than area average)
July 2020 Variance from Market Area Industry:
   Average Site Sales: -47.53 %
   Median Site Sales: 20.57 %
   Average Small Business Sales: -4.34 %
   Average Industry Wage: -21.14 %
   Sales per Employee: -39.71 %
   Efficiency Index (SPE/Avg. Wage): 0.76 x
   Rent per Employee: -38.38 %

Market Area Population and Economic Demographics

This 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 of 39. 29.71% of the population boasts a bachelor’s degree or higher; another 30.49% holds an associate degree.

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 $54,742 and median household income is $54,291. 23.92% of market area households earn over one hundred thousand dollars per year.

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

The Industry Market: Competitor Analysis

July 2020 Industry Market Area Operations

In this market area, the Plumbing, Heating, and Air-Conditioning Contractors industry includes 671 competitor business operations; 614 independent firms and 57 branch establishments. Among the independent firms, 578 fall within the small business definition of single site firms with fewer than twenty-five employees. Total industry employment is 6,168; average industry operation employment stands at 9.

Industry operations in the market area account for a total market volume of $1,023,104,664. Of that, the industry's small business segment in the market area earns $483,353,922.

Average annual industry site sales are $1,524,746, including branch operations controlled from outside the market area. Median site sales are $663,492.

By contrast, US average industry site sales are $1,640,319, with average industry small business sales registering at $999,893. The US industry small business market share is 55.0%.

Market area small business sales average $836,252, or 45.15% below industry market area site average and 20.66% above median market area industry sales. Average annual industry sales have increased by 17.25% in the three calendar years 2017 to 2019; market area small business sales increased by 9.60% during the same period. The small business share of the total market has increased from % to 47.24% since 2017.

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

The Plumbing, Heating, and Air-Conditioning Contractors industry captures $894 in sales per person within the market area, while national levels are at $788. Market area sales per household are calculated at $2,000; by contrast, US industry sales per household are $1,868.

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 suggest whether the local industry market is saturated or under‐served, or whether it is outperforming or underperforming national levels. Although all three penetration metrics are presented, only one or two may be relevant to the specific industry or firm, depending on its customer target.

Employment and Productivity

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

Sales per Employee levels are a common efficiency indicator calculated outside of traditional financial ratio metrics. Industry average sales per employee in this market area are calculated at $165,873, below the US industry average of $212,243. (Value-added differentials can significantly affect sales per employee variations.) Average market area industry wage levels are $50,725, behind the US level of $63,393.

In a separate, targeted efficiency benchmark, local industry market Rent per Employee is calculated at $3,043, compared to the US per employee rate of $3,894.

Sales Per Employee ($)
Jul-20
US
212,243
Market Area
165,873
Average Annual Wage ($)
Jul-20
US
63,393
Market Area
50,725
Efficiency Rate
Jul-20
US
3.35x
Market Area
3.27x

COVID IMPACT

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

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, Competitive Market Narrative and Company Insight series will reflect our new update protocols and add content for Preliminary Update and Advance months.

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

Month-to-Month Employment-Sales
Dec-19
July-20
Aug-20 Advance
Employment
6,206
6,492
6,580
Monthly Industry Market Volume
84,249,001
89,781,494
91,000,921
Average Monthly Site Sales
121,222
133,803
135,620
% Change from Dec-19
July-20
Aug-20 Advance
Employment
4.60%
6.02%
Monthly Industry Market Volume
6.57%
8.01%
Average Monthly Site Sales
10.38%
11.88%
Monthly Change Index (Dec-19=1.00)

Industry Vitality: Entrepreneurship and Cessation Rates

How vigorous is industry entrepreneurship in the market area? Defined as operations in business for two years or less, 21 independent industry startups and new branch operations were identified in the market area in July 2020, creating a new operation rate of 3.28% in the most recent analysis year, less than the national rate of 13.55%. Unusually low new operation rates can indicate market saturation or 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 of operations 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 2.58% share of the total local industry market, with average sales of $1,255,896. Due to the variations in scale, startup sales often diverge from the industry and small business average.

Over 2018-2019, 15.17% of industry establishments (firms and branches), 15.64% of all firms and 14.95% in the industry small business segment ceased operation. US industry cessation rates were 12.22% for all establishments; 12.02% for firms and 12.22% for small businesses

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

ABC Plumbing Competitive Analysis

ABC Plumbing sales for the 12 months ending July 2020 were $800,000, compared to the market area industry average of $ 1,524,746 and the median of $663,492. Company annual sales have decreased by 5.56% in the three calendar years since 2017.

As of July 2020 company annualized sales vary from the local industry average by -47.53%. Variance from the small business bracket average is higher at -4.34%, while variance from median site sales is 20.57%. The variance from median indicates the percentage level of annual sales relative to median sales—the level at which the number of operations above and below is the same.

ABC Plumbing sales rank 333 of 671 industry operations in the market area, giving the firm a 50 percentile rating (the percentage of competitors with sales that fall below ABC Plumbing sales). ABC Plumbing 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, compared to a -49% differential against the national average. At $40,000, average annual firm wages are 21.14% below the local industry market average and lower than the Plumbing, Heating, and Air-Conditioning Contractors segment nation-wide. ABC Plumbing Rent per Employee, an expense-specific efficiency metric, is $1,875, while the average industry market rent per employee figure is $3,043. Overall efficiency 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, the Efficiency Index (SPE/Avg. Wage) for ABC Plumbing is 0.76x of the market area industry level and 0.74670307147939x that of the national industry.

2019
Jul-20
ABC Plumbing:US Sales per Employee Index
0.53 x
0.47x
ABC Plumbing:Market Area Sales per Employee Index
0.65 x
0.60 x
ABC Plumbing:US Efficiency Index
0.65 x
0.75 x
ABC Plumbing:Market Area Efficiency Index
0.64 x
0.76 x

In the three years 2017 to 2019, ABC Plumbing : US Sales per Employee Index remained flat; the ABC Plumbing : Industry Market SPE Index remained flat. By contrast, ABC Plumbing : US Efficiency Index was 0.78x in 2017 and 0.65x in 2019, while the Market Area Efficiency Index went from 0.85x to 0.64x.

The Efficiency Index divides sales per employee by average annual worker salary to yield an overall efficiency 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.

Population and Demographics

Total population 1,147,054 100.00%
Male 552,345 48.15%
Female 594,709 51.85%

Age

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
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%
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%
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%
5-9 Unit Housing Structures 23,886 4.65%
10-19 Unit Housing Structures 24,451 4.76%
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%
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 $100k-$149.9k 52,230 38.38%
Owner Occupied Units: Value $150k-$199.9k 49,106 36.09%
Owner Occupied Units: Value $200k-$299.9k 55,320 40.65%
Owner Occupied Units: Value $300k-$499.9k 38,502 28.29%
Owner Occupied Units: Value $500k-$999.9k 14,559 10.70%
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 $1000-$1499 Rent 34,569 25.40%
Occupied Units Paying $1500-$1999 Rent 6,752 4.96%
Occupied Units Paying $2000-$2499 Rent 1,372 1.01%
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 20%-24.9% of Income (Households) 14,918 10.96%
Rent Paid 25%-29.9% of Income (Households) 13,938 10.24%
Rent Paid 30%-34.9% of Income (Households) 10,587 7.78%
Rent Paid 35%-plus of Income (Households) 48,638 35.74%

Glossary and Methodology

Establishments: Firms plus Branch operations.

Firms: Independent companies.

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

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

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

Cessation Rates: Cessation rates track the actual experience of industry establishments and small businesses doing business at the start of the time series, and still in operation at the end of the analysis period. "Mature firms" are business operations within a given category which have maintained operations throughout the time series. Mature Firm measures isolate and report on these ongoing firms. As a result, Mature Firm benchmarks display experience-rated measures, rather than snapshots of the industry at a particular point in time. Firms which have experienced a transfer in ownership but continue as independent firms are considered "survivors". Firms which relocate but maintain independent operations are considered survivors if they do not move out of the jurisdiction being analyzed. Firms which are purchased or merge and become subsidiary locations, or whose location is terminated, are grouped with the "failures". Any business entity which does not evidence ongoing operations (for example, by registering with government agencies or credit reporting services) is considered to have ceased viable operations and is classified with the "failures". The Cessation rate analysis is developed for discrete business segments by segregating the original pool of tracked firms by industry classification, location, and population segment (all establishments, small businesses, etc.) That beginning universe is segregated and tracked to develop the failure rate for that group. As a result, failure rates occasionally reflect performance above 100% or below 0% due to business 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 entrepreneurial activity and new branch development. The Startup Rate measures the percentage of all industry firms which indicated one year or less of operation during the one –year period reflected by the time series and which maintained operation through its end point. These startup firms are compared to the number of firms in the industry for which ages can be identified. The New Branch Rate measures the number of new branches developed in the final year of the time series and which maintained operation through the end of the time series. These are compared to the total number of industry branches. The two measures are combined into a unified New Business Operation Rate displayed at local and national industry levels.

Industry Market Size and Market Share: Reported Annual Market Volume includes industry sales figures 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 firms headquartered outside the US. The volume figures are for the industry (firms identifying this as their primary classification) not the product or service. As an example, a report for retail furniture stores analyzes sales of stores whose predominant revenue stream is furniture sales; that data would not include furniture sold at a general department store, for example. Consequently, more detailed industry segments may underreport volume due to the choice of companies to identify a higher level parent classification as their primary line of business. Market Volume projects sales volume based on the number of local industry employees and sales per employee data developed by BizMiner. This number 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 each category between years, results can be affected by business failures, mergers and the migration of companies between the three categories. Migration between business classifications has a much lesser impact in most cases.

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

Efficiency Rate and Index: The Efficiency rate of a firm or industry market is calculated as Sales per Employee/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 Data

Raw data analyzed for BizMiner reports is sourced from an array of the nation's government and private statistical sources. None of these raw data sources creates the final measures reflected in BizMiner industry profiles. In total, BizMiner accesses over a billion sourced data points from 15 million 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-reporting firms. Data elements are sourced specifically from:

  • IRS SOI Corporation Tax Book
  • IRS Statistics of Income
  • US Economic Census
  • US Census Quarterly Financial Reports
  • US Census County Business Patterns
  • Bureau of Labor Statistics Monthly Employment Reports
  • Bureau of Labor Statistics Monthly Unemployment Reports
  • Bureau of Labor Statistics Annual Wage Survey
  • Bureau of Labor Statistics Industry Productivity Reports
  • Bureau of Labor Statistics Price Indices
  • National Agricultural Statistical Service
  • US Census Quarterly Financial Reports
  • US Census Retail Trade Report
  • InfoGroup, Inc.
  • Credit Reporting Agencies
  • Business Directories
  • American Community Survey

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

As is the case with any databases this large, some errors are inevitable. Some firms are missed and specific information on others is lacking from the database. Not all information received is uniform or complete, resulting in the need to develop projection algorithms for specific industry segments and metrics in some report series. No representation is made as to the accuracy of the databases utilized or 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 decisions made based upon this data or analysis. In no event will the Brandow Company or its resellers be liable for any damages, direct, indirect, incidental or consequential resulting from the use of the information contained in BizMiner reports.