What’s In Your Wallet? Benchmarking Owner Pay
As we race toward the end of the year, it’s time to take stock of all you’ve done this year in your business — jobs completed, those scheduled for 2020, and your gross and net profits, and more. When you look at your own bottom line, you may want to know how your paycheck measures up to what other remodeling company owners are making.
We love metrics and key performance indicators at RA, and we’re dedicated to helping our members make a difference in their business and lives. We survey our Roundtables members twice a year, and one of the KPIs that matters most to you and your family is your take-home pay.
When we look at owners compensation, we consider all of the money available to the owner. This could be salary or distributions, .and for this metric, we include net profit in the calculation.
We combine these elements because it’s the best apples-to-apples comparison we can make when considering the many ways owners can take money out of their companies.
Our members’ stretch goal for this metric is 20 percent of revenue. So if you produce $1,500,000 per year, your owner compensation goal would be $300,000.
Our top 25 percent of the membership averages 18 percent in owners’ compensation. With their average revenues of $3,100,000, this makes $558,000 available to them. Many will use some of this to add to their savings, or to distribute bonuses to their team.
Building a Profitable Business
What we found when we looked through the owner compensation data is that, on average, members who have been with us for fewer than six months are earning $94,614 annually. For those who have been Roundtables members for two to three years, income increases to $138,125, on average. And it keeps growing. For those members who have been active for nine years or more, that annual number jumps to $298,864. While compensation rises, they’re also adding staff, and offering competitive wages and benefit packages to their employees.
Most important, their work/life balance improves. Our top members are working 55 hours per week or less, and taking at least four weeks off — and are able to take more than that. They’re working smarter, making more time for their families, and supporting their employees.
As we look back on 2019, that’s what makes our year — that we’ve helped our members make positive changes in their businesses and their lives.