Peer groups and trade associations for benchmarking

Why owners benchmark

Your own numbers tell you whether you are improving. They do not tell you whether you are good. An owner whose gross margin rose three points may still be well below companies like theirs, and an owner who worries about a high overhead share may find it is normal for a company with their mix of work. Benchmarking against peers answers that question and, more usefully, shows you who is doing something better and how.

There is no shortage of potential peers. In 2023 the US had 117,969 landscaping services establishments with paid employees, 111,207 plumbing, heating and air-conditioning contractors, 83,342 electrical contractors, 67,799 janitorial and cleaning establishments, 25,519 roofing contractors and 16,535 pest control establishments^[3]. Most of them are not in your market. That is the point: a contractor three states away faces the same problems and has no reason to keep their answers from you.

Where benchmark data comes from

• Government statistics: free, reliable and large-scale, such as employment, wages and establishment counts. Good for context, too broad for comparing your margins.
• Public-company data: free and well documented, but drawn from large listed firms whose costs and scale differ from yours.
• Trade association surveys: financial and operating studies run for members of a trade, often by a research firm. Closer to your business, usually paid, and only as good as the number and type of companies that respond.
• Facilitated peer groups: groups of non-competing companies, often run by an association or a consultant, that share detailed numbers and visit each other.
• Self-organized peer groups: owners who know each other from training or conferences and agree to compare numbers regularly.
• Software platform benchmarks: some field service and accounting platforms show anonymized comparisons across their customers. Check how they define each metric before trusting them.

Associations by trade

Programs change, so ask each association directly what it offers now. Two examples show the range. ACCA has run MIX Groups for HVAC contractors who share business information including marketing and sales strategies, operations and financial metrics^[1]. NALP and Landscape Management have published an Operating Cost Study for the landscape industry, sold as a digital copy, that lets a company measure itself against others in the industry^[4]. State and regional associations, buying groups and franchise systems often run their own comparisons too.

Choosing a peer group

A good peer group is worth far more than a survey report, because members explain how they reached their numbers. A poor one is an expensive social club. Ask these questions before you join:

1. Are members non-competing? Groups work only when nobody is protecting local market share.
2. Are members similar in trade, size and mix? A residential service company learns little from a new-construction contractor ten times its size.
3. What numbers are shared, and with what definitions? Ask to see the template.
4. Who facilitates, and what does the facilitator do between meetings?
5. How often does the group meet, and does it visit members' businesses?
6. What is expected of you: preparation time, data, hosting a visit?
7. How does the group handle confidentiality and competition law?

Talk to two current members before signing up. Ask what they changed in their business because of the group in the last year. Specific answers are a good sign.

Staying on the right side of antitrust law

Comparing notes with other businesses in your trade is legal and common, but there are lines. The Federal Trade Commission says most trade association activities are procompetitive or competitively neutral, and that sharing historical rather than current or future data is less likely to raise antitrust concerns^[2]. Aggregated data managed by an independent third party raises fewer concerns^[2].

The FTC also says it is illegal to use a trade association to control or suggest prices of members, and that exchanging current prices can raise concerns if it encourages more uniform prices than would otherwise exist^[2]. In practice:

• Share past results, such as last quarter's margins or last year's labor costs, not current or planned prices.
• Prefer aggregated data collected by a third party, especially if any members could compete.
• Never discuss future pricing, bids, territories or which customers to pursue.
• Keep an agenda and notes for meetings, and ask an attorney to review the group's rules if you are unsure.

Agree definitions before comparing

The most common reason benchmarking disappoints is that companies measure the same thing differently. One company puts field vehicles in cost of goods sold; another puts them in overhead. One counts revenue per truck; another per tech. Before you compare a single number, agree a short definitions sheet:

• Gross margin: which costs are direct, including burdened labor, vehicles and warranty. See our guide to gross margin targets by trade.
• Owner pay: adjusted to a market salary for the role, so profits are comparable.
• Productivity: revenue per field FTE, with FTEs calculated from paid hours.
• Memberships: active agreements defined the same way, with renewal rate measured on agreements due. Our membership metrics guide offers definitions.
• Phones: answer rate and booking rate measured on the same basis, as in the weekly owner scorecard.

Starting your own group

1. 01

   Find four to eight peers

   Owners of similar companies in other markets, met through training, conferences, suppliers or online trade communities.

2. 02

   Write simple rules

   Confidentiality, no discussion of current or future prices, attendance expectations and how data is shared.

3. 03

   Agree a template

   A one-page set of quarterly numbers with written definitions. Start with ten or fewer.

4. 04

   Meet quarterly

   Video calls work for routine reviews; one in-person visit a year to a member's business is where much of the learning happens.

5. 05

   Rotate a focus topic

   Each meeting, one member presents a problem and the group digs into it: pricing, hiring, memberships, call handling.

6. 06

   Review after a year

   Ask each member what changed. If nothing did, change the format or the members.

What to bring to your first meeting

First meetings set the tone. Arrive with numbers rather than stories, and with questions rather than answers.

• Your last four closed quarters on the group's template, with any definitions you could not match written in a note.
• One problem you want help with this year, described in a paragraph with the numbers behind it.
• One thing your company does well that others could learn from, so the exchange runs both ways.
• A list of the people in your company who will act on what you learn, and when you will brief them.

After the meeting, write down the two ideas you will test, who owns each and how you will measure the result. Report back at the next meeting. Groups that hold members to what they said they would try tend to last; groups that only compare numbers tend to fade.

Example: a six-company cleaning group

Example (fictional): six residential cleaning company owners in six different states meet by video each quarter. Each submits revenue, cleaner wages with burden, supplies, travel time between homes, overhead, recurring clients and cancellations, all for the previous quarter, to a shared sheet kept by a bookkeeper who is not a member.

Example finding: one member's travel time between homes is far lower than the others'. She explains that she stopped accepting one-off cleans outside two core zip codes and moved recurring clients onto fixed days by neighborhood. Within two quarters, two other members try the same approach and see their travel share fall. Nobody discussed prices; the gain came entirely from routing.

Getting value from the data

Benchmarks are a starting point for questions, not a verdict. When your number differs from the group's, ask why before deciding what to change. A lower gross margin might reflect a heavier install mix rather than poor pricing; a higher overhead share might reflect an office that answers every call live. Use the comparison to pick one or two priorities a year, and bring the results into your annual pricing review and financing plans; lenders often ask how your numbers compare, a question covered in our guide to SBA loans and equipment financing. Measuring the same things every quarter, such as first-time fix rate, makes each meeting more useful than the last.