industry offer to private-sector employers
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61143BusinessCoachingintheUSIndustryReport.pdf
WWW.IBISWORLD.COM Business Coaching in the US August 2017 1
IBISWorld Industry Report 61143 Business Coaching in the US August 2017 Taylor Palmer
Back to school: More affordable and flexible classes will propel industry growth
2 About this Industry 2 Industry Definition
2 Main Activities
2 Similar Industries
2 Additional Resources
4 Industry at a Glance
5 Industry Performance 5 Executive Summary
5 Key External Drivers
7 Current Performance
9 Industry Outlook
11 Industry Life Cycle
13 Products & Markets 13 Supply Chain
13 Products & Services
15 Demand Determinants
15 Major Markets
17 International Trade
18 Business Locations
20 Competitive Landscape 20 Market Share Concentration
20 Key Success Factors
20 Cost Structure Benchmarks
23 Basis of Competition
24 Barriers to Entry
25 Industry Globalization
26 Major Companies
27 Operating Conditions 27 Capital Intensity
28 Technology & Systems
29 Revenue Volatility
29 Regulation & Policy
30 Industry Assistance
31 Key Statistics 31 Industry Data
31 Annual Change
31 Key Ratios
32 Industry Financial Ratios
33 Jargon & Glossary
www.ibisworld.com | 1-800-330-3772 | [email protected]
This report was provided to Trident University (2127866900) by IBISWorld on 28 January 2018 in accordance with their license agreement with IBISWorld
WWW.IBISWORLD.COM Business Coaching in the US August 2017 2
This industry includes companies that offer short duration courses and seminars for management and professional development. Training is provided through public courses or through employers’ training programs,
and the courses can be customized or modified. Instruction may be provided at the company’s training facilities, client or educational institutions, the workplace or the home and via television or the internet.
The primary activities of this industry are
Providing management development training
Providing professional development training
Providing quality assurance training
Providing business coaching
54161 Management Consulting in the US This industry advises clients on human resource and training issues.
54161b HR Consulting in the US This industry advises clients on personnel policies, benefits and compensation, as well as recruitment and retention.
61121 Community Colleges in the US This industry prepares individuals for careers and offers associate degrees, certificates and diplomas below the baccalaureate level.
61144 Business Certification & IT Schools in the US This industry offers certification courses in office procedures and secretarial and stenographic skills.
61131a Colleges & Universities in the US This industry prepares individuals for careers and offers degrees at the baccalaureate or graduate levels.
61131b For-Profit Universities in the US This industry prepares individuals for careers and offers degrees at the baccalaureate or graduate levels.
Industry Definition
Main Activities
Similar Industries
About this Industry
The major products and services in this industry are
Business coaching
Management development training
Professional development training
Quality assurance training
For additional information on this industry
www.amanet.org American Management Association
Additional Resources
Provided to: Trident University (2127866900) | 28 January 2018
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About this Industry
IBISWorld writes over 1000 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com
www.td.org Association for Talent Development
www.iacet.org International Association for Continuing Education and Training
www.certifiedcoach.org International Association of Coaching
www.coachfederation.org International Coach Federation
www.pmi.org Project Management Institute
Additional Resources continued
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Corporate profit
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2309 11 13 15 17 19 21Year
Revenue Employment
Revenue vs. employment growth
Products and services segmentation (2017)
46.4% Professional development
training
26.2% Management development
training
13.8% Business coaching
13.6% Quality assurance training
SOURCE: WWW.IBISWORLD.COM
Key Statistics Snapshot
Industry at a Glance Business Coaching in 2017
Industry Structure Life Cycle Stage Growth Revenue Volatility Low
Capital Intensity Low
Industry Assistance None
Concentration Level Low
Regulation Level Light
Technology Change Medium
Barriers to Entry Low
Industry Globalization Low
Competition Level Medium
Revenue
$11.4bn Profit
$1.0bn Wages
$3.5bn Businesses
51,532
Annual Growth 17-22
1.7% Annual Growth 12-17
3.5%
Key External Drivers Corporate profit Per capita disposable income Households earning more than $100,000 Investor uncertainty Number of employees
Market Share There are no major players in this industry
p. 26
p. 5
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31
SOURCE: WWW.IBISWORLD.COM
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Key External Drivers Corporate profit A large proportion of the industry’s customers are corporations, so changes in business sentiment typically influence industry demand. When corporate profit is low, companies are less likely to spend money on nonessential training for their staff. Corporate profit is expected to increase in 2017, representing a potential opportunity for the industry.
Per capita disposable income Disposable income levels influence individuals who take courses for self-fulfillment. Customers are sensitive to price, so an increase in disposable income often leads to increased spending on education and training courses. Per capita disposable income is expected to increase in 2017.
Executive Summary
The Business Coaching industry is heavily reliant on demand from its largest market, the middle and senior management of US corporations. After rebounding from a period where businesses cut back on nonessential expenses, including employee business coaching programs, the industry flourished. IBISWorld estimates that revenue will increase at an annualized rate of 3.5% to $11.4 billion over the five years to 2017, including expected growth of 1.4% in 2017 alone.
The industry offers leadership and management training courses, including courses to enhance knowledge in particular areas, such as information technology and change management. The industry has benefited from large corporations and individuals’ growing acceptance of training seminars. In response to globalization, businesses increased their use of training and more individuals attended programs to learn about finance and real estate. Over the past five years, per capita disposable income levels have grown, which has
spurred an increase in demand from nonemploying business owners looking to diversify or strengthen their skill sets to become more competitive in the current economic climate. Additionally, job seekers attempting to strengthen their bids for positions have also sought out business coaches more frequently as income growth has given them the resources to do so. Corporate profit levels have also generally benefited the industry since 2012. During the early portion of the five-year period, profit growth gave corporations more funds to allocate toward discretionary purchases, such as business coaches. Toward the latter half of the period, corporate profit levels began to fall, but because of the growing acceptance of the benefits of business coaching, businesses still allocated funds to industry businesses.
Although some companies will use internal resources for training, industry revenue is forecast to increase at an annualized rate of 1.7% to $12.4 billion over the five years to 2022. In the future, the adoption of online training is expected to bolster the industry. This alternative is a more affordable and flexible option for customers and offers lower operating costs for training providers, putting upward pressure on margins.
Industry Performance Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage
In the future, the adoption of online training is expected to bolster the industry
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Industry Performance
Key External Drivers continued
Households earning more than $100,000 Demand for the educational services provided by this industry mainly comes from middle and senior managers. An increase in the number of people in these positions will increase demand for services. A proxy for the number of middle and senior managers is the number of households in high-income groups. Therefore, an increase in the number of wealthy households is expected to raise demand for industry services. The number of households earning more than $100,000 is expected to increase in 2017.
Investor uncertainty Investor uncertainty controls investor risk. Investor uncertainty
rises during economic downturns with investors becoming risk averse. National debt and interest rate worries are continuing to increase uncertainty and reduce demand for industry services. Investor uncertainty is expected to increase in 2017.
Number of employees Any rise in the number of employees in the United States will expand the potential market base for the industry. Therefore, an increase in the number of employees typically boosts demand for industry services. The number of employees is expected to increase in 2017.
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2210 12 14 16 18 20Year
Per capita disposable income
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2210 12 14 16 18 20Year
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Industry Performance
Current Performance
The rapid pace of technological change and overall shorter product life cycles have altered the skills required to be an effective manager. To keep up with these changes and develop the skills of senior employees, many companies use business coaching seminars, such as the ones offered by the Business Coaching industry. Large corporations have placed a greater value on seminars and workshops, resulting in higher industry demand. Courses related to new skills, such as information technology and change management, have been growing areas for the industry. As acceptance of the value of professional development and continuing education classes, the industry has benefited immensely, because companies looking to host these courses often seek out industry operators.
Overall, industry revenue has grown an annualized 3.5% to $11.4 billion over the past five years, including expected growth of 1.4% in 2017.
Income levels and corporate profit
Wider economic performance largely affects growth in this industry. The market for professional skills and performance training includes both individuals and corporations. Personal disposable income influences demand from individuals, but the industry’s greatest share of revenue comes from large corporations. Over the past five years, per capita disposable income has benefited the industry substantially. Nonemploying business owners with greater income levels have gained more resources to contract the services of industry operators to learn or develop skills to make them more effective business owners and more competitive in their markets. Additionally, growing income levels have enabled job seekers looking to become more competitive in the labor market to take courses with industry operators.
While per capita disposable income levels have grown and boosted industry demand from nonemployers and individuals, corporate profit has had
a much more uneven effect on the industry over the period. Corporate profit is a particularly important driver because businesses tend to spend more on employee development when money is readily available, and corporations make up the bulk of industry clients. Early in the five-year period, corporate profit grew strongly. As a result, businesses invested in educating senior and mid-level employees. This practice not only makes employees more competent at the tasks or skills they are being taught, but engages workers and boosts job satisfaction. Toward the end of the period, however, corporate profit began to drop. As businesses lost resources, many of them cut back on discretionary purchases, but business coaching was not one of the services that was cut most frequently. Business coaching is often seen as an investment in employees and, subsequently, a company at-large. Consequently, clients chose to continue patronizing business coaches even as resources were trimmed, and business did
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2309 11 13 15 17 19 21Year
Industry revenue
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Industry Performance
Industry structure Though the economy recovered, depressed demand and profit caused industry players to cut back on operational costs associated with employees, branch offices and wages. While larger operators can more easily cut costs associated with branch offices and employee head count, nonemployers are more likely to fall victim to declining profit, forcing them to leave the industry.
This lull in demand particularly affected nonemploying, sole proprietors, which account for more than 85.0% of companies operating in this industry and less than 20.0% of total industry revenue. Operators of nonemployer businesses are primarily former management consultants or management-level employees. These operators often work on a part-time basis, leaving the industry during periods of low demand. However, growth in demand and low barriers to
entry spurred former operators and new players to enter the market. Over the five years to 2017, the number of enterprises is expected to grow at an annualized rate of 2.3% to 51,532 companies.
New enterprises and establishments are also leading to higher employment. Increasing usage of virtual training sessions has enticed companies to hire employees with technical expertise to aid in the delivery of such services, as well as more consultants and trainers in the field. Employment is forecast to increase over the period at an annualized rate of 0.7% to 88,222 workers.
not fall as corporate profit dwindled. Corporate profit figures are expected to grow in 2017 and the industry will likely continue its regular cyclical growth patterns.
Income levels and corporate profit continued
Depressed demand and profit caused industry players to cut back on operational costs
Technology The rapidly changing business environment has assisted long-term industry growth. Technological advances have not only increased required knowledge for employees and managers, but also changed the working environment, increasing the volume and diversity of work that most employees have to undertake. Moreover, globalization has pushed many businesses to expand their operations overseas, further changing demands and requirements of employees. These business conditions have led to an overall increase in
expenditures on employee and management training and development.
Professional and management development education providers have increased the flexibility of their courses through the use of the internet and other technologies. Greater flexibility has helped increase demand for professional skills training because it enables people to attend seminars they would not otherwise be able to attend. New software programs have enabled individuals to attend training courses from home or out of town. The development of online education resources has also enabled
Provided to: Trident University (2127866900) | 28 January 2018
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Industry Performance
Industry Outlook
The Business Coaching industry is expected to experience continued growth as the US economy expands. Demand depends largely on business sentiment; therefore, as corporate profit increases over the five years to 2022, the industry will benefit from companies having more money to spend on training. Over the five years to 2022, revenue is expected to increase at an annualized rate of 1.7% to $12.4 billion.
Demand for industry services has largely been supported by long-term
trends that will ultimately sustain recent growth in the industry. Increasing competition among corporations, which has been assisted by globalization and the entry of new domestic competitors, will encourage companies to spend on professional training. Midsize businesses are expected to be a growth segment as they experience increasing pressure to move into international markets to remain competitive.
some establishments to cut labor and rent costs as percentages of revenue. These video conferencing programs have helped industry operators reach more clients with less travel requirements. As operators have been able to take on more clients and minimize relative fixed costs, margins have grown.
The industry has also benefited from a trend of businesses outsourcing their training and development. The majority
of corporate training is still internal, but companies are increasingly outsourcing the training that can be standardized. This market has yet to peak, and industry operators regard internal training programs as one of their main competitors. With this knowledge, many operators have changed course styles and flexibility to encourage businesses to use their services rather than training internally.
Technology continued
Economic recovery Over the next five years, industry profit margins are expected to increase as demand for training services continues to rise. This increase is expected partially as a result of virtual training sessions that enable employees to conduct seminars and classes remotely. As a result, operators can cut down on travel time and coach more clients each day, maximizing their revenue and minimizing relative fixed costs. However, as the growing number of enterprises bolsters overall industry competition, operators will place a premium on hiring highly skilled workers that command higher salaries, which will limit some margin growth. Wages are expected to grow an annualized 2.3% to $4.0 billion over the five years to 2022.
Improving profit margins are expected to continue to bring more operators and employees into the industry. Following the economic downturn, slowing demand was particularly damaging to sole proprietors and nonemployers, causing many to leave the industry amid poor operating conditions. However, many of these companies operate on a part-time basis, making their exits during periods
Improving profit margins are expected to continue to bring more operators into the industry
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Industry Performance
New technology, rising competition
Distance-education tools can be used to increase the flexibility of education courses’ delivery, so expansion of distance education is expected over the next five years. These courses are unaffected by location and are becoming more affordable to provide. Internet-based programs can reduce the cost of delivering education by reducing operators’ wage costs. Distance education also makes training programs available to a wider potential audience such as out-of- town individuals. Virtual presence technologies, such as Skype, have made it possible for players to provide coaching services to users who prefer remote courses.
Industry competition is forecast to increase over the next five years. As a result, new entrants may seek to
specialize in particular niche markets, such as quality assurance training for specific sectors. A survey by the Association for Talent Development found that when searching for a management and professional training development provider, corporate clients value businesses with strong knowledge of the company’s industry. This factor means there are potentially lucrative niche markets for smaller training providers to exploit.
Growing markets Over the five years to 2022, expansion in corporate profit and the increasing number of businesses with employees will provide a platform for industry growth. However, companies that reduced spending on training programs over the past five years will be hesitant to take on such costs again. Consequently, growth is expected to slow from current rates, as these companies will likely use internal resources to train employees to reduce costs.
The consumer market for professional skills and performance training is also expected to grow.
Demand from individuals is generally linked to disposable income. Over the five years to 2022, the industry will benefit from rising per capita disposable income. Some individuals who have been unemployed for an extended period will likely use services from this industry to update their skills as the labor market continues to grow. Many professional skills courses undertaken by individuals are related to real estate. Over the next five years, improving growth in the real estate market will spur demand for related training.
of low demand relatively easy. Over the next five years, many small players, particularly nonemployer operators, will continue to re-enter the industry. This factor is the primary reason there will be such strong employment and enterprise growth during the period.
Over the five years to 2022, the number of enterprises operating in the industry is expected to increase at an annualized rate of 2.9% to 59,333 companies. Likewise, employment is also projected to increase at an annualized rate of 2.3% to 98,643 workers.
Economic recovery continued
Industry competition is forecast to increase over the next five years
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Industry Performance The industry has grown faster than the overall economy
There is increasing acceptance of the value of training offered by this industry
The type of training offered is adapting to changes in the business environment
Life Cycle Stage
SOURCE: WWW.IBISWORLD.COM
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15
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-10
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ro w
th in
s ha
re o
f ec
on om
y
% Growth in number of establishments
-10 -5 0 5 10 15 20
Decline Shrinking economic importance
Quality Growth High growth in economic importance; weaker companies close down; developed technology and markets
Maturity Company consolidation; level of economic importance stable
Quantity Growth Many new companies; minor growth in economic importance; substantial technology change
Key Features of a Growth Industry
Revenue grows faster than the economy Many new companies enter the market Rapid technology & process change Growing customer acceptance of product Rapid introduction of products & brands
Management Consulting
Book, Magazine & Newspaper Wholesaling
HR Consulting Computer Stores
Community Colleges
Business Coaching
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Industry Performance
Industry Life Cycle The Business Coaching industry is expected to grow faster than the overall economy during the 10 years to 2022. Industry value added, a measure of the industry’s contribution to the overall economy, is expected to increase at an annualized rate of 2.3% over the 10 years to 2022, while the US economy is expected to grow at an annualized rate of 2.1% over the same period. Since the beginning of the economic recovery and subsequent expansion, there have been steady increases in the number of operators, rapid technological change and new products, skewing industry growth. Therefore, the industry is currently in the growth phase of its life cycle. More companies have embraced professional skills programs as an important method of training key management personnel, which is indicative of the industry’s growing life cycle stage. Senior managers
are leading organizations in an increasingly competitive and global economy, so businesses use this industry’s services to teach managers to navigate these problems.
The type of training provided by this industry is adapting to the changing needs of businesses. Newer training courses include those related to information technology, security management, information management and change management. These moves have supported long-term growth for players offering these courses. After many part-time operators left the industry amid poor operating conditions, the number of enterprises operating in this industry exploded, and is expected to increase an annualized 2.6% over the 10-year period, including the return of many who previously exited the industry.
This industry is Growing
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Products & Services The product segmentation of this industry has undergone changes over the past decade. The advent of business coaching and ongoing changes to the business environment have affected the content of training courses. Increasing globalization, widespread use of technology and an aging workforce have all contributed to these changing services. In general, these factors have increased demand for services provided by this industry. Courses in this industry relate to professional development, management development, quality assurance training and business coaching.
Professional development training The most common service provided by this industry is in the field of professional development, which includes seminars and courses on topics such as finance and accounting, communication and interpersonal skills, marketing and time management. These courses appeal to a broad group of people with a wide range of skills and are more likely to include individuals than programs in the management development training segment. Many providers of these services have experienced a surge in
Products & Markets Supply Chain | Products & Services | Demand Determinants Major Markets | International Trade | Business Locations
KEY BUYING INDUSTRIES
61131a Colleges & Universities in the US Participants completing seminars and short courses in this industry may choose to further their education (in particular at a post-graduate level) at a university or professional school.
61131b For-Profit Universities in the US Participants completing seminars and short courses in this industry may choose to further their education (in particular at a post-graduate level) at a university or professional school.
81392 Professional Organizations in the US This industry may offer professional skills training services to their members.
92 Public Administration in the US The public sector accounts for nearly 25.0% of the market for this industry. The government contracts professional skills training services for employee training and for unemployment assistance programs.
99 Consumers in the US Consumers are the primary source of demand for this industry.
KEY SELLING INDUSTRIES
42492 Book, Magazine & Newspaper Wholesaling in the US This industry provides the books and resources used in education and training courses.
44312 Computer Stores in the US This industry provides the computer hardware and software that is used in training and for administrative purposes.
45321 Office Supply Stores in the US This industry provides notebooks and other stationary requirements.
53112 Commercial Leasing in the US This industry provides office space to business coaching companies.
54151 IT Consulting in the US This industry develops websites from which business coaches can market their services and provide classes.
Supply Chain
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Products & Markets
Products & Services continued
demand with the recovery and subsequent growth of the economy. This segment is expected to account for 46.4% of industry revenue in 2017.
Management development training Management development training is generally targeted at middle- and senior- level management. Courses in this segment include seminars on topics such as strategic business management, leadership, management and supervisory skills, sales management and IT management. The primary market for this segment is made up of corporations that are trying to develop their managers. This segment also experienced declines as a result of the economic downturn because the decline in corporate profit caused many of these companies to cut back on training expenses, which has ultimately reduced demand for this segment. In the next five years, the segment is expected to return to growth, though, as businesses begin spending on training services once again. In 2017, management development training is projected to make up 26.2% of industry revenue.
Quality assurance training Quality assurance training is a growing segment of this industry and is expected
to increase over time; accounting for an expected 13.6% in 2017. This segment is primarily focused on improving production processes as well as the end result of the processes. Increasing requirements for the formal quality certification of products and business systems are expected to spur demand for quality assurance training over the next five years. Furthermore, this segment has received a boost following several high- profile cases, such as dangerous levels of lead paint found in children’s toys.
Business coaching The business coaching segment has experienced rapid growth as demand for more personal executive training has increased. Management training experts believe that this is due to the flattening out of businesses, which is leaving management more isolated than before. Due to the isolation, managers often employ coaches to share ideas with, learn from and help develop their leadership skills. Employment trends toward higher instances of job transition, self- employment and changing management styles are also cited as reasons for the increased demand for business coaches. Furthermore, some managers feel that traditional management styles no longer
Products and services segmentation (2017)
Total $11.4bn
46.4% Professional development
training
26.2% Management development
training
13.8% Business coaching
13.6% Quality assurance
training
SOURCE: WWW.IBISWORLD.COM
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Products & Markets
Major Markets This industry provides training to individuals through public open- enrollment programs and to corporations and government departments through custom-designed programs. Services provided by this industry to the private, public and nonprofit sectors are most often aimed at middle management and above.
Age breakdown While data is not available for which sector that industry business comes from, there is data pertaining to the age of the relevant industry clients. Customers younger than 25 years old account for just 4.1% of industry revenue. These people are much less likely to be in
Demand Determinants
Demand for services from the Business Coaching industry is influenced by business sentiment, corporate training budgets, course quality and employer perception of course value, change within corporations and the price of training courses. Demand from individuals is influenced by growth in household disposable income, price and perceptions of quality and value.
Corporations comprise the largest market segment for this industry; therefore, demand for industry services is largely influenced by corporate training budgets. These budgets, in turn, are affected by business sentiment, overall economic growth and the perceived value of training programs to company performance. Periods of high business sentiment often spur investment in employee training programs, while difficult economic times cause companies to reduce spending on nonessential training. Corporations often cut training budgets when profit falls, leading to lower demand for the services provided by this industry.
Employer perceptions of the value of management and development training strongly influence demand for performance skills training. There is
likely to be a higher level of demand for training programs that are highly respected and valued by corporations. Training programs have generally become more widely accepted, a driving factor in industry growth during the past five years.
Change within a company can also spur demand for industry services. An increase in the pace of technological improvements or a reduction in product or process life cycles can translate to an increase in demand for professional skills and performance training. Similarly, companies may choose to invest in training programs during restructuring campaigns.
The price of training is an important factor of demand. Seminars and short- duration courses are not essential services and, therefore, must be affordable for both individuals and corporations, depending on the target market of the training program. The level of disposable income influences demand for self-fulfillment courses that are taken by individuals. More flexible course arrangements have boosted demand because they permit individuals to take classes remotely and on their own schedules.
Products & Services continued
work and they need to learn new techniques to achieve what is required of them. This segment accounts for 13.8% of industry revenue.
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Products & Markets
Major Markets continued
management positions than other age groups. Therefore, they have less use for business coaching and are less likely to have their companies pay for coaching. This also explains why the proportion of industry business goes up for those in the age groups between 26 and 35, 36 and 45 and 46 and 55. After that age bracket, the proportion of industry revenue the age brackets account for shrinks, as older workers are less likely to seek out business coaching.
Private sector The majority of enrollments in this industry are through corporations and the private sector. The majority of participants are from middle management and upper-middle management. In this segment, training courses and seminars may be customized to some degree to meet the specific requirements of the particular corporation. The training may be general in nature or on a specific topic relevant to the company at the time. For instance, companies might send senior employees to a training seminar on change management during a period of company restructure. However, low corporate profit caused many companies to reduce spending on
training expenses, slowing demand for training in this segment. Demand from this segment is expected to return as business sentiment continues to improve over the next five years.
Public sector The public sector is another important segment for this industry. This market is largely focused on the federal government, so there is a high share of larger professional and management development training establishments in Washington, DC. Over the past five years, this segment has remained relatively steady.
Individuals Training through open-enrollment programs for individuals’ accounts for a significant proportion of industry revenue. Establishments offer a range of courses and seminars in cities throughout the United States. These courses generally follow a standard format, and enrollment is open to all members of the public. Distance education courses, where students can work at their own pace, are also offered. In some instances, this market segment may benefit from the federal government’s Work Investment Act,
Major market segmentation (2017)
Total $11.4bn
34.9% Customers between 36 and 45 years old
0.9% Customers older than 65 years old
34.2% Customers between 46 and 55 years old
16% Customers between 26 and 35 years old
9.9% Customers between 56 and 65 years old
4.1% Customers less
than 25 years old
SOURCE: WWW.IBISWORLD.COM
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Products & Markets
International Trade Given that this industry offers only seminars and courses of short duration, international participants are unlikely to attend courses offered in the United States; therefore, trade levels within this industry are relatively small. However, an increasing number of establishments in this industry are offering their courses over the internet, enabling overseas residents to participate.
Additionally, several of the larger enterprises in this industry also operate outside the United States,
either through establishing overseas branches, the sale of a franchise to an overseas operator or through licensing an overseas enterprise to deliver training courses. For instance, the Center for Creative Leadership operates campuses in Singapore and Brussels and also has network associates in several other countries. These network associates are licensed to offer one or more of the center’s programs and assessments to the public or the managerial staff of organizations.
Major Markets continued
which provides funding for some professional development training for the young and unemployed. This market has experienced a decline over the past five years due to reduced spending on classes related to finance and real estate.
Nonprofit sector The nonprofit sector is one of the industry’s significant downstream markets. Over the past five years, this market segment has grown rapidly due to increased acceptance of the benefits of management training within the sector.
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Products & Markets
Business Locations 2017
MO 1.5
West
West
West
Rocky Mountains Plains
Southwest
Southeast
New England
VT 0.5
MA 2.9
RI 0.3
NJ 2.5
DE 0.3
NH 0.5
CT 1.6
MD 2.4
DC 0.9
1
5
3
7
2
6
4
8 9
Additional States (as marked on map)
AZ 2.4
CA 11.5
NV 1.2
OR 1.6
WA 3.1
MT 0.4
NE 0.3
MN 2.1
IA 0.7
OH 2.7
VA 3.7
FL 7.6
KS 0.9
CO 4.6
UT 1.6
ID 0.4
TX 6.9
OK 0.6
NC 3.3
AK 0.1
WY 0.2
TN 1.4
KY 0.7
GA 3.4
IL 4.6
ME 0.5
ND 0.1
WI 1.6 MI
2.4 PA 3.6
WV 0.2
SD 0.3
NM 0.7
AR 0.3
MS 0.3
AL 0.6
SC 1.1
LA 0.9
HI 0.3
IN 1.4
NY 6.3 5
6 7
8
3 21
4
9
SOURCE: WWW.IBISWORLD.COM
Mid- Atlantic
Establishments (%)
Less than 3% 3% to less than 10% 10% to less than 20% 20% or more
Great Lakes
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 19
Products & Markets
Business Locations The distribution of industry establishments closely follows the US population. The most populated region of the United States, the Southeast, accounts for 23.5% of establishments, followed by the West with 17.8% and the Mid-Atlantic with 16.0%.
Highly populated regions, particularly those with centers of major business activity, benefit from higher demand for professional skills training. Regions with a large number of corporate headquarters will have higher demand for professional and management development training because a large proportion of the market for this industry is made up of corporations. Larger establishments are, therefore, more likely to be located in these regions. The distribution of businesses in this industry has not changed much over the past five years; although the share of establishments in the West has declined from 20.2% in 2012 to just 17.8% in 2017 due to a drop
in establishment numbers in states other than California. California still accounts for the largest segment of industry establishments at 11.5%.
%
30
0
10
20
So ut
hw es
t
W es
t
G re
at L
ak es
M id
-A tl
an ti
c
N ew
E ng
la nd
Pl ai
ns
R oc
ky M
ou nt
ai ns
So ut
he as
t
Establishments Population
Distribution of establishments vs. population
SOURCE: WWW.IBISWORLD.COM
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 20
Cost Structure Benchmarks
Cost structures vary across the industry. Some operators may benefit from operating efficiencies or offering more online courses to reduce their labor costs.
Additionally, some operators primarily offer classes in their clients’ workspaces, while others coach from their own facilities, which dramatically alters rent
Key Success Factors Being part of a franchising chain New establishments in this industry can benefit from offering courses under license from a larger organization. This reduces the costs associated with establishing new courses and maximizes economies of scale.
Ability to alter goods and services produced in favor of market conditions Establishments in this industry must be able to change or adapt the courses offered to suit the needs of attendees. For instance, recently there has been increased demand for IT management training and quality assurance training.
Having a good reputation The perceived value of a company is important for the recruitment of new clients for seminars and workshops.
Access to highly skilled workforce Trainers in this industry must have an appropriately high level of skills and experience.
Provision of superior after sales service Establishments that provide a higher level of after-sales service have a competitive advantage over those that do not in cementing client relationships.
Market Share Concentration
In 2017, IBISWorld estimates that the two largest companies account for less than 5.0% of industry revenue. As a result, the Business Coaching industry is highly fragmented, with a large number of small enterprises operating throughout the United States. The vast majority of operators are nonemployers that service only their local area. Nonemploying businesses represent more than 85.0% of all companies operating in this industry. Similarly, there is also a large number of operators that have a relatively small number of employees. 72.8% of employing companies have fewer than five employees, while companies with fewer than 10 employees represent 85.2% of employing enterprises. The low barriers to entry into this industry and growing demand have helped nonemploying companies carve out a niche and a space for success in this industry. Additionally, the wide range of
client industries has led to specialization that has discouraged any one company from gaining significant market share in this industry. As a result, most competition occurs on a regional basis. While larger companies operate in several locations, the dominance of smaller companies is emblematic of an industry with low market share concentration. Additionally, concentration has fallen over the past five years, as technological advances have made it easier for nonemployers to enter the industry. Teleconferencing technologies, like Skype, have enabled individual operators to bolster flexibility in their offerings and availability, cutting into barriers for entry and success. This has offered a lower-priced option for many businesses that may have otherwise been priced out of service by the larger companies, bolstering already-high levels of fragmentation.
Competitive Landscape Market Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization
Level Concentration in this industry is Low
IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 21
Competitive Landscape
Cost Structure Benchmarks continued
expenditures. The cost structure for nonemployer enterprises will also vary from that of the larger operators.
Profit In 2017, the Business Coaching industry is expected to generate profit margins, measured by earnings before interest and taxes, representing 8.9% of revenue. Over the past five years, the industry experienced a rise in profit margins due to an expansion in industry demand. As the benefits of business coaching have become more widely accepted, an influx in demand has enabled operators to minimize relative fixed costs, like rent and utilities. Additionally, operators have invested in more technology, which has enabled them to maximize profit. Business coaches have implemented voice over internet protocol and video conferencing technologies, which have enabled them to reach more clients in a
given day. Instead of traveling to different locations to coach disparate clients, coaches can maximize time and video conference with more clients because of the lack of travel time. This has led to an increase in margins. However, the low barriers to entry in the industry and expanding demand have enticed a high number of new entrants. This has caused some operators to lower prices to stimulate demand in a competitive environment, which has constrained margin growth.
Wages Wages and salaries account for the largest portion of industry revenue because most teaching is conducted on a face-to-face basis. Wages account for an expected 31.1% of industry revenue in 2017, which includes wages for teaching, administration and management staff. The wages category also includes an
Sector vs. Industry Costs
n Profi t n Wages n Purchases n Depreciation n Marketing n Rent & Utilities n Other
Average Costs of all Industries in sector (2017)
Industry Costs (2017)
0
20
40
60
Pe rc
en ta
ge o
f re
ve nu
e
80
100
SOURCE: WWW.IBISWORLD.COM
5.1 8.9
39.0
4.0 3.02.0
12.0
31.1
17.3
4.4 1.4 7.1 8.3
55.0
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 22
Competitive Landscape
Cost Structure Benchmarks continued
allowance for the wages of self-employed operators in the industry. This proportion is lower than the average for the overall industry. Over the past five years, nonemployers have taken advantage of technological advancements in voice over internet protocol software and teleconferencing equipment. The flexibility that these permit have enabled more part-time work, which has cut into wage outlays.
Purchases Purchases account for a significant proportion of overall costs, at 12.0% of industry revenue. Purchases include materials, equipment and property and leasehold improvements. Course development costs, which are associated with developing and refreshing courses, are also considerable. Since it is important for providers to offer courses that are current, they must frequently invest in updating course material. Over the next five years, this segment is expected to increase, due to higher costs of the cost of materials and equipment.
Marketing Advertising and marketing expenses make up a large cost for industry operators because business coaching is still gaining acceptance and competition is strong. The larger companies in the industry have emphasized the importance of marketing and advertising in their operations. Marketing is expected to account for 3.0% of industry revenue in 2017, and is projected to increase as operators continue to incorporate new products into their portfolios.
Rent and utilities The cost of rent varies among operators: while some own their training facilities, others rent them. Operators that serve business clients may use the business’ facilities to reduce costs. This move reduces capital and also rent and utility expenses, which are estimated to represent 4.0% of industry revenue. Rent and utilities costs have actually increased over the past five years because more coaches have started using video conferencing services. This has caused more coaches to operate out of a facility, as opposed to coaching from their clients’ facilities.
Other Depreciation represents only a small share of total revenue for this industry because seminars and training courses are generally of a short duration, and facilities are rented on an as-needed basis. Other capital requirements for operators are minimal; therefore, depreciation is estimated at 2.0% of industry revenue. These costs have grown since 2012, as more operators have implemented video conferencing services.
Industry operators also incur a variety of other expenses, such as fees for legal and accounting work. Operators must also pay for other day-to-day costs of running a business, such as administrative expenses and travel to and from clients. Continuing education and training fees also contribute to these costs. For those who are self-employed, self-employment taxes account for a significant amount of profit earned.
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 23
Competitive Landscape
Basis of Competition Industry establishments experience both internal and external competition. Since the industry is fairly fragmented with a large number of owner operators, competition occurs mainly at a regional level.
Internal competition Businesses within the industry compete on the basis of quality, reputation, industry-specific knowledge, price, flexibility and marketing ability. Since most clients of this industry are in higher-level positions in their organizations, they are typically seeking a high-quality educational service with a short duration. This fact is influenced not only by the standard of course content, but also by the quality of trainers. Trainers need to be highly knowledgeable and respected in their teaching fields.
Reputation is an important factor and can include both the reputation of the training provider and of the content of the course. Well-known training courses (e.g. courses based on Stephen Covey’s 7 Habits of Highly Effective People and seminars presented by well-respected trainers) or courses offered by organizations such as the American Management Association can benefit considerably from a good reputation. Specific industry knowledge creates another basis of competition between providers. For instance, a good understanding of a client’s particular industry may give an education provider a competitive advantage over others.
Establishments within this industry also compete on the basis of price. Although prices may be difficult to compare because of the range of
different courses offered in terms of the topics covered, the length of the training course and the level of course support before and after training. Effective marketing strategies can be a point of competition; therefore, businesses undertake a range of marketing and advertising activities to attract both corporate and individual clients.
Flexibility in terms of course design and scheduling will give establishments within this industry a competitive advantage. Industry operators provide set courses, and customize their training to suit the needs of the client. Flexibility in the scheduling of courses is important because the vast majority of participants in training offered by this industry are full-time employees, often in senior-level positions. As a result, several establishments in this industry offer self-paced programs or online courses.
External competition Industry participants are experiencing increasing external competition from other education operators involved in the Colleges and Universities industry (IBISWorld report 61131a) and the For-Profit University industry (61131b). This competition is evident in the large increases in Masters of Business Administration degrees, which involve similar content to some of the courses delivered through the Business Coaching industry. Industry operators also experience competition from internal training and development departments of larger corporations. Internal training providers benefit from higher knowledge of the workings of the company.
Level & Trend Competition in this industry is Medium and the trend is Increasing
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 24
Competitive Landscape
Overall, there are few barriers to entry into the Business Coaching industry. Investment requirements are low, and there is minimal regulation of the industry. As a result, the industry has a low concentration with a large number of owner-operated businesses. The ease of entry enables these nonemploying businesses to enter and exit the industry in line with changing conditions. Business coaches are good examples because they have minimal fixed costs and can set up or leave the industry with little expense incurred.
The major cost of entering this industry relates to the development costs of creating suitable training programs and the promotion of new courses. The initial costs of establishing an enterprise in this industry are relatively low. Most classes are of a short duration, and training facilities and equipment can be hired on an as-needed basis to minimize capital costs. Businesses providing corporate training may also use the client’s facilities, lowering expenditures by reducing the need to rent out sizable training facilities.
Reputation is important; therefore, new establishments in this industry may initially experience difficulties attracting students. Establishments generally need to have a quality training reputation to attract both individual students to public seminars and courses and corporations seeking customized training for their professional and management staff. Obtaining accreditation from an organization such as the International
Association for Continuing Education and Training (IACET) or the International Coach Federation (ICF) is one way that an establishment in this industry can develop a good reputation. The IACET Authorized Provider Program assesses programs based on a series of criteria that measure all aspects of an educational provider’s program development. The ICF has an accreditation program that costs $1,000 (for a renewable three- year approval) and includes over 176 hours of training. The cost and time required to gain accreditation may, however, represent a barrier to entry for some potential operators.
Over the next five years, it is likely that barriers to entry will increase as more operators attempt to enter the industry. As a result, IBISWorld expects that more stringent certifications will be imposed on existing and prospective business coaches. The increasing enterprise figures will give prospective clients more choices when choosing a business coach and being certified is likely to become more of a necessity in this industry.
Barriers to Entry checklist
Competition Medium Concentration Low Life Cycle Stage Growth Capital Intensity Low Technology Change Medium Regulation & Policy Light Industry Assistance None
SOURCE: WWW.IBISWORLD.COM
Barriers to Entry
Level & Trend Barriers to Entry in this industry are Low and Increasing
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 25
Competitive Landscape
Industry Globalization
This industry has a low level of globalization, with all of the larger enterprises being domestically owned. The international reach of these enterprises is growing; however, through the establishment of branches overseas, licensing programs to operators outside the United States and increasing use of distance-education methods. For instance, industry leader Franklin Covey earned more than 20.0% of its total sales outside of North America in fiscal 2017.
Despite this expansion, the vast majority of people served by this industry are located in the United States, and companies with operations overseas account for only a small percentage of total industry revenue. Given the highly fragmented nature of this industry, with more than 85.0% of establishments being nonemployers, the level of domestic ownership of certain establishments is likely to remain low.
Level & Trend Globalization in this industry is Low and the trend is Increasing
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 26
Other Companies The majority of companies in this industry are small players that operate on a local basis. Furthermore, more than 85.0% of industry enterprises are nonemploying sole proprietorships. Although these nonemployers generate less than 20.0% of industry revenue, their prevalence is indicative of the industry’s low market concentration. As a result of this low concentration, the industry’s largest players also generate a relatively small share of industry revenue.
Franklin Covey Estimated market share: 1.5% Franklin Covey is a learning and performance solutions company that provides management development training and a range of related services to organizations and individuals. The company was formed in 1997 when Franklin Quest acquired the business created by Stephen Covey, author of The 7 Habits of Highly Effective People. With more than 800 associates, Franklin Covey now has just one operating segment, organizational solutions, which is responsible for the company’s training and seminar services. Domestic revenue accounts for the vast majority of the company’s more than $200.0 million in total revenue from fiscal 2016. IBISWorld estimates that Franklin Covey will generate $171.1 million in industry- specific revenue in fiscal 2018.
Organizational solutions segment offers courses on strategic execution, productivity, leadership, sales-force performance and communication training. Consultants provide on-site
training for organizations and schools, while the company offers a measurement methodology along with its courses to quantify the results of the training.
Center for Creative Leadership Estimated market share: 0.9% The Center for Creative Leadership (CCL) is a nonprofit organization founded in 1970 in Greensboro, NC. CCL now operates at five campuses, with one in Brussels and another in Singapore. In addition to having its own campuses, the company provides courses online and through a network of associates. Each of the more than 500 associates, which are located in eight different countries, are licensed to offer one or more of CCL’s programs. CCL undertakes research and educational training programs on modern leadership issues. The company is routinely ranked among the top providers of nondegree executive education programs by publications that include the Financial Times and Business Week.
CCL offers a range of leadership development courses designed for middle and senior managers. It provides 15 different open-enrollment courses and tailored courses for corporate training. CCL provides customized programs for more than 2,000 client organizations each year. About 80.0% of its program participants are from the private sector and 5.0% are from the public sector. The remainder is involved in the education and nonprofit sectors. IBISWorld estimates that CCL will generate $105.0 million in US industry-specific revenue in fiscal 2018.
Major Companies There are no Major Players in this industry | Other Companies
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 27
Capital Intensity The Business Coaching industry has a low level of capital intensity. IBISWorld estimates that for every dollar spent on wages, industry operators will spend $0.07 in capital investment. As is the case for most industries in the education sector, wages and salaries account for a high proportion of industry revenue, resulting in high labor intensity. Business coaches are often skilled and accredited workers with experience in the fields in which they coach. This type of worker often commands a high salary, which pushes up labor expenditures. Capital investment is mainly in equipment, such as computers, and technology, such as voice over internet protocol software. Over the past five years, capital intensity decreased slightly; in 2012, for every
dollar spent on wages, industry operators spent closer to $0.08 in capital investment. Many operators have
Operating Conditions Capital Intensity | Technology & Systems | Revenue Volatility Regulation & Policy | Industry Assistance
Tools of the Trade: Growth Strategies for Success
SOURCE: WWW.IBISWORLD.COM
La bo
r In
te ns
iv e
Capital Intensive
Change in Share of the Economy
New Age Economy
Recreation, Personal Services, Health and Education. Firms benefi t from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labor skills are key to product differentiation.
Traditional Service Economy
Wholesale and Retail. Reliant on labor rather than capital to sell goods. Functions cannot be outsourced therefore fi rms must use new technology or improve staff training to increase revenue growth.
Old Economy
Agriculture and Manufacturing. Traded goods can be produced using cheap labor abroad. To expand fi rms must merge or acquire others to exploit economies of scale, or specialize in niche, high-value products.
Investment Economy
Information, Communications, Mining, Finance and Real Estate. To increase revenue fi rms need superior debt management, a stable macroeconomic environment and a sound investment plan.
Management Consulting
Book, Magazine & Newspaper Wholesaling
HR Consulting Community Colleges
Offi ce Supply Stores Business Coaching
Level The level of capital intensity is Low
Capital intensity
0.5
0.0
0.1
0.2
0.3
0.4
SOURCE: WWW.IBISWORLD.COM Dotted line shows a high level of capital intensity
Capital units per labor unit
Business Coaching
Educational Services
Economy
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 28
Operating Conditions
Technology & Systems Establishments in this industry need to keep pace with the rate of technological change in major corporations to ensure that the training provided is up-to-date and relevant, which includes updating existing courses and providing new training courses as client industries evolve. For instance, training courses are now available for project management, software design and other IT-related management topics.
Technology developments are changing the way courses are delivered. An increasing number of operators in this industry now offer training via the internet. The use of the internet as a communication device is also enabling better pre- and post-training support and networking, which enables companies in this industry to establish an ongoing relationship with their clients. For instance, the Center for Creative Leadership holds webinars, online seminars that often include online
discussion forums. Similarly, the American Management Association provides pre- and postblended learning support for its instructor-led courses. Online materials prepare students with subject matter before their courses and enable better revision of the course contents after it has been completed.
Advancing technology has also enabled operators to improve administrative efficiency. Management software can incorporate human resources and financial and client information, enabling operators to have a better understanding of their customers, resulting more accurate and timely monitoring of outcomes. These improvements will enable companies to direct their marketing more effectively to potential students. The monitoring of student outcomes also ensures the expectations of students and client corporations are met, leading to better client feedback and a clearer demonstration of past results.
Capital Intensity continued
invested in capital so that they can coach and remain in communication with clients online. These technologies are rather inexpensive and has not bolstered much capital spending. However, it has had a far greater impact on the number of part-time workers in this industry. Telecommunication equipment has increased flexibility for potential entrants, as they can provide coaching from their homes, bolstering the entry of workers operating as nonemployers. This has decreased capital intensity slightly.
This industry generally provides training on a face-to-face basis. However, alternative training delivery methods, particularly via the internet, has grown in
popularity in recent years. Currently, the internet is primarily used in blended learning, which uses online elements to complement classroom training. Online learning is expected to develop further over the coming years.
As training courses in this industry are predominantly short in duration, many establishments are able to rent premises and equipment on an as- needed basis, rather than purchasing them outright. In addition, training programs provided to corporations can be held at the client’s training facilities or workplace. This ability results in lower capital costs than would otherwise be the case.
Level The level of Technology Change is Medium
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 29
Operating Conditions
Regulation & Policy There is little regulatory control of establishments operating in this industry, as there is no centralized government authority and states assume varying degrees of responsibility. In general, establishments in this industry are able to operate with considerable independence and autonomy.
Industry operators are not required to have specific accreditation to operate seminars, short duration courses or self-study programs. However, some establishments have gained recognition
for their courses from key institutes, such as the Project Management Institute and the International Association for Continuing Education and Training (IACET). The IACET is a nonprofit association that was commissioned by the Bureau of Education in 1968. It authorizes education providers that meet strict guidelines in relation to the quality and standard of education provided. The association’s authorization gives an assurance to prospective students that
Revenue Volatility
The Business Coaching industry has a low level of revenue volatility. Many of the services offered by this industry fall under the discretionary spending category; therefore, revenue is subject to changes in the level of disposable income and corporate profit. Nonemploying entrepreneurs looking to boost their skills and expand their business and job seekers looking to become more competitive in the hiring market often seek out business coaches and pay for them out of pocket. Per capita disposable income growth has been relatively steady over the period, which has contributed to low volatility. Corporate profit has grown
overall, but experienced some volatility. However, changes to the business environment have encouraged companies to provide professional training to senior employees, increasing demand for business coaching services, regardless of corporate profit fluctuations. Increasing acceptance of the benefits of business coaching has consistently benefited the industry, resulting in steady revenue growth. Additionally, the industry has clients in a wide variety of different industries. As a result, a decline in revenue in one market can be offset by an increase in another segment, thus reducing the industry’s volatility.
SOURCE: WWW.IBISWORLD.COM
Volatility vs Growth
Re ve
nu e
vo la
ti lit
y* (%
)
1000
100
10
1
0.1
Five-year annualized revenue growth (%) –30 –10 10 30 50 70
Hazardous
Stagnant
Rollercoaster
Blue Chip
* Axis is in logarithmic scale
A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment.
When a fi rm makes poor investment decisions it may face underutilized capacity if demand suddenly falls, or capacity constraints if it rises quickly.
Business Coaching
Level The level of Volatility is Low
Level & Trend The level of Regulation is Light and the trend is Steady
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 30
Operating Conditions
Industry Assistance This industry receives no direct government assistance, with establishments generally operating quite autonomously. Industry establishments are not required to comply with onerous regulations; however, some businesses may benefit from the Federal Government Workforce Investment Act. In 2015, this Act was budgeted to give nearly $3.3 billion to public-sector job
training and employment systems to ensure a certain level of employee training within the employment market in the United States. The level of assistance that this legislation gives to the whole industry, however, is limited because it is aimed at providing training to unemployed individuals, whereas this industry predominantly targets management and professionals.
Regulation & Policy continued
the company’s processes and procedures are of a high quality and standard.
For the business coach segment there is the International Coach Federation (ICF), a nonprofit organization that has devised an industry code of ethics and professional standards for business coaches. By providing credentials, it aims to improve the profession’s reputation. More than 9,000 people have been certified as coaches by the ICF, and its membership count exceeds 20,000 people in 100 different countries over the world.
Taxation About one-fifth of employing establishments in this industry are exempt from federal income taxation,
according to US Census data. These are educational organizations and establishments operated by nonprofit organizations that are recognized as exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. Nonprofit organizations are also authorized to receive tax-deductible charitable contributions. Educational organizations may include establishments that conduct public discussion groups, forums, panels or other similar programs. A qualifying organization may also present a course of instruction by correspondence or through the TV or radio. The proportion of industry revenue generated by tax- exempt establishments has stayed relatively flat over the past five years.
Level & Trend The level of Industry Assistance is None and the trend is Steady
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WWW.IBISWORLD.COM Business Coaching in the US August 2017 31
Key Statistics Revenue
($m)
Industry Value Added
($m) Establish-
ments Enterprises Employment Exports Imports Wages ($m)
Domestic Demand
Number of employees
(Mils) 2008 9,811.6 3,801.3 40,173 39,880 77,943 -- -- 3,232.2 N/A 137.2 2009 9,252.8 3,641.1 39,068 38,795 73,081 -- -- 2,826.8 N/A 131.3 2010 9,415.0 3,611.2 38,635 38,357 71,110 -- -- 2,820.4 N/A 130.4 2011 9,446.6 4,205.0 43,457 43,175 78,172 -- -- 2,948.6 N/A 131.9 2012 9,602.5 4,187.1 46,342 46,020 85,175 -- -- 3,294.0 N/A 134.2 2013 10,045.2 4,975.7 47,887 47,560 91,340 -- -- 3,730.1 N/A 136.4 2014 10,419.5 4,596.4 49,446 49,191 87,968 -- -- 3,502.4 N/A 138.9 2015 10,881.5 4,562.1 49,061 48,890 85,781 -- -- 3,430.4 N/A 141.8 2016 11,224.0 4,715.9 49,847 49,621 86,253 -- -- 3,461.7 N/A 144.3 2017 11,379.1 4,787.1 51,946 51,532 88,222 -- -- 3,539.2 N/A 145.7 2018 11,600.2 4,901.1 53,683 53,105 90,720 -- -- 3,640.0 N/A 146.9 2019 11,792.3 4,993.7 55,882 55,093 93,010 -- -- 3,731.6 N/A 147.3 2020 11,958.1 5,098.8 57,652 56,687 95,097 -- -- 3,814.3 N/A 147.8 2021 12,146.8 5,187.4 59,203 58,079 96,930 -- -- 3,891.2 N/A 148.6 2022 12,353.4 5,281.0 60,606 59,333 98,643 -- -- 3,966.0 N/A 149.3 Sector Rank 9/25 10/25 6/25 5/25 14/25 N/A N/A 10/25 N/A N/A Economy Rank 715/1777 544/1573 202/1777 179/1777 477/1777 N/A N/A 513/1777 N/A N/A
IVA/Revenue (%)
Imports/ Demand
(%)
Exports/ Revenue
(%)
Revenue per Employee
($’000) Wages/Revenue
(%) Employees
per Est. Average Wage
($)
Share of the Economy
(%) 2008 38.74 N/A N/A 125.88 32.94 1.94 41,468.77 0.03 2009 39.35 N/A N/A 126.61 30.55 1.87 38,680.37 0.03 2010 38.36 N/A N/A 132.40 29.96 1.84 39,662.49 0.02 2011 44.51 N/A N/A 120.84 31.21 1.80 37,719.39 0.03 2012 43.60 N/A N/A 112.74 34.30 1.84 38,673.32 0.03 2013 49.53 N/A N/A 109.98 37.13 1.91 40,837.53 0.03 2014 44.11 N/A N/A 118.45 33.61 1.78 39,814.48 0.03 2015 41.93 N/A N/A 126.85 31.53 1.75 39,990.21 0.03 2016 42.02 N/A N/A 130.13 30.84 1.73 40,134.26 0.03 2017 42.07 N/A N/A 128.98 31.10 1.70 40,116.98 0.03 2018 42.25 N/A N/A 127.87 31.38 1.69 40,123.46 0.03 2019 42.35 N/A N/A 126.79 31.64 1.66 40,120.42 0.03 2020 42.64 N/A N/A 125.75 31.90 1.65 40,109.57 0.03 2021 42.71 N/A N/A 125.32 32.03 1.64 40,144.43 0.03 2022 42.75 N/A N/A 125.23 32.10 1.63 40,205.59 0.03 Sector Rank 18/25 N/A N/A 5/25 18/25 23/25 11/25 10/25 Economy Rank 476/1573 N/A N/A 1373/1777 440/1777 1645/1777 1197/1777 544/1573
Figures are in inflation-adjusted 2017 dollars. Rank refers to 2017 data.
Revenue (%)
Industry Value Added
(%)
Establish- ments
(%) Enterprises
(%) Employment
(%) Exports
(%) Imports
(%) Wages
(%)
Domestic Demand
(%)
Number of employees
(%) 2009 -5.7 -4.2 -2.8 -2.7 -6.2 N/A N/A -12.5 N/A -4.3 2010 1.8 -0.8 -1.1 -1.1 -2.7 N/A N/A -0.2 N/A -0.7 2011 0.3 16.4 12.5 12.6 9.9 N/A N/A 4.5 N/A 1.2 2012 1.7 -0.4 6.6 6.6 9.0 N/A N/A 11.7 N/A 1.7 2013 4.6 18.8 3.3 3.3 7.2 N/A N/A 13.2 N/A 1.6 2014 3.7 -7.6 3.3 3.4 -3.7 N/A N/A -6.1 N/A 1.9 2015 4.4 -0.7 -0.8 -0.6 -2.5 N/A N/A -2.1 N/A 2.1 2016 3.1 3.4 1.6 1.5 0.6 N/A N/A 0.9 N/A 1.8 2017 1.4 1.5 4.2 3.9 2.3 N/A N/A 2.2 N/A 1.0 2018 1.9 2.4 3.3 3.1 2.8 N/A N/A 2.8 N/A 0.8 2019 1.7 1.9 4.1 3.7 2.5 N/A N/A 2.5 N/A 0.3 2020 1.4 2.1 3.2 2.9 2.2 N/A N/A 2.2 N/A 0.3 2021 1.6 1.7 2.7 2.5 1.9 N/A N/A 2.0 N/A 0.5 2022 1.7 1.8 2.4 2.2 1.8 N/A N/A 1.9 N/A 0.5 Sector Rank 19/25 19/25 7/25 10/25 14/25 N/A N/A 15/25 N/A N/A Economy Rank 1165/1777 975/1573 270/1777 288/1777 637/1777 N/A N/A 779/1777 N/A N/A
Annual Change
Key Ratios
Industry Data
SOURCE: WWW.IBISWORLD.COM
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Apr 2015 - Mar 2016 by company revenue Apr 2012 - Apr 2013 - Apr 2014 - Apr 2015 - Small Medium Large Mar 2013 Mar 2014 Mar 2015 Mar 2016 (<$10m) ($10-50m) (>$50m)
Liquidity Ratios
Current Ratio 1.4 1.1 1.2 1.7 2.3 n/a n/a Quick Ratio 1.0 0.8 1.0 1.6 1.9 n/a n/a Sales / Receivables (Trade Receivables Turnover) 9.1 10.0 8.6 11.3 10.4 n/a n/a
Days’ Receivables 40.1 36.5 42.4 32.3 35.1 n/a n/a Cost of Sales / Inventory (Inventory Turnover) n/c n/c n/c n/c n/c n/a n/a
Days’ Inventory n/a n/a n/a n/a n/a n/a n/a Cost of Sales / Payables (Payables Turnover) 13.1 11.7 30.4 13.1 15.6 n/a n/a
Days’ Payables 27.9 31.2 12.0 27.9 23.4 n/a n/a Sales / Working Capital 11.4 112.6 39.5 14.2 6.7 n/a n/a
Coverage Ratios
Earnings Before Interest & Taxes (EBIT) / Interest 8.3 7.1 9.8 9.1 17.9 n/a n/a
Net Profit + Dep., Depletion, Amort. / Current Maturities LT Debt n/a n/a n/a n/a n/a n/a n/a
Leverage Ratios
Fixed Assets / Net Worth 0.5 0.6 0.4 0.5 0.5 n/a n/a Debt / Net Worth 2.9 3.8 2.6 1.6 1.0 n/a n/a Tangible Net Worth n/a -15.5 2.6 3.0 25.9 n/a n/a
Operating Ratios
Profit before Taxes / Net Worth, % 94.5 47.3 42.3 33.7 30.5 n/a n/a Profit before Taxes / Total Assets, % 18.0 10.2 13.7 9.5 14.3 n/a n/a Sales / Net Fixed Assets 38.1 42.9 63.4 49.2 126.5 n/a n/a Sales / Total Assets (Asset Turnover) 2.4 2.3 2.6 2.6 2.8 n/a n/a
Cash Flow & Debt Service Ratios (% of sales)
Cash from Trading 59.3 62.5 53.7 62.0 64.0 n/a n/a Cash after Operations 10.0 6.7 5.3 4.1 3.6 n/a n/a Net Cash after Operations 9.5 4.9 6.0 6.0 3.6 n/a n/a Cash after Debt Amortization 0.7 1.0 1.3 1.6 1.1 n/a n/a Debt Service P&I Coverage 3.2 1.8 1.8 4.6 8.6 n/a n/a Interest Coverage (Operating Cash) 4.4 5.3 8.8 22.7 23.6 n/a n/a
Assets, %
Cash & Equivalents 21.7 20.0 25.8 29.2 31.6 n/a n/a Trade Receivables (net) 30.5 24.1 31.4 28.6 34.6 n/a n/a Inventory 3.7 3.9 2.8 2.0 2.8 n/a n/a All Other Current Assets 6.6 5.6 9.2 3.4 3.3 n/a n/a Total Current Assets 62.6 53.5 69.2 63.2 72.3 n/a n/a Fixed Assets (net) 13.0 12.8 12.9 12.3 16.0 n/a n/a Intangibles (net) 15.8 21.4 12.5 15.4 2.6 n/a n/a All Other Non-Current Assets 8.5 12.2 5.5 9.1 9.1 n/a n/a Total Assets 100.0 100.0 100.0 100.0 100.0 n/a n/a Total Assets ($m) 988.2 1,437.0 1,117.5 882.0 44.8 173.4 663.9
Liabilities, %
Notes Payable-Short Term 7.0 13.3 14.0 11.7 19.6 n/a n/a Current Maturities L/T/D 4.1 5.0 2.8 1.7 2.1 n/a n/a Trade Payables 10.4 15.6 7.8 10.9 13.9 n/a n/a Income Taxes Payable 3.0 1.1 0.1 0.2 0.3 n/a n/a All Other Current Liabilities 32.1 27.5 39.3 28.3 19.9 n/a n/a Total Current Liabilities 56.6 62.5 64.0 52.9 55.8 n/a n/a Long Term Debt 18.7 20.7 18.6 17.7 5.6 n/a n/a Deferred Taxes 0.7 0.4 0.4 0.7 0.6 n/a n/a All Other Non-Current Liabilities 8.2 10.5 1.8 10.2 9.5 n/a n/a Net Worth 15.8 5.9 15.1 18.4 28.5 n/a n/a Total Liabilities & Net Worth ($m) 988.2 1,437.0 1,117.5 882.0 44.8 173.4 663.9
Maximum Number of Statements Used 30 34 35 33 17 9 7
Industry Financial Ratios
Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more than 260,000 statements of member financial institutions’ borrowers and prospects. Note: For a full description of the ratios refer to the Key Statistics chapter online.
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Jargon & Glossary
BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.
CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the “real” growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.
EXPORTS Total value of industry goods and services sold by US companies to customers abroad.
IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.
INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry’s contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industry’s life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry’s products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals.
PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.
Industry Jargon
IBISWorld Glossary
BLENDED LEARNING A combination of both online and traditional instruction.
CHANGE MANAGEMENT An organizational process aimed at empowering employees to accept and embrace changes in their current business environment.
DISTANCE EDUCATION Education delivered to students who are not physically on site in a traditional classroom or campus.
WEBINAR A presentation, lecture, workshop or seminar that is transmitted over the internet.
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Jargon & Glossary
VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES The gross total wages and salaries of all employees in the industry. The cost of benefits is also included in this figure.
IBISWorld Glossary continued
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