Informed decisions can separate thriving integration firms from those that struggle to keep pace. Savvy leaders understand that financial data has great value. However, accurate, timely and relevant benchmarking data specific to the industry is hard to come by. Too often, integrators end up relying on scattered anecdotes and general industry surveys to make decisions.
That’s why, decades ago, NSCA developed its Financial Analysis of the Industry (FAI) report. It’s a focused, actionable, sector-specific resource built by and for commercial integrators. We update it every two years to reflect current trends and provide relevant financial benchmarks. The most recent update just launched this summer.
Developed based on data gathered from integration firms that represent every major segment of the industry, the Financial Analysis of the Industry connects leaders to the realities of running a business rooted in commercial AV, security, communications and life safety.
Examples of How Integrators Can Use the FAI Report
When used correctly, the Financial Analysis of the Industry report can serve as your compass for navigating growth, profitability and risk. What follows are some examples to explain how leaders of integration firms leverage the data in their organizations.
- Setting Realistic, Motivating KPIs: Rather than wondering, “Are our project managers as effective as they could be?”, median revenue-per-employee and revenue-per-salesperson data is usable to evaluate team performance as compared to their peers. From there, it’s possible to set specific goals for improvement, and it’s possible to track the impact of different actions.
- Course-Correcting Profitability: By comparing expense ratios, it’s possible to assess how much other integration firms spend on direct labor as a percentage of revenue. By drilling into cost-of-goods data by company size, integration business leaders can uncover excessive overtime and overstaffing costs on low-profit projects. With that knowledge in hand, they can begin to revamp scheduling and project reviews, trim expenses and improve net profitability.
- Revisiting Pricing and Proposal Strategy: By evaluating where revenue comes from for other integration firms, companies can pinpoint new ways to refine sales strategies and align with best practices. For example, if you discover that most of your peers are generating revenue through negotiated/direct sales, rather than competitive bids, you can revisit your own sales focus and double down on building long-term customer relationships (and, one hopes, see project margins rise as a result).
- Shaping Workforce Strategy: Data segmentation by ownership structure, workforce model and vertical market gives leaders insight into how similar companies adapt to trends like hybrid work, recurring-revenue models and new-customer acquisition strategies. Instead of making reactive adjustments, this intelligence is usable to proactively optimize benefits, policies and compensation models.
- Identifying Strengths and Vulnerabilities: Instead of relying on gut instinct, leaders of integration businesses can use trusted data as the basis of informed decision-making. By identifying cost, margin and staffing outliers, it’s possible to uncover inefficiencies and adjust to improve performance and profitability.
- Empowering Leaders Across the Organization: Bring the FAI report into the boardroom and make it a standing agenda item during quarterly or annual business reviews. Assign specific metrics to relevant business unit leaders, ask functional heads to interpret and report on the discrepancies they find, and discuss the future direction of your organization.
What You’ll Find Inside the FAI Report
The Financial Analysis of the Industry is set up so that, quickly, you can find the information you need. What follows are just a few examples of the data and metrics you’ll find in the pages of the report.
- Revenue per employee helps you evaluate workforce productivity and scalability.
- Gross margin can be used to evaluate cost control and efficiency.
- Percentage of recurring revenue assesses business-model sustainability.
- Backlog provides a window into future revenue visibility and risk.
- Operations, sales and administrative costs serve to evaluate overhead expenses as compared to industry norms.
- Debt-to-equity ratio indicates risk profile and capital-management strength.
- Net profitability reflects bottom-line health as compared to peers.
The Full Effect: Combining FAI Data with Other NSCA Resources
Although reviewing the benchmarking data, financial ratios and industry-specific KPIs featured in the report helps integrators spot trends and areas in which to improve, its true value emerges when the information is put to work alongside other NSCA tools.
1. Predict Success with the Project Contribution Simulator: By pairing the real-world benchmarks from the FAI report with your specific project details, which can be input into NSCA’s Project Contribution Simulator, you can accurately predict which projects will strengthen your margins — not erode them — before you commit resources or submit proposals. Is a certain project worth pursuing? This combination can help you to decide.
2. Plug Benchmarks into Financial Management Software: FAI medians and percentiles are suitable to input into your ERP, project-management software or accounting system to serve as default targets or limits for the following:
- Labor efficiency
- Operating expenses as a percentage of revenue
- Gross profit margins
- Days sales outstanding
Analyze variances between your real-time dashboard results and FAI industry benchmarks to trigger process reviews and cost-control initiatives.
3. Optimize Labor and Compensation Planning: Review labor standards, wage benchmarks and burden rates from NSCA’s Labor Installation Standard and Compensation & Benefits Report, in tandem with FAI data, to make sure your labor costing in bids and project plans is competitive and profitable.
4. Enable Financial Comparisons with the Standard Chart of Accounts: Use NSCA’s Standard Chart of Accounts, available in the Essentials Library, to align your reporting and expense tracking with best practices. This makes it easier to compare your financials to FAI benchmarks, as well as to peers.
Unlock Industry-Specific Financial Insights
We believe that every leader in the industry should download and spend time going over the Financial Analysis of the Industry report. It’s full of valuable metrics to help integrators assess everything from backlog and customer dynamics to average sales per salesperson and operating expenses.
If you need help making sense of the data in the report, applying what you uncover and developing an action plan for improvement, contact NSCA. We can help.
NSCA members can join the waitlist to download the upcoming 2025 report, at no cost, by visiting NSCA.org/2025FAI.
Tom LeBlanc is executive director of NSCA. To learn about becoming an NSCA member, go to NSCA.org.
