OPERATING POLICIES OF BUILDERS ARE STUDIED IN RESEARCH PROGRAM

A study of the operating results and policies of building material dealers, covering the year 1928, has just been completed by the Bureau of Business Research of Harvard University. This survey was undertaken at the instance of the Atlas Portland Cement Company, which furnished funds to defray the costs. The report, which has been published as Bulletin No. 81 of the bureau is based on statements from 369 dealers.

Gross margin for mason material dealers in 1928 was 23.2 per cent of sales; total expense, 22.7 per cent; leaving a net profit over and above return on investment of 0.5 per cent, or $.50 for each $100. of sales. Profits of 3 per cent or over were secured by more than one-fifth of the firms.

Companies handling lumber reported a gross margin of 25.8 per cent; total expense of 25.0 per cent; and net profit on sales of 0.8 per cent. Stock-turn was at the rate of 3.1. times a year. Profits of 3.0 per cent or over were shown by one-fourth of them.

Lumber and Mason Supplies

For firms selling lumber and mason materials, gross margin was 24.4 per cent: total expense, 22.8 per cent; and net profit, 1.6 per cent. Profits of 3.0 per cent were realized by about one-third of the dealers in this class.

The operating results of firms reporting to the bureau for both 1927 and 1928 in the lumber, lumber and mason material, and mason material groups indicated that in all but the latter division gross margin was greater in 1928 than in the preceeding year. In all three groups total expense was greater and net profits on sales less in 1928. This variation was similar to that found in other retail fields during the last few years.

The common figures published by the bureau may be used by business men in two ways: (1) to judge the quality of the operating performances of individual firms, and (2) to set standards to be used in planning future operations. Directions for using these common figures are given in the bulletin.

In addition to establishing common figures typical of 1928 operating performance, the bureau also made an intensive study of the policies and methods employed by twelve successful building material dealers. Data obtained from this series of case examinations are presented in the bulletin.