Comparing how your business performs against others in your industry is a good way to monitor your business’s financial health. An easy way to do this is to use the ATO's small business benchmarks.
Benchmarking is evaluating your performance against some meaningful standard. In this case, the ATO has provided some useful statistics from over 100 industries based on data sourced from the 2013–14 financial year income tax returns and business activity statements of over 1.3 million small businesses.
These benchmarks can help you manage your business and recognise problems early on. For example, you might notice that your expenses far outweigh your turnover compared to similar businesses in your industry. There could be a variety of reasons for this (you may be using resources less efficiently, or have a much lower mark-up than your competitors); but by identifying the problem early, you can take steps to fix it.
See how you compare with others in your industry and build your business with benchmarks here:
If you are concerned about the trajectory of your business please get in touch with me as soon as possible and so I can help you preserve value and turn things around.
Bruce Mulvaney is a Fellow Chartered Accountant and Turnaround and Insolvency Practitioner operating from Melbourne's eastern suburbs. He is a past State Chairman and National Board Member of the Institute of Chartered Accountants in Australia.
He is freely available to business groups and industry associations for speaking engagements.