Knowing where your business stands compared to your competitors can really help you climb above the pack.
All business owners know how important it is to compare their own weekly, monthly and annual earnings to ensure they’re still growing.
However, many businesses do not take the time to compare their performance against their competitors.
For example, how do you know if your 15% profit margin is optimal if you don’t know what your competitors are making?
By taking a quick check of the business landscape you can benchmark your profit with companies of a similar size and identify whether your business is really doing as well – or struggling as much – as you might think it is.
How to see where you stand
There are many online resources to help you compare your business’s performance against similar businesses in the same industry.
A good place to start is the Australian Tax Office (ATO)‘s small business benchmarks guide, which includes the small business performance check tool.
Using the tool is straightforward.
Just enter your business details into the online calculator and it will compare the data against the tax returns and activity statements from more than 1.4 million SMEs across more than 100 industries across Australia.
It will then use industry-specific benchmarks to quickly show how your business ranks against your competitors.
Room for improvement?
If you are above the range for business turnover in your industry, that’s obviously a cause for celebration.
However if your business is below the range, this can be a wakeup call that your practices aren’t optimal.
For example, your costs may be higher or your prices lower than your competitors.
For time-poor small business owners, the quickest way to get your business firing on all cylinders is to come in and talk to us.
We’ll help you pinpoint areas where your business needs to improve.
The ATO isn’t the only resource you can use to benchmark your business – there’s no shortage of information, including:
– The New South Wales Business Chamber’s benchmarking guide
– Business.gov.au’s financial ratios guide
– The Australian Bureau of Statistics’ industry performance ratios
– The Australian Tax Office’s small business benchmarks
– CPA Australia’s Business Evaluation Model
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without the prior written consent of Finance Matters, which is where this article also appeared.
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