Starting a business is hard work. It starts much earlier than your first day of trading. Lots of planning, building and training goes in to the venture before you can even open the doors! This brings with it a heap of worrying thoughts. What if it doesn’t work? What if i run out of money? What if I get no customers? What if the whole thing falls flat?
But once you’re open and you begin trading, there are a whole new set of worries on your mind (on top of the first set). To settle your worries, you want to know that your performance is in line with other similar businesses.
Traditionally this information was not easily available, unless you held good relationships with key competitors – highly unlikely. These days though there is more information available on how thousands of businesses in most industries are performing.
At The Accounting Division one of the services we provide is benchmarking. This is where we compare your business performance compared to other similar businesses in your industry. This provides our clients with an indication of whether they are performing to industry standard.
We pick several key costs in a business and compare the ratio of your business performance compared to what other similar businesses are spending in those categories.
In addition to the commercial reasons for benchmarking your business performance, the Australian Taxation Office (ATO) uses benchmarking techniques when selecting which taxpayers to investigate (audit). This is particularly prevalent in industries where there is a large cash economy (e.g. cafe’s & restaurants).
There is a great deal of value for Small Business owners to benchmark their businesses and know where they stand compared to others in their industry.