Think of small business benchmarks as your industry’s report card. They’re financial ratios that let you stack up your performance against other businesses just like yours in Australia. These ATO small business benchmarks are based on real tax return data. You’ve got options too—performance benchmarks, input benchmarks, and profitability benchmarks, to name a few.
How Do Small Business Benchmarks Work?
Small business benchmarks work by providing a way for small business owners to compare their financial performance against similar businesses in their industry. The ATO uses benchmarks to identify businesses that may be avoiding their tax obligations and to protect honest businesses from being unfairly targeted. By using small business benchmarks, you can measure your progress and growth over time, identify performance gaps, establish best practices, set goals, and improve your financial management.
How Can Small Business Benchmarks Help You Grow Your Business?
Here are some of the ways small business benchmarks can help you grow your business:
Identify Potential Risks
By comparing your business’s performance against industry benchmarks, you can identify potential risks that may be impacting your business. For example, if your expenses are higher than the industry average, you may be paying too much for supplies or services. By identifying these risks, you can take steps to address them and improve your business’s financial performance.
Measure Performance
They provide a way for you to measure your business’s performance against similar businesses in your industry. This enables you to pinpoint both your strong suits and the aspects that could use some fine-tuning. By measuring your performance, you can set goals and focus your efforts on areas that will have the greatest impact on your business performance.
Set Goals
By using these benchmarks for small business, you can set realistic goals for your business based on industry standards. This can help you focus your efforts on areas that will have the greatest impact on your business performance. By setting goals, you can measure your progress and growth over time and make informed decisions about how to grow and succeed.
Improve Financial Management
Small business benchmarks can help you improve your financial management by providing a framework for measuring and monitoring your financial performance. This can help you make better decisions about spending, pricing, and other financial matters. By improving your financial management, you can improve your business’s financial performance and position your business for growth and success – isn’t this the whole point of business anyway?
How To Use Small Business Benchmarks
Now that you understand what the ATO small business benchmarks are and how they can help you grow your business, let’s explore how to use these benchmarks effectively.
Understand Your Industry
You need to understand your industry. This includes understanding the key performance indicators (KPIs) that are important in your industry and how your business compares to others in your industry.
Review Your Financial Statements
You need to review your financial statements regularly. This entails regularly reviewing your income statement, balance sheet, and cash flow statement. By reviewing your financial statements, you can identify areas where you are performing well and areas where you need to improve.
Compare Your Performance
You will need to compare your performance against industry benchmarks. This can help you identify areas where you are falling behind and take steps to improve. By comparing your performance, you can set goals and focus your efforts on areas that will have the greatest impact on your business performance.
Take Action
This may include making changes to your pricing, expenses, or other financial matters. By taking action, you can improve your business’s financial performance and position your business for growth and success.
How Often Are Small Business Benchmarks Updated?
The ATO updates these benchmarks on an annual basis to reflect changes in the economy and business practices. However, the ATO may also update benchmarks more frequently if there are significant changes in an industry or if new data becomes available. It is important for small business owners to regularly review their business’s performance against the latest benchmarks to ensure they are meeting their tax obligations and staying competitive in their industry.
How To Access Small Business Benchmarks
You can access the ATO small business benchmarks through the following methods:
- ATO Website: The ATO provides access to all benchmarks for small businesses listed in alphabetical order on their website. You can compare your business’s performance against others in your industry by using these benchmarks.
- Benchmarking Tools: There are various benchmarking tools available, such as the high-level benchmark tool provided by the ATO, which allows you to compare your company’s performance to a wider range of similar businesses.
- Industry Reports: Industry benchmark reports can provide additional insights into small business performance and help you better understand how your business is performing relative to your industry.
- Expert Advice: Speak to expert business accountants, like the team at Allevi8HQ, who can help you identify the correct benchmarks and compare them to your figures.
To use small business benchmarks effectively, you need to understand your industry, review your financial statements, compare your performance, and take action based on your benchmarking results.
By following these tips, you can improve your financial performance and position your business for growth and success. Book a call for assistance with benchmarking your business.
