So you’ve been in business for a while now, having either started it yourself, or bought and established business from someone else, but how does it stack up compared to your competitors? Often as business owners, we get so caught up in doing the job, that we lose focus on the key drivers, and that is where the GNS team can help to get your business humming along.
Are you tracking above average, below, or are you somewhere middle of the road?
These key numbers are often called Key Performance Indicators, or KPIs.
Some common ones are:
- Gross Profit Margin – Cost of your materials compared to sales
- Wage Recovery – Wages as a percentage of your sales
- Net Profit Margin – your bottom line profit compared to your sales
Benchmarking your business to similar businesses, across similar geographical position and of comparable size is a great way to see how you are travelling. And depending on what business you are in, there will be different key numbers that you need to focus on.
There might also be some specific ones depending on your business, whether it be how much you spend on advertising compared to sales, stock turnover, debtor lock up days, or the amount of wastage compared to material purchases. Some non financial KPIs include: Turnaround time, workplace injuries, re-work or errors, staff retention etc.
There is almost a measure for every aspect of a business, but its important to focus on the important ones – the Key Performance Indicators.
If you know the right KPIs to track, and you are performing above the average of your competitors, then everything else will flow from there.
And its not just our clients that take note of the important financial indicators of a business, and how that compares to your industry benchmark, but the ATO as well. For the past few years, the ATO have been focusing their audit activity on businesses which fall outside the average or benchmark results of similar businesses.
The ATO’s belief is that if a business is operating well above or below the average, there may be something fishy going on. And I am sure that on some occasions, this is correct. On other occasions, there are justifiable reasons for a departure from the benchmark averages. But its only when armed with the vital information about your business, that you can adequately protect yourself.
And this is where the team at GNS Group can help. With many years of experience across a variety of industries and differing sized businesses, from a $20,000 part time business, all the way through to a $75 million business, we’ve seen most things.
Our advisers have all of the resources to help you understand the numbers and more importantly, can help you focus on the important KPIs of your business to drive better profits. Ask us today how we can help.