In a bid to help SMEs compare their operational costs and expenses with others in the industry, the Tax Office has unveiled a detailed benchmarking tool using annual tax data.
The small business benchmarks provide data broken down across more than 100 industries, allowing them to see how their own cost of sales compares with the industry average.
“Our benchmark data is from income tax returns and activity statements of over 1.4 million small businesses around the country. With such a large data set, things like locality and different business circumstances are included when we calculate the average range for each industry,” said assistant ATO commissioner Matthew Bambrick.
“Businesses can use these benchmarks not just to check that they’re getting their tax and reporting obligations right, but also to provide information to support their decisions on how to improve their profitability.”
According to Mr Bambrick, the data has already proved useful for a number of business owners to introduce new efficiencies to boost their margins.
“We have seen examples such as a café bought for $45,000 that quadrupled in value within five years because the owners looked at the benchmarks and adapted their business, including a point of sale system that provided much improved reporting,” Mr Bambrick said.
“This gave them a far better view of what was working and what wasn’t, both the menu and the opening hours – and the changes they made significantly increased their profit and the value of their business.”
The business benchmarks can be found on the ATO website.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.