Finding Industry Averages for Small Businesses to help with Benchmarking, Ratio Analysis or Planning
You can add value for your clients by providing reports with key financial ratios compared to industry averages. This benchmarking can help clients see how their business is doing compared to others and identify areas for improvement. Plus, it is a great way for you to deepen your relationship with the client enhancing your position as their trusted business advisor. In this post, I’ll show a couple of ways to get industry averages for free or some lower cost options if you choose.
RMA Industry Averages from OneSource in ReferenceUSA
Login to the library website (look at for details about the ReferenceUSA database and how to access it) and go to the ReferenceUSA database and click on the OneSource database as shown below.
If your library does not have the OneSource database, you might want to check with some other libraries. In my area, only one out of three local public libraries subscribe to the OneSource database. After this section, I will show you other ways to get industry averages if this does not work for you.
Once you are in OneSource, you want to search for the appropriate industry. As shown below, I searched for restaurants.
The search results provide me with more details to select the specific type of restaurant – whether it is full service or limited service (see image below). Look through the search results to determine which most closely matches your client (or whatever).
When I click on the NAICS code in front of Limited Service Restaurants, I get the screen below where I can click on the Market Research Report to get the industry averages.
When you first see the pages with the averages, it is somewhat overwhelming so let’s break it down and first analyze the headings. RMA provides the two pages of averages—one based on assets and the other based on sales of the companies. This helps to compare companies of similar size. In the image below, on the right you will see this page is based on sales and the column headings indicates the range of sales. For example, in the image below for companies with sales < $1 million you would use the averages in the first column on the right (for the current period) and $1-3 million in sales would be the 2nd column. Note there is no breakdown based on sales (or assets) for the historical averages.
There are averages on both sides of the page – the left is historical and current data is on the right. You can see the period dates in the column headings.
In the image below, you can use the ratios in the section labeled Income Data (circled in blue in the below) to calculate the ratios for Gross Profit, Operating income and net income. Then, in the Ratios section, there are several other ratios provided for you such as the Current and Quick Ratios, Debt/Equity and more. You can use the ratios provided to calculate the Accounts Receivable and Inventory turnovers and days in receivables and/or inventory.
There are 3 averages for each ratio. For example, looking at the Current Ratio below for <$1 million in sales (i.e. the first column) the top number (1.9) represents the top 25% while the bottom (.2) is the lowest 25% of the companies that comprise the averages. I usually use the middle one (.7) – which is the median or average.
If you cannot access the OneSource database via a library for free you may want to go to the library (as discussed below). If you choose, you can get reports from RMA for $135 for non-members as shown below. Here’s the link
If you would like to read more about the ratios, how they are calculated, etc. here is the link to Financial Ratio Benchmarks – Definitions of Ratios which is a 15 page document which is helpful. Here’s the direct link: http://www.rmahq.org/NR/rdonlyres/15D21745-3F7C-478D-86EE-061F5E9AD888/0/Definition_of_Ratios_200910.pdf
RMA Industry Averages at the Library
If you cannot access the OneSource website to get the industry averages online, then you can go into your library. Most libraries have the book RMA (Risk Management Association) Annual Statement Studies in the reference section. It will save time if you know the NAICS Code before you get there. You can look up the NAICS code online (http://www.naics.com/search.htm). Otherwise there usually is a book of NAICS Codes in the Reference section of the library. Don’t forget to take change to copy the industry averages.
Note: Some people may remember using SIC codes. The Standard Industry Classification (SIC) codes have been replaced with the North American Industry Classification (NAICS) codes http://www.naics.com/search.htm
Free Industry Averages from BizStats
You can get industry averages for free from BizStats (www.bizstats.com) too but they are somewhat dated (i.e. old). You would want to click to see the financial benchmark reports as shown below. However, I’d suggest you check out the other stats they have available too. The stats on risk show what percentage of firms are profitable or not for an industry and more.
BizStats allows you to select whether the entity is a C or S Corporation or Sole Proprietor as shown below.
Next you need to indicate which industry. Also, notice you can purchase the BizMiner Micro Firm Profit & Loss Profiles with more information for $69 (for a 3 year report or $99 for a 5 year report).
Then you will see the average for the industry selected. The nice thing about the averages from BizStats is there is more detail by expense account. For example, you can see the % of sales spent on advertising, insurance, etc. The bad thing is the information is from 2007. However given the current economic conditions it may not be a bad idea to use ratios from a few years ago since that may be more ‘normal’. Below you will see all the financial benchmarking averages available for free. Remember there are other stats in the website which you may be interested in as well.
I usually use averages from both RMA and BizStats to get as much information as possible. Industry associations and organizations may provide industry specific averages (like sales per square foot for retail, etc.) which are useful as well. Keep in mind that you really only need to look up the industry averages for a client once a year. Clients like to see how they compare to their competitors. Plus, it provides a great consulting opportunity to discuss the numbers with clients, what the ratios mean and what they can do to improve the profitability of their business. I find this is a good way to differentiate myself and add value for the client. I hope it will help you too!
Please Join Me at the Ultimate Accounting vCon — it will be a GREAT conference you won’t want to Miss!
It is exciting to see so many CPAs, accountants, bookkeepers, QuickBooks ProAdvisors, consultants and others who have already registered to attend the Ultimate Accounting vCon next week (May 16 and 17). Sandi Smith Leyva and I (Michelle Long) have been finalizing the presentations and materials and all I can say is WOW! We have soooooo much great information, resources and ideas to share with you that will help you grow your business and serve your clients better that it is amazing! It’s not too late to register to join us and you will be glad you did! All the sessions are recorded so you can listen to them later as needed. Hundreds of your peers have already registered — don’t get left behind! Read more
Time Sensitive – If you want to Grow Your Accounting or Bookkeeping Business, Do Not Miss This GREAT Opportunity!
We’re thrilled that many of you have already registered for our Second Annual Accounting vCon on May 16 & 17. You now have immediate access to some amazing case studies, a BONUS checklist, a BONUS “Dear John” sample letter for clients you need to fire (will be posted ASAP), hundreds of motivated and upbeat peers, and that’s all before the conference even starts!
It’s not too late! Read more
6 Steps to Easier Profits and Better Service in Your Accounting or Consulting Practice
Having your own business is hard work, but there is a smart way to serve clients well and make the income you want without putting in hundreds of hours per week. The skills and tools you need to move from one level of income in your practice are different from the ones it took to get where you are. Stop relying on peers who are at or behind your level of income and start relying on mentors like Michelle and Sandi who have already been where you want to go and are fully dedicated to serving the accounting profession. Read more
Do you know the secrets to easier profits in your accounting practice?
It’s super-easy to grow your business as big as you want and without struggle. All you need to know is the right set of skills. Unfortunately, they’re not accounting skills – they are practice management skills. And that’s one secret to growing a business that most entrepreneurs never learn.
There is a second secret: that it’s not that hard to learn these practice management skills. The problem is most people don’t know that that’s what will help them leapfrog their revenue and serve their clients better. Read more
The Ins and Outs of Value Pricing – FREE webinar with FREE CPE
Join Michelle Long (Owner of Long for Success) and Ian Vacin (VP of Marketing & Product at Xero) for a 1 hour webinar on Value Pricing. Get an overview of what value pricing is, how to bundle your services, tips on how to set price, and how to take the first steps to increase your practice’s profitability. Plus we’ll give a wealth of tips and tricks from folks we interviewed while creating the content (like Ron Baker, Jody Padar, Sandi Smith Levya and others).
When: Thursday, March 21, 4:00 – 5:00 pm Eastern (US)
Can’t make it to the live session? Register anyway so you get the email with the link to the recording.
Register here: http://events.xero.com/us/events/447-the-ins-and-outs-of-value-pricing-live-online
This is a basic level Group-Internet Based course worth 1 CPE credit based on a 50 minute hour.
Xero is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.learningmarket.org
Women CPAs Host Virtual Accounting Conference
The Second Annual Ultimate Accounting vCon will be held on May 16-17, 2013 in the comfort of participants’ own offices. The all-virtual, cloud-based Ultimate Accounting vCon (which is short for virtual conference) is the brainchild of Michelle Long and Sandi Smith Leyva, two popular accounting industry speakers.
Michelle Long, CPA and owner of Long for Success, runs the 21,500-plus member LinkedIn group called Successful QuickBooks Consultants, is a popular QuickBooks speaker and trainer, and is author of two books, including “Successful QuickBooks Consulting.” Read more
The Ins and Outs of Value Pricing for Bookkeepers, Accountants, CPAs, Tax Pros and more
Join Michelle Long (Owner of Long for Success) and Ian Vacin (VP of Marketing & Product at Xero) for a 1 hour webinar on Value Pricing.
You’ll learn:
- What is value pricing?
- How to bundle your services
- Tips on how to set price
- How to take the first steps to increase your practice’s profitability.
- Plus we’ll give a wealth of tips and tricks from folks we interviewed while creating the content (like Ron Baker, Jody Padar, Sandi Smith Levya and others). Read more
8 Simple Steps to Accelerate Your Accounting Practice, Free CPE, and Final Call for Accountant’s Accelerator 2013
If you:
- Are actively growing your accounting practice, starting a practice, or repositioning your services
- Struggle with time management and how to get everything done even though you’d like new clients
- Want to develop your business management skills so you can move from being a technician to a business owner
- Feel uncomfortable or lack confidence when it comes to marketing or selling
Then I’d like to invite you to a complimentary webinar on Tuesday, February 19, 2013 full of simple and low-cost tips, answers, and ideas to help you in these areas.
“8 Simple Steps to Accelerate Your Accounting Practice” Read more
Are You Tired of the Same Old, Work-Your-Tail-Off Tax Season Routine?
The difference between accounting practice owners that make a meager living and those that are far more comfortable financially can often come down to just one or two skills that are easily learned.
Most accounting professionals build their technical skills – far more than they need to – but they ignore the more important set of practice management and development skills that will help them take their practices to the next level. They keep reaching for technical credentials because that’s the more comfortable road.
But it’s also the less profitable road. Read more
Focus on Referrals
It’s that time of year again – tax season. Only accounting professionals truly understand the grueling busy season, which usually means little time for sleep, meals, or family and friends. Many will have their nose to the grindstone with their sole focus on getting the work completed. Who has time for networking or marketing during busy season? If that is how you think, then you may be missing a great opportunity for referrals! Read more
Xero 101 – Intro to Xero, Demo and Q&A with Jamie Sutherland, Xero’s US President
Have you heard about Xero from clients or others? Do you wonder what the buzz is all about? Do you want to learn how Xero can help you transform and grow your accounting practice? See how you can code a year’s worth of transactions in a few hours instead of days. Please join me for an introduction to Xero and demonstration with Jamie Sutherland, US President of Operations. Read more
Transform Client Relationships from Transactional to Consultative
Accountants, CPAs, Bookeeepers and others who want to start or grow their accounting practice will find this free webinar contains valuable and beneficial information.
Join Ian Vacin (Vice President of Marketing & Product at Xero), Michelle Long (CPA, MBA – Owner of Long for Success) and Steve Chaney (CPA – Owner of Chaney & Associates) as they share proven strategies and experiences on how accounting professionals can leverage modern cloud solutions to transform their relationships with clients from 
transactional, hourly relationships to consultative ones that place the accounting professional back as the Trusted Advisor. Specifically, learn the process (with easy to follow steps) to move your once a year clients (like write-up / tax clients) to be monthly paying consultative relationships. Gain perspective on the process, the conversations,and the outcomes of these new relationships and revenue streams. Read more
Accounting Professionals — Add Profits to Your Practice with Concur
One of my New Year's Resolutions is to focus on helping accounting professionals grow their business and improve profitability. Adding Concur to your 'toolbox' for your firm or clients and joining the Concur Advisor Program is one way to add profits to your accounting practice. Read more
Make more, work less, serve clients better in your accounting practice
If you’re looking to grow your practice, increase your marketing skills, & find done-for-you, almost-ready-to-go marketing materials, I’ve discovered a practice growth program that I want to share with you. Accountant’$ Accelerator is a program for QuickBooks ProAdvisors, IRPs, EAs, CPAs, and bookkeepers who want to take their accounting, IT, or QuickBooks consulting practice to the next level.
Here are some excerpts from 2011-2012 members: 
- “I am getting so much out of the exposure to new ideas and new developments!” – Tracy
- “Three or four more leads per week.” Jemel
- “It gave me motivation and clarity to what I need to do to generate more income.” —K.K.
- “You put together great programs!” –Diane
- “The Revenue Clarity program was a big eye opener.” — Cherri
- “I love your products and am enjoying my training so much. … you are an inspiration to women and to me.” – Brigid
- “I appreciate how much I have learned from you.” — Cindy
- “Immediately useful. She understands accountants, our weaknesses and turns those into strengths through her program. –Jeff
In 2012, Sandi Smith Leyva, founder of Accountant’s Accelerator, had over 200 members from roughly 40 states and 3 countries. The all-new 2013 program is a full year program from November 1, 2012 through October 31, 2013.
Sandi will be delivering around 14 hours of quality marketing, technology, and practice development training, accountability, and group coaching designed to take your practice to the next level. Plus you’ll get more done-for-you items than ever before: marketing plans in-a-box, almost ready-to-go marketing materials and client leave-behinds.
As an affiliate for Sandi, I’m so excited to announce that the Accountant’$ Accelerator 2013 is open to new member registrations right now! And Sandi is offering her program at $100 off until midnight, October 31, 2012. You can see the offer right here:
Don’t miss this chance to discover a refreshingly new solution to learn how to fill your accounting or consulting practice and grow your revenues.
To your success!
Why Sales Tax and Nexus Matter to Accountants – Plus Free Webinar: A Sales Tax Primer to Help Your Clients & Boost Your Business
Did you know sales tax audits are providing a good source of income for states during these difficult economic times? Unfortunately it is no longer a matter of if a business will be faced with a sales tax audit, but when it will happen. As an accounting professional (or business owner) are you aware of the latest sales tax laws and implications for your business or your clients? Are you providing your clients with the information and advice they need to ensure compliance with the latest sales tax laws? Read more
Do you want more revenue but work way too hard already?
Have you relied on referrals for most of your career, but find there simply aren’t enough referrals any more to keep your practice full?
Are you just starting (or starting over) your accounting business and need help to find clients?
Do you swear every tax season that you are not going to work as hard NEXT year?
Do you want to proactively grow your practice so you can reach and help more clients? Read more
Accountants, Want to Learn Some Low-Cost Ways to Get More Clients?
Have you dabbled in social media and are wondering how to make it pay off? Do you want to find a way to use social media for marketing, but get overwhelmed at how much time it takes up? Do you need to attract more clients so you can get to the revenue level you desire?
If you said yes to any of these questions, then I’d like to introduce you to a new webinar series “Monetizing Social Media for Accountants” that’s being put on by Sandi Smith Leyva, CPA, CITP, CGMA, and Certified QuickBooks ProAdvisor. It’s designed for accountants, bookkeepers and QuickBooks consultants who want to: Read more
Are You Ready to Earn Six Figures This Year and Beyond? (Discount Extended + Free Webinar Series – Monetizing Social Media)
You might remember from an unscientific study in my first book, Successful QuickBooks Consulting, that many QuickBooks ProAdvisors — a full 85% — are stuck at an annual revenue of five figures with no idea of how to get to six figures. As service professionals, if we don’t fill our inventory of hours, that time goes unused and unbilled forever; we can never reclaim that revenue.But that’s only part of the problem. What if we don’t want to work that hard, but still earn more? What happens when we burn out? 
Read more
QuickBooks ProAdvisors, CPAs, Accountants and Bookkeepers — Are You Ready to Finally Earn Six Figures This Year and Beyond?
You might remember from an unscientific study in my first book, Successful QuickBooks Consulting, that many QuickBooks ProAdvisors — a full 85% — are stuck at an annual revenue of five figures with no idea of how to get to six figures. As service professionals, if we don’t fill our inventory of hours, that time goes unused and unbilled forever; we can never reclaim that revenue.But that’s only part of the problem. What if we don’t want to work that hard, but still earn more? What happens when we burn out? Read more
How to Meet Your Income Goals Every Time
Does your business experience a feast/famine cycle when it comes to work and clients and revenue?
Are you just starting your business and wonder how you’re going to make the income you want?
Do you feel so busy that you fail to market when you know you should be?
Do you feel like you are in a reactive mode when it comes to marketing, just looking for the next client, then the next, then the next?
Are you having trouble attracting all of the clients you want?
Are you falling short of your desired revenue every year? Read more
Results of Billing Rates Poll of Accounting Professionals
Frequently accounting professionals will ask questions like: What should I be charging for my services? What is the average billing rate for bookkeepers? Certified QuickBooks ProAdvisors? Accountants? Certified Public Accountants (CPAs)? Enrolled Agents (EAs)? Tax Professionals? Should I charge an hourly rate or fixed fees? Unfortunately, the answer is usually — it depends. There is no ‘one size fits all’ when it comes to billing rates for accounting professionals. It depends on your education, experience, expertise, geographic location and more. The good news is that there is information available to help you get an idea of average billing rates to help you determine and set your billing rates and policies.
I put a quick poll on my website asking accounting professionals for their most common billing rates. Here are the results based on almost 1,000 replies:
For more detailed information on average billing rates for accounting professionals, check out these resources:
- Intuit’s Average Billing Rates Survey
- National Society of Accountants Survey of Average Tax Preparation Fees
Remember billing rates should be established based on a number of criteria and considerations. Keep in mind the value of your education, experience, skills and more. Please do not set your billing rates too low. It may be tempting when you are new to the profession or just starting your business or whatever, but it devalues your services and does not help you get quality clients.
QuickBooks Tip: Using Color to Help Identify Accounts or Files
It is frustrating to enter transactions into QuickBooks and discover you entered them into the wrong bank account or QuickBooks file. Using different colors can help differentiate checkbook registers (i.e. accounts) or QuickBooks files. This helps you quickly identify which account or file is currently open. Read below for details on how to change the color of accounts and QuickBooks files. Read more
Deadline is November 15 for Discount Pricing to Grow Your Business for Accountants, CPAs, Bookkeepers, QuickBooks ProAdvisors and more
Do you want to grow your accounting, QuickBooks, tax, or IT consulting business, but feel like your marketing skills are holding you back? Do you feel like there is no time to take on more clients, but you’d still like to earn more than you currently earn? Is your business not as full as you’d like it to be? Read more
For Accountants, QuickBooks ProAdvisors, CPAs, EAs, and Bookkeepers who want to Grow their Practice
If I were to ask you how you would rate your selling and marketing skills on a scale of 1 to 10, what would you say? If you’re like most of us, the economy has made our weaknesses in this area glaringly obvious over the last few years. Just about everyone I know needs more clients these days. Read more
Social Media
