Good compared to what?
How do you know your business is doing well?
Most owners answer that by how they feel. The annual revenue is more than it was last year, the phone has been ringing off the hook, and nothing is on fire this week. That's good, but it tells you you're surviving. It doesn't really tell you how healthy your business is.
A quick way to compare your business to other businesses
Pull last year's numbers. Annual revenue, cost of goods sold — the materials and labor that went into the jobs themselves — overhead like office salaries, rent, insurance and marketing, and then your net profit. Then ask your AI app to compare your numbers to other similar sized businesses in your line of work.
One of two things comes back. Either you're at or above where similar shops land, and you can stop wondering. Or a line is out of place, and now the problem has an address instead of being a vague feeling you carry around all year.
That second outcome, while maybe not what you were hoping for, is the valuable one. It will give you insight into areas of your business you can work on.
A few things to keep in mind with this
Quality should show up in the margin. If you know your work is better than most, your margins should agree with this. If they don't, you're doing above-average work at average prices, and that's a pricing problem, not a cost problem Benchmarks are averages, and average includes every shop doing it badly. Landing above the middle only says so much. It might just mean you're not the one with the obvious problem.
AI is artificial intelligence. Ask the model where it pulled the data from and cross check it. Don't take everything you read as something to take action on today.
Prosynergy Bookkeeping works with trades and small businesses across the US. If you want a straight answer on how your numbers stack up against your industry, we're glad to look.
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