Your Competitor is Making 2X More Money Than You

[Ben McCann]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ August 25, 2010 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Your Competitor is Making 2X More Money Than You As I was putting together the final touches on a seminar I was preparing for a group of business owners at Truth at Work, I discovered some interesting performance facts. Robert Morris & Associates complies, industry specific financial performance information on businesses (primarily for lenders to bench mark their borrowers). This information is broken down by SIC or NAICS code (the same number on your business tax records). RMA breaks their data into three groups, the top 25%, the middle 50% and the bottom 25% of businesses in each SIC within an industry. These are not all business, they are just businesses that have been approved for financing - those that were turned down, don't make it into the data records. Each data box is comprised of scores of businesses that make up the data. My analysis: I choose 11 randomly select SIC codes for businesses between $2 million and $10 million in revenue for each of 6 different industry segments (a total of 66 different SIC's records) and averaged the data. The resulting information was startling. · Those businesses in the top 25%, they (on average) made 2X to 3X more profit than those businesses in the middle 50% of their specific SIC · The businesses in the top 25% made 6X to 8X more money than the bottom 25% of businesses · Those businesses in the middle bracket (50% of all businesses) made at least 200% more money than those in the bottom 25% How does this information help you? You need to benchmark you company against everybody else in your industry segment - this will tell you how you are doing relative to your peers. Are you in the top 25%, middle 50% or bottom 25% of your industry? If you are in the top, you can rest because you are doing most things right. If you are in the middle 50%, you have much room for improvement. Those in the top 25% are making 200% to 300% more money than you. Those that make the money are the big contenders in your market. If you are in the bottom 25% - you have many issues to be resolved and worked on. Where to find benchmarking information on your company? Your banker will have it - they are using that information to compare you against your peers. Ask them for a copy - they will be happy to comply. You can actually have them go over the data with you. Call or email me - I have access to all of that data and can get you different levels of reports. Look in your industry periodicals - some have very good information - other so, so. Much of what I do with clients revolves around helping businesses improve financial performance. While I have always preached how critical it is to know where you are and where you are going and having a plan to get there, being a sounding board, confidant, and accountability partner is just as important. If you need help in any of these areas, please give me a call or shoot me an email. To Your Business Success: Dan Lacy Growth & Profit Coach, Financial Strategist, Cash Flow Doctor, CEO Mentor P.S. I have received rave reviews for my book - Cracking the Financial Code. This is the most practical book on understanding your financial statements and how to use them in your business ever written (okay, that's just my opinion). Get your copy now for only $15. Go to www.crackingthefinancialcode.com/to order now. Here's what others have said about this book: "Cracking the Financial Code removed both the mystery of financial statements and my excuses for not diligently using them. This is a must-read for any business owner wanting to make informed business decisions." Jonathan Arnold, President, Tuitive, Indianapolis, Indiana "In Cracking the Financial Code, Dan has taken difficult financial concepts and made them easy to understand. This is a "must read" for business owners who want to grow their business." Kirk Klabunde, Senior Vice President, First Merchants Bank, Anderson, Indiana "Cracking the Financial Code is a terrific reference source for growing companies to make sure their financial focus is sound." Terry J. Pahls P.E., President and COO, I Power Energy Systems Anderson, Indiana

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