Benchmarking Your Business: How Do Your Numbers Actually Compare?

You know your revenue. You know your profit margin — roughly. You probably have a feel for whether the business is doing well or struggling. But “doing well” compared to what? Your gut? Last year? The business down the road?

Benchmarking is the practice of measuring your business performance against industry standards, competitors, or your own historical data. It turns vague feelings into specific numbers and answers the question every business owner quietly asks: are my numbers actually good?

Why Benchmarking Matters

Without benchmarks, you’re interpreting your numbers in a vacuum. A 25% gross margin might feel healthy — until you learn that comparable businesses in your industry average 38%. A $180,000 revenue-per-employee figure might seem low — until you discover that the industry median is $160,000 and you’re actually outperforming.

Benchmarking gives you three things:

Context for your numbers. Raw metrics are meaningless without a reference point. “Our customer acquisition cost is $340” is a fact. “Our customer acquisition cost is $340 versus an industry average of $280” is information you can act on.

Early warning signals. If your gross margin is trending down while the industry average holds steady, you have a pricing or cost problem specific to your business — not an industry-wide shift. Without the benchmark, you might assume the squeeze is affecting everyone and fail to act.

Credible targets. Instead of setting arbitrary goals (“let’s grow revenue 20%”), you can set targets grounded in what’s actually achievable: “The top quartile of businesses our size runs at 42% gross margin. We’re at 31%. Let’s close that gap.”

The Metrics That Matter Most

You could benchmark dozens of metrics. Don’t. Focus on the handful that genuinely reveal business health and drive decisions.

Revenue Per Employee

What it tells you: How efficiently your business converts headcount into revenue. A proxy for productivity and operational efficiency.

How to calculate it: Total annual revenue divided by total full-time equivalent (FTE) employees. Include part-timers as proportional FTEs (a half-time employee = 0.5 FTE).

Typical Australian benchmarks:

• Professional services: $150,000-$250,000
• Trades and field services: $120,000-$200,000
• Wholesale/distribution: $300,000-$500,000
• Manufacturing: $180,000-$350,000

If your revenue per employee is significantly below industry average, you’re either understaffed in sales (not enough work coming in), overstaffed in operations (too many people for the work you have), or your pricing is too low.

Gross Profit Margin

What it tells you: How much money you keep after the direct costs of delivering your product or service. The foundation of business viability.

How to calculate it: (Revenue minus cost of goods sold) divided by revenue, expressed as a percentage. “Cost of goods sold” means direct costs only — materials, subcontractors, direct labour. Not rent, not admin wages, not insurance.

Typical Australian benchmarks:

• Professional services: 50-70%
• Trades (electrical, plumbing, HVAC): 30-50%
• Construction: 15-25%
• Retail: 40-60%
• Manufacturing: 25-40%

Gross margin below industry average usually points to one of three things: pricing too low, direct costs too high, or a poor mix of high-margin and low-margin work.

Net Profit Margin

What it tells you: What’s left after all costs — direct, overhead, and administrative. The ultimate measure of business profitability.

How to calculate it: Net profit (before tax) divided by revenue.

Typical Australian benchmarks:

• Professional services: 15-25%
• Trades and field services: 8-15%
• Construction: 3-8%
• Retail: 3-7%
• Manufacturing: 5-12%

If your gross margin is healthy but your net margin is thin, your overhead costs are too high relative to your revenue. If both are thin, the problem starts at the pricing and direct cost level.

Customer Acquisition Cost (CAC)

What it tells you: How much you spend to win one new customer. The metric that tells you whether your marketing and sales effort is efficient.

How to calculate it: Total sales and marketing spend (including salaries of sales staff) divided by the number of new customers acquired in that period.

Why it matters: A CAC of $500 is perfectly fine if each customer is worth $10,000 over their lifetime. It’s a disaster if the average customer spends $600 once and never returns. CAC only makes sense in relation to customer lifetime value.

Debtor Days

What it tells you: How long it takes your customers to pay, on average. A direct measure of cash flow efficiency.

How to calculate it: (Accounts receivable divided by annual revenue) multiplied by 365.

Typical Australian benchmarks:

• Professional services: 35-50 days
• Trades: 25-40 days
• Construction: 40-60 days
• Wholesale: 30-45 days

If your debtor days are significantly above industry average, you have a collections problem. Every extra day your money sits in someone else’s bank account is a day you might need to use your own cash reserves or credit facilities to cover costs.

Where to Find Benchmarks

Australian benchmark data is available from several sources, most of them free:

ATO Small Business Benchmarks. The Australian Taxation Office publishes performance benchmarks by industry based on actual tax return data. They cover cost of sales, total expenses, and labour costs as a percentage of turnover. Blunt but useful, and specific to Australian businesses. Available at ato.gov.au.

Industry associations. Most trade and professional associations publish annual benchmark reports for their members. The Master Electricians, Master Plumbers, HIA (Housing Industry Association), and CPA Australia all produce benchmark data. These are often the most specific and relevant numbers you’ll find.

Your accountant. If your accountant works with multiple businesses in your industry — and most do — they have a practical sense of what “good” looks like. They may not publish formal benchmarks, but asking “how do my margins compare to your other clients in this space?” usually produces useful information.

IBISWorld and similar. Paid industry research platforms publish detailed financial benchmarks by ANZSIC code. More expensive but more granular. Worth it if you need investor-grade comparisons or if you’re in a niche industry with limited free data.

How to Actually Use Benchmarks

Finding the numbers is step one. Using them effectively is where most businesses fall down.

Don’t Benchmark Against Averages Alone

The average includes struggling businesses dragging the number down and exceptional ones pulling it up. Where possible, look at quartile data — the 25th, 50th, and 75th percentile. Being at the median is fine. Being in the bottom quartile is a red flag. Aiming for the top quartile gives you a meaningful stretch target.

Benchmark Against Yourself First

Your most valuable benchmark is your own historical performance. If your gross margin was 38% last year and it’s 33% this quarter, that’s a trend you need to understand regardless of what the industry average is. External benchmarks tell you where you stand. Internal benchmarks tell you which direction you’re heading.

Dig Into the Outliers

If your revenue per employee is well above average, find out why. Is it because you’re genuinely efficient, or because you’re overworking a small team? If your CAC is well below average, is your marketing exceptionally efficient or are you underinvesting in growth?

Numbers that look good on the surface sometimes mask problems underneath. Always ask “why” before celebrating — or panicking.

Benchmark by Segment, Not Just Overall

Your blended gross margin might look healthy, but when you break it down by service line, you might find that commercial work runs at 45% while residential runs at 18%. The average hides the problem. Benchmark each service line, each customer segment, each region separately.

Building a Benchmarking Habit

Benchmarking isn’t a one-time exercise. Markets shift, costs change, and your business evolves. The real value comes from making it a regular practice.

Quarterly reviews. Calculate your key metrics every quarter and compare them to benchmarks. Track the trend over time. Four data points per year is enough to see patterns without drowning in numbers.

Annual deep dive. Once a year, do a thorough comparison across all major metrics. Update your benchmark sources — the ATO publishes new data regularly, and industry association figures refresh annually.

Build it into your dashboard. If you already have a business dashboard, add benchmark lines to your key charts. Seeing your gross margin trend alongside the industry median is far more informative than seeing the number in isolation.

The goal isn’t to hit every benchmark perfectly. It’s to know where you stand, understand why, and make deliberate decisions about where to improve. The businesses that benchmark consistently don’t just perform better — they make better decisions, because every decision is informed by where they are relative to where they could be.