Everyone wants to know how they’re doing. As a small business owner, this is critical to your survival. Because franchises often operate on tighter margins, knowing where to pull back on certain expenses (for example, marketing) or where to negotiate harder (for example, leasing property) or where to invest (buying new equipment) matters. If you’re not comparing yourself against your peers, you’re flying blind. And that might mean you’re making mistakes.
Here are three ways to compare your franchise against your peers, and why they matter.
Revenue.
How much money are you making versus “Company B”? Before you start your research make sure you take an apples-to-apples approach. Choose a competitor that’s in your field, within your geographic location (or similar), with the same years in business and of a similar size. Then compare your revenue.
What do differences in revenue tell you? For starters, don’t assume that if they have higher revenue that’s automatically bad. They might be overestimating their revenue, or not spending enough on things that will work against them (equipment, marketing, etc.). But it’s definitely something to look at.
COGS (cost of goods sold) as a percentage of revenue.
Cost of goods sold is how much money it costs you (equipment, staffing, supplies) to create and sell your products and services to your customers. (See our related infographic explaining COGS)
If your revenue is $10,000 a month and your COGS is $5,000, that means your COGS as a percentage of revenue is 50% (it costs you half of what you take in to sell your services).
What does your COGS as a percentage of revenue tell you? If your rate is higher than your competitor’s rate, you might be at a disadvantage—for some reason, you are spending more to deliver your services. Perhaps your competitor is simply charging more—that’s an easy fix for you. Or, perhaps you’re paying too much for equipment and supplies. Regardless, this gives you an opportunity to examine how you’re running your business and where you need to make changes.
Expenses as a percentage of revenue.
This one is a no-brainer. If you are spending more than your competitor and getting the same revenue, your rate of expenses to revenue will be higher. Similar to comparing COGS to revenue, this is also an opportunity to examine where you’re spending money, and where you might want to negotiate or cut back (for example, you might be spending more on payroll).
Questions? Chat with one of our friendly franchise experts today: Call us at 720-213-8040 or click below to request a free consultation.
Parties and other events are a great way to engage and reward employees and customers, and it’s also an opportunity to find tax deductions. But the tax rules for such events are strict and require careful planning and navigation to ensure you can claim your deductions with confidence.
Read on how to deduct the cost of a business party while also being conscious of potential tax deductions.
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The various taxes that small businesses have to pay out each year are significant, so it’s important to be aware of every opportunity the tax man gives you to reduce your bill. So be sure to consider whether any or all of the items in this checklist apply to your business and discuss them with your bookkeeper and accountant to ensure you are documenting and claiming every deduction available to you.
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With tax season approaching, you will want to take advantage of any and all deductions legally available to you. And if you aren’t satisfied with this year’s write-offs, you’ll want to start looking ahead next year to ensure you are aware of and actively documenting everything you could be deducting.
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Financial fraud is the number one consumer complaint in the United States, and it can have devastating consequences for victims.
But by being proactive and following some simple steps, you can make it much more difficult for criminals to steal your money or your identity. Read about implementing some measures to protect you!
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Now is the time to start thinking about the coming year, and what changes you could make to reduce your bill next time the taxman comes around.
Take a look at several ways businesses are reducing their tax burden.
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Good financial reporting can help a business track what is really important for profitability and guide good decision-making for the future. Many small businesses struggle to really take full advantage of their financial reporting.
Take a look at five tips that could make the difference in whether your financial reports tick boxes or truly help drive growth.
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Accounting and invoicing for general contractors have always been a paperwork-intensive process, tracking various construction-specific tasks like estimates, sourcing subcontractors, handling change orders, and partial-completion invoicing.
Let’s take a closer look at what makes construction invoicing different – and difficult – and consider a few highly-regarded apps that are worth considering, not only for invoicing but potentially for the entire end-to-end construction process, from submitting bids to paying contractors to customer relations.
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Filing as an S Corp eliminates the self-employment tax on all income that many small businesses pay, while at the same time keeping some income out of reach of things like Medicare and Social Security taxes. It offers you the opportunity to take part of your income as a W-2 salary, with the associated federal program taxes, and the rest of it as distributions that are not subject to those taxes.
As with most “great deals,” though, there are potential pitfalls. It’s important to take the process seriously and abide by the rules in order to reap the benefits while avoiding some very serious penalties.
Let’s take a look at the benefits and potential pitfalls of filing as an S Corp, and how you can pay yourself in a way that maximizes your tax benefits while minimizing your compliance risks.
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Filing as an S Corp eliminates the self-employment tax on all income that many small businesses pay, while at the same time keeping some income out of reach of things like Medicare and Social Security taxes. It offers you the opportunity to take part of your income as a W-2 salary, with the associated federal program taxes, and the rest of it as distributions that are not subject to those taxes.
As with most “great deals,” though, there are potential pitfalls. It’s important to take the process seriously and abide by the rules in order to reap the benefits while avoiding some very serious penalties.
Let’s take a look at the benefits and potential pitfalls of filing as an S Corp, and how you can pay yourself in a way that maximizes your tax benefits while minimizing your compliance risks.
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