How to Compare Your Business to Industry Standards

Running a small business often feels like you're on an island — especially if you’re a solo operator in a trade like cleaning, pressure washing, inspections, or handyman services. But here's a question worth asking:

How do your numbers stack up against others in your industry?

Comparing your business to industry standards helps you:

• Set smarter goals

• Price your services competitively

• Understand where you’re excelling — or falling behind

• Plan for sustainable growth

Let’s break down how to do it without getting lost in spreadsheets or corporate jargon.

What Are Industry Standards?

Industry standards are benchmark averages based on businesses like yours. They typically include things like:

• Average revenue

• Profit margins

• Labor costs as a % of income

• Marketing spend

• Overhead expenses

• Customer acquisition cost (CAC)

Knowing these numbers gives you context — so you’re not just guessing if your 15% profit margin is “good” or not.

Step 1: Gather Your Own Numbers First

Before comparing to anyone else, you need to know your own stats. Start with these:

• Monthly Revenue

• Gross Profit Margin = (Revenue – COGS) ÷ Revenue

• Net Profit Margin = Net Profit ÷ Revenue

• Labor Cost % = Labor Costs ÷ Revenue

• Marketing Spend % = Ad Spend ÷ Revenue

You can find these on your Profit & Loss Statement and Balance Sheet.

Tip: If you use QuickBooks, it can generate these reports automatically.

Step 2: Find Industry Benchmarks

Here’s where to look for standard data:

• IRS’s Sole Proprietor Industry Averages: Found in their annual Statistics of Income reports

• NAICS Benchmarks: Use your business NAICS code to find sector-specific data

• Trade Associations (e.g. IWCA, NADCA, PHCC)

• QuickBooks Industry Reports (for users)

• Online Tools like BizStats, SCORE.org, and SBA.gov

Example Benchmarks:

Cleaning businesses often run at 20–30% net profit margins

Home inspectors may spend 5–10% of revenue on marketing

Many trades aim to keep labor at or below 30–40% of income

Step 3: Compare and Ask Key Questions

Once you have both your numbers and the industry averages, ask:

• Am I more or less profitable than similar businesses?

• Are my labor, supply, or marketing costs out of line?

• Do I charge enough to hit average margins?

• Where can I trim or reinvest for better results?

This doesn’t mean you have to match every average — just that you can make intentional, informed decisions.

Step 4: Adjust Based on the Data

Let’s say you find that:

• The average net profit margin in your industry is 20%

• Yours is 8%

Now you have clarity. You can look closer at:

• Underpricing

• Overspending on supplies

• Too many unpaid hours

• Jobs that aren’t worth it

This kind of analysis leads to smart action, not just guesswork.

✅ Final Thoughts

Comparing your business to industry standards is like checking your compass — it tells you if you're heading in the right direction.

You don’t have to hit every benchmark, but knowing where you stand helps you grow smarter, price better, and stay in control of your business finances.

Want help pulling your numbers and comparing them to industry benchmarks?
I offer a free Bookkeeping Health Check that gives you a clear, personalized snapshot — no pressure, just clarity.

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Or send us an email at David@RuckandReconcile.com

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And as always, thanks for reading and we’ll see you next week!