How to read your benchmark – a guide
This post is a how to guide for all those folks who’ve clicked on the Facebook ad and are wondering what they might get out of a comparison of their last years business finances plus all the MyCake users who’ve been receiving ‘your data has been approved’ messages and are wondering how to look at the benchmark for the quarter or year concerned.
To benchmark with MyCake you need an account and to have submitted your financial data. Once it’s approved here’s what you can access:
What’s in the benchmark report?
Benchmarking allows you to compare your financial information anonymously and confidentially to the rest of the MyCake user base. For example you can compare how your ratios of gross profit (sales minus cost of goods), net profit (sales minus cost of goods and minus indirect costs) compare for that quarter or year to the average, best, worst and top 25% of all other users.
You can use a benchmark to gauge how successful you’ve been relative to other businesses like yours (in terms of sector or age of business).
If you click on the ‘results’ button at the top of the MyCake dashboard you’ll see this screen…
From here you can pick the set of benchmark results you’d like to see. There’s plenty to look at in the 2008 annual data set so we’d suggest you start here. As you’re probably all too aware cash flow can make a quarterly P&L look pretty variable whereas the annual view is usually a bit more even.
So pick the period from the drop down and then click on either of the two grey buttons at the bottom. We’ll now look at the reports as they appear in the menu list at the top, starting with the graphical results in slice 1 first…
Slice 1 – the overview
In this view we’re showing you some basic metrics – gross profit, indirect costs, net profit etc. The thermometers are set to show green for generally healthy levels, yellow for things that probably need a closer look and red for things you should definitely investigate further.
To see your figures use the blue vertical scroll on the left, and at the bottom of the list you’ll find your own data set. Along the way you’ll see that you can also look at the average, maximum and minimum for the whole MyCake user set as well as a smaller section of users based on the ‘group’ you joined when you signed up. So if you’re affiliated with partners such as Artquest or Cockpit Arts you can compare yourself to just this crowd.
For those of you who enjoy a few columns of numbers in the mix we also show you these basic metrics in figures - again with the same ability to select different things to compare yourself to in the drop downs.
Slice 2 – The detail
There’s only so much we can show visually and at some point we need to revert to columns of figures! This section shows how your figures compare as a full profit and loss sheet. We show all the costs as a percentage of turnover so that we can give you comparisons across businesses of different sizes and scales yet still compare apples to apples.
As a place to start why not compare your split between main income stream and ‘other income’ against the average for the whole MyCake user base.
Next you could look at what proportion of your turnover you spend on what’s called ‘direct costs’ – this means the amount spent on production materials and any freelancers/sub-contractors who work on the production of goods and services. If, when you look at this you think that you would like to re-allocate some of your cost headings, do talk to Marion (see support) who will be happy to help you through this.
We’d expect that those who sell their time will have quite low direct costs (unless there are a lot of freelancers involved) whereas those who make objects will have a higher direct cost base (but it still doesn’t want to exceed 40% of turnover absolute max).
Next you might go on to look at where your major indirect costs are … where is the highest percentage of your turnover spent? Travel, professional fees, rent etc?
Again see how this compares to the norms.
Towards the bottom of the page you’ll see the net profit line as well as the drawings and pension lines. Go on! We dare you!
Slice 3 – What if?
By this point we hope you’re starting to ask questions about what you could do differently going forward both in terms of income growth and changing expenditure. The third view enables you to play with your data a little and ask ‘what if’ questions.
You’ll find that on this page your figures have been turned into a flow diagram with income and direct costs on the left, through to profit on the right. The dial on the left allows you to see what happens when you increase sales. The dial on the right shows you to see the impact of increasing your drawings. The sliders in the middle allow you to play with scenarios where you increase or decrease major costs such as marketing, staffing etc. Don’t forget to pick your data set from the drop down list in the top left!
So you could consider what would happen if you increased your marketing spend by 10% and then looked at how much you’d need to increase your income for it to have been worth it (by worth it we mean more net profit at the end). You might consider what would happen if you moved into larger premises and therefore had to increase the amount you spend on rent.
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You might also find this post on comparing hourly rates useful … not least because we provide some general benchmark results as well as an overview of what this means.
There are plenty of possibilities and if you’re wanting more guidance, then do book a 1:1 session with MyCake and we’ll help you interpret the information.
We’ll also keep posting on the blog about what we’re seeing in the overall results and you can compare this to your own data set.
3 Comments to How to read your benchmark – a guide
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I discovered your homepage by coincidence.
Very interesting posts and well written.
I will put your site on my blogroll.
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