Hi Yvonne,
Back in the old days Stellenbosch Uni did the stats on the different industries, and you could get a good grip and what net prof % you could look at. Unfortunately they don't get a gov. grant anymore, but here are some average net prof % for you:
Construction & Building 3.19
Short Term Insurance 9.75 with latest year set at 16.20
Pharmaceuticals 20.15 and we all know the mark-up on that
Food comes in at a mere 1.87 see why we don't like to cook?
General Retailers 5.17
Media 13.84 (latest) see why we like to gossip?
Travel & Leisure 11.46 and holding steady since 97
Real Estate 31.96 average but 6.15 on latest
General Financial 39.65 on latest showing strong growth
Venture Capital -0.87 latest
I am a bit weary of these stats, and at SETA they also asked me what industry ratios I use as barometer on my graphs, but that is all we have right now, and historical performance must also be looked at.
But it can be a bit misleading in that the % might look low, but a % of what turnover? 10% of a R100.00 Turnover is way lower than 10% on R 10 000.00. So essentially you have to look at the whole picture afore you can determine what % one can look at for a SMME.
I did an analysis for a college last year, and I advised them to close down, to cut their losses and close the doors. Did they listen? No, so it was closed down for them. Rent can kill your venture even before you start off, and boy, in this country people can invest in assets like there is no tomorrow!! The latter is one of the biggest problems. There is only one criteria in investing in a Fixed Asset -- how much money will it bring in, and what will my turnover ratio be on my Fixed Assets? I am not even talking about Total Assets and all the rest of the ratios.
But yes, just had a discussion today on what business owners do -- you and your business are not one entity, so don;t tell me that you are making x per month, when you are using all of x just to make a living for yourself and your family. Then you enter into the survivalist scenario for a business.
If you like, I will help you do an analysis on your business for free, and you can check out the end result and see what it looks like. Just let me know.
When it comes to a service industry, I like to see a net profit margin of at least 30%.
And it can go up to 49% if you know what you are doing.
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