How Benchmarking Reveals Hidden Profit Opportunities
Accountants Minute 459
Why Top 20% Benchmarking Creates Advisory Opportunities
Many accounting firms promote Business Advisory Services, yet a common challenge remains:
How do you objectively demonstrate to a client where improvement opportunities exist?
This is where benchmarking becomes one of the most valuable tools available to accountants, bookkeepers and business advisors.
A recent discussion with Darren Gleeson, Managing Director of TaxFitness, highlighted an important reality confronting Australian SMEs today. While many businesses focus on sales growth, very few truly understand how their performance compares with the best operators in their industry.
Why Average Is Not Good Enough
Traditional benchmarking often relies on industry averages.
The problem?
In many industries, a significant percentage of businesses are either losing money or generating returns below what could be earned from a salaried position. Benchmarking against average performers may simply confirm that a client is operating at a mediocre level.
Top 20% benchmarking takes a different approach.
Instead of comparing a business to the average operator, it compares performance against the most successful businesses within the industry.
This immediately highlights the gap between current performance and what is realistically achievable.
Turning Compliance Into Advisory
Many accountants already prepare annual accounts, management reports, cash flow forecasts and tax returns.
However, clients are increasingly seeking more than compliance services.
They want answers to questions such as:
❓ Why is profitability lower than expected?
❓ How do top-performing businesses operate?
❓ Which areas of the business need attention?
❓ What improvements will have the greatest impact on profit and cash flow?
Benchmarking helps answer these questions quickly and objectively.
Instead of simply presenting financial results, accountants can identify the specific drivers that are holding back performance and focus management attention on areas that matter most.
The Power of Identifying One Key Opportunity
One of the examples discussed involved a cosmetic injectables business.
The business was already profitable and performing above industry averages. However, benchmarking against the top 20% revealed a significant opportunity within Cost of Goods Sold.
The analysis showed that if Cost of Goods Sold could be reduced to the level achieved by top-performing operators, the business could generate an additional $53,000 profit without increasing sales, adding staff or taking on more customers.
That is the real value of advisory services.
Not producing more reports.
Producing insights that improve business performance.
What Gets Measured Gets Managed
A key message from the discussion was the famous management principle: "What gets measured gets managed."
Elite sporting teams constantly measure performance indicators.
Large corporations monitor KPIs daily.
Successful SMEs do exactly the same.
Yet many smaller businesses still rely on annual financial statements that describe what happened many months ago.
Business owners need current information.
They need KPIs, business metrics, benchmarking reports and management insights that help them make decisions today.
This creates a significant opportunity for accounting firms to become the trusted advisor their clients are seeking.
Beyond The Numbers
Benchmarking does not solve the problem.
It identifies where the opportunity exists.
The advisory process then involves working with management to determine the practical actions required to improve performance.
These actions may include:
✅ Reducing wastage and shrinkage
✅ Improving productivity
✅ Better inventory management
✅ Reviewing supplier arrangements
✅ Strengthening pricing strategies
✅ Monitoring labour efficiency
✅ Improving internal processes
The accountant’s role is not to run the business.
The accountant’s role is to provide the analysis, insights and accountability that help management make better decisions.
A Growing Opportunity For Accounting Firms
SMEs are operating in a challenging environment characterised by:
❗ Rising costs
❗ Wage pressures
❗ Cash flow challenges
❗ Productivity concerns
❗ Increased competition
Business owners need guidance.
They need someone who can help them understand where they stand and what actions are required to improve profitability and cash flow.
Benchmarking provides an effective starting point for those conversations.
For accounting firms seeking to expand Business Advisory Services, Top 20% Benchmarking offers a practical way to move beyond compliance and demonstrate measurable value to clients.
The firms that can identify opportunities, interpret business metrics and help clients improve performance will increasingly become the trusted advisors that SME owners rely on for ongoing support and business growth.
See How Top Performers Create Higher Profits
Would you like to see how Top 20% Benchmarking works in practice?
In this informative webinar, Darren Gleeson, Managing Director of Tax Fitness, demonstrates how accountants, bookkeepers and business advisors can quickly identify profit improvement opportunities, compare clients against top-performing businesses, and create meaningful advisory conversations that deliver measurable results.
The webinar includes real business examples, practical benchmarking insights, and strategies that can be incorporated into your Business Advisory and Virtual CFO services.
Watch the webinar recording and discover how benchmarking can help your clients improve profitability, cash flow and overall business performance.
Special Offer
Through ESS BIZTOOLS, firms can access exclusive TaxFitness subscription offer, providing additional resources to help you expand your advisory services.
FIND OUT MORE AND SUBSCRIBE HERE
Would your clients benefit from understanding how their business compares with the top 20% performers in their industry?
Top 20% Benchmarking can become a valuable component of your Business Advisory and Virtual CFO services, helping clients improve profitability, strengthen cash flow and make more informed business decisions.
Visit our website – www.essbiztools.com.au – to discover the detailed overview of the services provided by ESS BIZTOOLS. You are also welcome to contact us on 0418 190 181 or email .
Free Webinars by ESS BIZTOOLS
The Boss Factor Library – Sales Training Helps Accountants Deliver Advisory Services
📅 Wednesday 24 | 12pm AEST - REGISTER HERE
Want to know more?
Visit www.essbiztools.com.au.
If you would like to have a discussion about how this concept of virtual CFO services can be supplied by Australian accounting firms please ring our Managing Director, Peter Towers, on 0418 190 181 and we will arrange a complimentary 45-minute Zoom meeting to discuss your firm’s position and to give you our advice.
We believe that this is the blueprint for the delivery of an enhanced range of services by Australian Accounting and Bookkeeping firms to assist SME businesses to add value to their businesses and to assist accountants and bookkeepers not only to attract but to retain outstanding talent who want to be involved in the delivery of “real accounting services”.
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