Sources of Finanical Information on Small Businesses
A previous post on this blog for Accounting Month described the relationship between the business financials and the business plan. For business owners, business managers and future business owners who are starting a business, or for anyone who needs to make financial projections, it helps to do research when you actually know where to look for the information. If you don’t know where to look for the information, then it is super difficult to complete a business plan or research how much money you might need to start the business you want to start. Since small businesses are private, their financials are not often made public. (This is different from corporations who want to attract stock investors). That makes the information difficult to obtain. However, there are some resources that can help. Here are some sources of financial information that you can look to:
- RMA Annual Statement Studies (non-IRS data)
- Financial Studies of Small Business (non-IRS data)
- Almanac of Business and Industrial Financial Ratios (based on IRS returns data)
- IRS Corporate Ratios (based on IRS returns data)
- IRS Corporate Financial Ratios (based on IRS returns data)
- Financial Ratio Analyst (based on IRS returns data)
The resources above that get their information from the IRS are based on corporate income tax returns. These do not include returns for sole proprietorships, partnerships or LLCs. The RMA data is supplied by commercial lenders and includes about 150,000 businesses. The Financial Studies is compiled from over 30,000 financial statements submitted by CPA firms. This data isn’t 100% representative of how your business might be, and there are many arguments for the inaccuracy of the data (described in the source for this article listed below). At least the information provided in the sources listed above can give you a starting point. If you select an accountant that has clients similar to your business, then that accountant may have additional data that you can work with.
Major source for this article: Financial Accounting: A Mercifully Brief Introduction by Michael Sack Elmaleh.
This article was not written by an accountant. Consult with a CPA or other accounting professional before performing accounting for your business.
If you have any questions (or answers to questions) related to this article, leave a comment below.