For the industry benchmarks feature in LivePlan, we chose to partner with Sageworks, because they are the leading provider of industry data in North America. Sageworks is a financial information company, and their data and applications are used by thousands of accounting firms, banks and credit unions across North America.
Sageworks owns a proprietary database of privately held company financial statements aggregated by industry. Each day, Sageworks collects approximately 1,000 of these financial statements from accounting firms, banks and credit unions through a cooperative agreement with their clients. They separate the financial data from any firm-identifiable information, and then aggregate the data by industry according to the North American Industry Classification System (NAICS). The database includes more than 1,400 different industries.
The information is entered into their system by financial professionals who are generating analytical reports about each private company, so the data entered represents the true operational performance of the companies included in their database.
NAICS codes and descriptions
Benchmark search results are based on the industry codes and descriptions established by the North American Industry Classification System (NAICS). Sageworks data is categorized according to NAICS, because it is the standard used by Federal statistical agencies (like the U.S. Census Bureau) to classify businesses for the purpose of collecting, analyzing, and publishing data about the U.S. business economy.
NAICS replaced the Standard Industrial Classification (SIC) system in 1997. It was developed jointly by the U.S., Canada, and Mexico to allow for a high level of comparability in business statistics among North American countries.
NAICS category titles aren't very intuitive
NAICS codes and descriptions are updated every five years, and the last update was in 2012. Despite these updates, many of the NAICS industry titles still contain somewhat outdated terminology. For example, if you are writing a business plan for a coffee shop, and you search for "coffee shop," NAICS will return a category called "Snack and Nonalcoholic Beverage Bars." This is the correct category for a coffee shop business, but it might not seem intuitive based on the title.
Likewise, If you search for "web design," NAICS will return a category called "Custom Computer Programming Services." Again, it's important to read the entire description for a category so you can make an accurate category selection.
We have added more current terminology as keywords for LivePlan's custom search algorithm to make it easier to locate the correct category for your business. But, if you have any difficulty finding a NAICS category that seems correct for your business, please contact us, and we'll be happy to help you.
How to use benchmarks if you are outside of the U.S.
The industry data from our partners at Sageworks comes from U.S. companies only. If you are in another country, these benchmarks may still be useful, but you probably want to select the entire U.S., rather than a specific region.
For more on using the Benchmarks, see these articles: