Australian Business Benchmarks

The four numbers that tell you whether your business actually works

Margin, owner pay, labour and cash. Free benchmark data for Australian business owners, drawn from ATO, ABS, RBA and ASIC sources.

Last reviewed August 2026.

Most owners track revenue. Revenue tells you how busy you are, not whether the business works.

These four numbers tell you whether it works. Each one has its own page with full industry tables and sources. This page shows you the headline figures and, more usefully, how to read them together.

What are the four key benchmarks for an Australian business?

Benchmark What good looks like What most businesses actually do
Net profit margin 10% to 15% after paying yourself a market salary Around 43% of small businesses make no profit at all
Owner pay $123,000 to $162,000 package, being what a replacement would cost 60% could not pay themselves at least occasionally last year
Labour as a share of revenue 25% to 40% including superannuation Above 40% is a stress point most owners have never measured
Cash reserve Three to six months of fixed operating costs 40% hold less than one month. 22% hold nothing

Net margin, owner pay, labour cost and cash reserve. Here they are with the target for an established Australian business turning over $1M to $3M.

If you only take one thing from this page: three of those four "actual" columns describe a business that is quietly not working, and the owners in question mostly have no idea, because nobody ever gave them the number to compare against.

The one adjustment that changes all four

Before you compare yourself to anything, there is a correction to make, and almost nobody makes it.

ATO Small Business Benchmarks exclude the owner's own pay. In the ATO's words: "Do not include amounts paid to associated parties, for example, labour provided by a business owner or business partner."

That is the best benchmark data Australia has, and every margin and labour figure derived from it assumes you work for nothing.

Here is what it does in practice. A trades business showing a 19% net margin against the ATO benchmark, on $1.2M of turnover, is making $228,000 before the owner takes a cent. Pay that owner a market salary of $150,000 and the real margin is about 6.5%.

Same business, same year, thirteen percentage points apart. Only one of those numbers tells you anything.

So the rule is simple. Put a market salary for yourself into the costs before you measure anything. If you do not, your margin looks good, your labour percentage looks excellent, and both are fiction.

How the four numbers connect

They are not four separate tests. They are one diagnostic, and the combinations are what tell you where the problem is.

What you are seeing What it usually means
Margin thin, labour above 40% Over-staffed, or under-priced. Check gross margin to tell which
Margin healthy, cash under one month A collection or working capital problem, not a profit problem
Labour under 25%, owner working 60 hours You are the subsidy. The benchmark is hiding it
Margin fine, owner pay well below market The profit is real but the business is not as valuable as you think
Margin thin and cash thin, revenue growing The most dangerous combination. Growth is consuming the business

That last row is worth sitting with. Businesses do not usually run out of money when things are bad. They run out when things are good and moving quickly, because every new job has to be funded before it pays.

What if my numbers are outside the range?

Usually nothing dramatic, and here is why. The ATO's own description of its benchmark range is "30% of the population around the average." It is not the middle 50% and it is not the interquartile range. Roughly seven in ten Australian businesses sit outside it.

Being outside the range is normal. What matters is the direction, the size of the gap, and whether you can explain it.

Two more things worth knowing about these benchmarks. They were built by the ATO to detect undeclared cash income, not to define good management, so they are a compliance tool being used here as a performance yardstick because nothing better exists. And turnover band changes everything: a carpenter under $110,000 derives a 50% net margin from the same dataset that gives a carpenter over $400,000 about 19%, purely because of whose labour is counted.

The four benchmark pages

Each page carries the full industry tables, the sources, and the method.

Net Profit Margin Benchmarks by Industry ATO-derived net margins for more than 30 Australian industries, from electrical services to dental surgery, with the owner-salary adjustment explained in full.

How Much Should a Business Owner Pay Themselves? The replacement-cost method, what Australian owners actually take, and the worked example showing how underpaying yourself by $96,800 a year can cost around $290,000 of what your business is worth.

What Should Wages Cost as a Percentage of Revenue? ATO labour ratios by industry, what a $70,000 employee really costs once super and on-costs are counted, and the growth threshold that structurally adds eight to thirteen points to your wage bill.

How Many Months of Cash Reserve Does a Business Need? Where the three-to-six month rule comes from, what Australian businesses actually hold, and how to size a reserve for a seasonal business.

How to run all four on your own business in an hour

You need last financial year's numbers and a spreadsheet.

  1. Net margin. Revenue, minus all costs, minus a market salary for yourself. Divide by revenue.

  2. Owner pay. Add up everything you took: salary, dividends, drawings, super, the car. Compare it to what a replacement would cost.

  3. Labour. Total wages including super, divided by revenue. Then add cost of goods and check the combined figure stays under about 60%.

  4. Cash reserve. Cash in the account, divided by one month of fixed costs.

Four numbers. Then read them together using the table above rather than one at a time.

If two or more land outside the range, the gap is almost always sitting in two or three specific places rather than spread across everything, and it is usually recoverable.

Common Questions

  • Primarily the ATO Small Business Benchmarks for the 2023-24 income year, published March 2026, covering around 100 industries and more than two million small businesses. Also the ABS, the Reserve Bank, ASIC insolvency statistics, Fair Work Commission wage decisions and published Australian salary surveys. Every page lists its sources.

  • No. ATO figures exclude payments to the business owner or partner. Most advisory benchmarks published elsewhere do the opposite and usually do not say so, which is how owners end up comparing two numbers that are five to twenty percentage points apart.

  • No. There is no ATO benchmark for tourism, tour operating, accommodation or travel, and Tourism Research Australia publishes visitor spend and employment rather than profitability. The nearest usable proxies are health and fitness centres or sports and recreation instruction, and they should be treated as proxies.

  • The ATO releases new benchmarks around March each year and wage rates change on 1 July. These pages are reviewed at least annually and each one carries the date it was last checked.

  • For an established business turning over $1M to $3M, 10% to 15% is healthy after paying yourself a market salary, above 15% is strong, 5% to 10% is fragile, and under 5% means you have bought yourself a job.

  •  Not according to the Reserve Bank. Its position, drawing on ABS data, is that small and medium business operating margins sit around the levels recorded in the decade before the pandemic, and most firms slightly improved margins despite strong cost growth. Distress is real but concentrated in hospitality and construction.

When the numbers point somewhere and you want the detail

Benchmarks tell you whether there is a gap. They do not tell you where it is or what closing it is worth.

That is what a Business Analysis does. It runs your real numbers across twelve profit levers, quantifies each opportunity in dollars, and puts them in the order worth doing.

Call me at 0491 729 043, or book a conversation.