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Recent financial data on small businesses encouraging
Raleigh, N.C., June 3, 2014 — New data from Sageworks, a financial information company, show that at least in recent years, the financial performance of small businesses has been pretty good. For the average privately held company with less than $10 million in annual sales, sales have increased every year since 2009 and profitability has more than doubled, according to data from financial statements for the firms.
That’s good news for small business owners, even if many of them actually rank the independence that comes with being your own boss – rather than financial rewards -- as the best thing about starting and running a business, according to a recent Wells Fargo/Gallup poll.
“Broadly speaking, in looking at our data, small businesses have been doing quite well following the recession,” said Sageworks analyst Kevin Abbas. “Sales growth is hovering right around 7 to 8 percent, which is healthy. In addition, net profit margins have been steadily increasing after the dip in 2008 and 2009.”
“Small businesses are doing well as the economy as a whole also continues to improve,” he added.
financial statement analysis of small businesses
Small, private companies have boosted sales, on average, between about 6 percent and 8 percent each year since 2009, including a 6.5 percent average sales increase in 2013, according to Sageworks’ financial statement analysis. Net profit margins – or the share of each sales dollar earned by these businesses after accounting for all expenses– have improved, from a recent low of about 3 percent in 2009 to more than 8 percent in 2013.
While the Wells Fargo/Gallup survey found that money wasn’t atop the list of rewards for small-business owners, it noted that many of the biggest challenges owners faced when opening their businesses had to do with the financial “nuts and bolts” – generating revenue and securing customers, generating cash flow and financing.
“As a financial information company specializing in reading and interpreting complex financial data, we’re always focused on how we can help our businesses maximize their income and increase their success without having to spend an inordinate amount of time digging through the numbers. That allows small business owners the opportunity to focus on the aspects of business ownership that are most important to them,” Abbas said.
Issues facing businesses owners, their overall sentiment about the economy, and their reactions to major policy issues are well documented by various surveys and indicators released by research organizations and corporations. However, the actual financial performance of these companies is largely unknown due to the fact that the financial statements of American small businesses are not publicly reported, unlike those of companies listed on stock exchanges.
Through a cooperative data model with financial institutions and accounting firms, Sageworks collects approximately 1,000 real financial statements each day from privately held companies. Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries. These adjustments are commonly made to private company financials in order to provide a more accurate picture of the companies’ operational performance.
About the Data
Sageworks possesses a proprietary database of privately held company financial statements aggregated by industry. Sageworks aggregates private-company financial statements from accounting firms, banks, and credit unions through a cooperative data model with their clients. The data is segmented and can be queried by 1,400 industry codes, 70 financial metrics, company size and geographic location.
About Sageworks
Raleigh, N.C.,-based Sageworks is a financial information company. Sageworks’ data and applications are used by thousands of banks and accounting firms across North America to analyze privately held companies. 
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