No. of Recommendations: 3
There is a tool out there which everyone might want to know about. It is RMA's Annual Statement Studies and it is quite a powerfull tool once you know about it. Using it you can pop the lid on an industry and see what it's finances look like.

The goverment classifies all companies according to what they do, asigning say whole bakery supplies industry a numeric identification number. This number had been called a SIC number, but had recently changed to a NAICS number but both are currently in useage. The numbers can be quite specific in what a business does.
What RMA does is collect through the banking industry a sampling of financial statements for each and every one of these segments, for companies of various sizes. Then it publishes the average financial statment numbers and financial ratios for each and every industry code broken down into 3-5 various categories according to company revenues.

Using these averages you can see a LOT about the industry. For example you can figure out what a product distrubitor pays for a product and their costs of distrubiting are. You can also see if "bigger" is better by comparing diffrent size catagories.
I won't say it is always easy or exact but it works a WHOLE lot better than guessing in the dark. Additionally, bankers will frequently use these or similar numbers to help analize a companies financial statements before underwritting a loan. If you want to look like your REALLY together then know how your company compares to the averages BEFORE you go into the bankers office and be able to explain why. I myself use it when going through other peoples business plans, it helps to quickly pop out issues.

The book costs $145, but most small business devolpment centers and university libaries will have a copy you can look at for free.
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