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Financial Benchmarks Survey Report: Looking Ahead to 2023

Updated: Nov 6, 2023

As we head into 2023, economic uncertainty is affecting every business. With this rising uncertainty, business decision making can be negatively affected as expectations might not be in alignment with actuality, and the ability to foresee the longer-term consequences of decisions could be blurred.


To help companies gain a better picture of how and what your competitors did in 2022 and what they are planning for 2023, Chief Executive magazine recently surveyed CEOs, presidents, owners and CFOs from over 200 U.S.-based companies.


According to the survey, 41 percent of U.S. companies are projecting their annual revenues to grow by at least 10 percent in 2023., with the big contributing factor being inflation-driven price increases that companies are implementing.

More companies plan to raise prices in 2023 than in 2022—81 percent vs. 72 percent. The extent of those increases varies, but the majority report numbers between 2.5 percent and 15 percent.


And while small companies (by annual revenues) tend to be more reluctant to increase prices compared to their larger peers, they are also the group with the highest proportion forecasting revenue declines this year—which showcases the importance of price increases in navigating this environment. This highlights the greater financial risks that small businesses are facing due to the dual threats of inflationary pressures and sales declines.


Industry sector also plays a prominent role. For instance, 53 percent of manufacturing companies focused on consumer goods forecasted ending 2023 with revenue growth in excess of 10 percent—the largest rate across all sectors. These are also among the companies most likely to implement substantial price increases (7.5 percent or more) in 2023, compared to other industries.


Net revenue per employee is another important metric to consider in this economy, as labor costs continue to skyrocket. According to the survey, median total net revenue per employee in 2022 was $225,000, with 35 percent reporting theirs falling between $100,000 and $199,000.


And while company size has a direct correlation to this metric, it also varies significantly based on industry: 30 percent of wholesale/distribution companies and 22 percent of energy companies have total net revenue per employee of at least $1 million, far more than any other sector.


When surveyed on the topic of how inflation, the survey found that the median projected cost of goods sold (COGS) as a percentage of net revenues is 41 percent in 2023 (average of 45 percent), an increase from 2022 (40 percent and 43 percent, respectively). While a 1 percent increase may seem modest, it can have a dramatic impact on profit margins.


In response to rising wages, 52 percent of companies said they are increasing or have increased prices to match wage increases. Overall, the larger the company (by annual revenues), the more likely it is to invest in automation to curb the impact of wage increases, particularly when it comes to back-office operations.


In the current economy, CFOs are increasingly focused on profitability. While median EBITDA in 2022 was 14 percent of revenues, according to the benchmarking study, average EBITDA as a percentage of net revenue is projected to be 16 percent in 2023.


Companies with less than $10 million in annual revenues and those with more than $1 billion in annual revenues enjoyed the highest median EBITDA as a percentage of revenues in both 2021 and 2022, at 15 percent.


As for sector, the study found real estate and pharma as the two industries with the highest median EBITDA as a percentage of revenues in 2022. Real estate, at 23 percent, showed no change from the year prior, but pharma/biotech, at 18 percent, is down from 23 percent in 2021.


When evaluating EBITDA per employee, a figure of less than $50,000 is quite common, and nearly 40 percent of companies represented in the benchmarking study reported that figure. Fewer than a quarter reported EBITDA per employee of $150,000 or more.


If you are a business owner or CEO within the San Francisco Bay Area or Silicon Valley, in need of an experienced fractional CFO to help your company identify opportunity and improve operational processes, cash flow, accounting and billing process management, as well as profit margins, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.

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