It is always helpful to get benchmark data on your competitors and on other companies that have a similar business model. To that end, I encourage you to sign up for the SIIA Financial Survey to see how you stack up against your competitors.
We encourage you to invite your software industry portfolio companies to participate in the SIIA Software Industry Financial Survey, conducted with assistance from Deloitte & Touche LLP and its affiliates.
The report from this survey will provide in-depth analyses on nearly 100 financial statement and productivity ratios — detail far beyond that available in annual reports or SEC filings. These include R&D, sales and marketing, legal, revenue per employee and inventory turnover, among others. Results will be shown by sales volume, market segment, ownership, profitability and other measures, allowing you to make appropriate peer comparisons.
I am sure this will be a worthwhile endeavor for you. When I meet an entrepreneur I always like to ask who they want to be when they grow up and why? In other words, I like to know what company out there today has a business model that you would like to emulate. While I do not pin my valuation for an early stage company on the financial model, it is important to have one to understand your costs or cash needs and to understand whether or not you have a viable business model with high gross margins or low gross margins. For example, if you are another social networking company that walks in my door wanting to be the next MySpace then you better understand that the only way to make that model work financially is to have a huge audience generating tons of page views since the monetization rates on each page view are so low relative to paid search as an example. If you are selling infrastructure software and you model out in 3 years that you will be more profitable than every other company out there, I am sure you are missing something as well.