Small businesses' profit margins may be increasing, according to data from financial analysis software company Sageworks, but this isn't exactly good news.
The company's latest figures show that while profit margins increased by 5.13 percent over this time last year, sales are down by 6.46 percent. This means, according to Drew White, chief financial officer of Sageworks, that a small business' success is being driven by expense containment, not revenue.
"Small businesses have to work very hard to make a profit," White says. "They have to carefully manage expenses if they want to stay in business."
Sageworks aggregates small-business industry data from the CPAs and accountants in its subscriber base. The accountants, in turn, use the benchmarking data to compare their own clients to industry peers. Financial data from more than 233,000 companies was used to compile the latest figures.