IBISWorld Fundamentals for Industry Analysis and Benchmarking

The Challenges of Industry Research for Financial Analysis

As a financial analyst, you’re expected to understand industries inside and out — whether you’re preparing a market report, evaluating a company for a loan, or benchmarking financial performance. But here’s the problem:

• Reliable industry data isn’t easy to find. Scouring through government reports, earnings transcripts, and fragmented news sources is slow and inefficient.
• Comparing a company’s financials to industry benchmarks can be frustrating. Public companies disclose financial data, but what about small or private businesses?
• Manually conducting industry and competitive analysis is overwhelming. Identifying trends, risks, and opportunities takes too much time without a structured approach.

This is where IBISWorld comes in. Instead of spending hours piecing together information, financial analysts can use IBISWorld’s structured reports to get industry insights in seconds.

How IBISWorld Helps Analysts Conduct Research Faster

IBISWorld provides ready-made industry reports that streamline research. Instead of manually gathering data, analysts can quickly access:

• Market trends — Growth projections, demand shifts, and macroeconomic impacts.
• Competitive analysis — Industry concentration, key players, and competitive forces data.
• Financial benchmarks — Profitability, efficiency, and leverage ratios for different-sized businesses.
• Risk assessments — Industry volatility, barriers to entry, and key external threats.

These reports save time and allow analysts to focus on drawing conclusions rather than collecting data.

Example: Benchmarking a Business in the Grocery Industry

Let’s say you’re evaluating Elk Bluff Groceries, a small-town grocery store applying for a business loan. Your task? Analyze the store’s financial performance, industry position, and competitive standing.

With IBISWorld, you can perform:

• Industry research: IBISWorld provides an overview of grocery store trends, including revenue growth, cost structures, and potential risks.
• Financial benchmarking: Instead of guessing whether Elk Bluff Groceries is performing well, you can compare its profit margins, inventory turnover, and debt levels to industry averages.
• Competitive analysis: IBISWorld’s Porter’s Five Forces breakdown helps you assess competition, supplier power, and barriers to entry.
• SWOT analysis: Identify business strengths, market weaknesses, expansion opportunities, and competitive threats.

Rather than manually collecting financial data, you can download industry-standard benchmarks directly from IBISWorld’s reports and Excel files.

How Financial Analysts Can Use IBISWorld More Effectively

IBISWorld goes beyond providing raw data, offering structured insights that financial analysts can use for strategic research. Here’s how to make the most of it:

1. Extract Key Insights, Not Just Data

Instead of skimming reports, look for trends, risks, and financial indicators relevant to your analysis.

• Example: Instead of noting that grocery stores have a 33% average gross margin, ask why a specific business is above or below that benchmark.

2. Customize Financial Comparisons to Business Size

IBISWorld lets you filter financial benchmarks by revenue and asset size, ensuring accurate comparisons between a small business and its true industry peers.

• Example: Comparing Elk Bluff Groceries to national chains like Kroger wouldn’t be useful. Instead, IBISWorld allows you to benchmark it against similar-sized stores.

3. Use Call Preparation Questions for Smarter Client Conversations

IBISWorld provides pre-built strategic questions for client discussions, covering marketing, operations, and financial management.

• Example: If you’re evaluating a grocery store’s risk profile, IBISWorld might suggest asking:
  • “How do you manage inventory turnover to ensure profitability?”
  • “What steps do you take to retain local customers?”

Sharpen Your Financial Analysis Skills with IBISWorld and CFI

Want to learn how to use IBISWorld like a pro? CFI’s course, Using IBISWorld to Analyze and Benchmark a Business, equips you to leverage IBISWorld to extract industry insights, conduct financial benchmarking, and prepare data-backed recommendations. 

You can enroll in this course — and get 12 months of free IBISWorld access — as a Full Immersion member. Membership benefits include CFI’s 200+ finance and banking courses, professional certifications, specializations, role-based learning paths, and much more!

Explore Membership Now!

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