Benchmarking – it’s the No.1 thing you can do right now to bring your processes up to scratch and plan for a big spike in profits. By letting you see where you sit compared with industry leaders, it goes beyond traditional KPI monitoring to help your business prosper and implement changes where needed.
As an example, say Company X is the ‘benchmark’ for their industry, and you run a smaller business within the same industry that’s had a good year. What can you learn from Company X’s financials and processes? The answer is plenty.
Let’s explore five very profitable reasons why – big or small – your business should get on board with benchmarking.
Understanding the competitive landscape in your field is so important. It allows you to take a step back and see where your business sits in your field. It presents the big picture of where you are and where you want to be. You can see what’s worked for others, what hasn’t and how your figures compare.
Benchmarking allows you to fall in line with best practice processes and set new standards of excellence. It gives you a snapshot into the inner-workings of your industry. For years, you may have wondered, ‘How did the frontrunners get there and how do they stay on top?’ Well, here’s your chance to find out! Benchmarking facts, figures and insights can help you raise the bar and improve performance.
Figures don’t lie. The story of your business is laid bare in a benchmarking report. Use these insights to assess your processes and inform your strategy going forward. It’s all about percentages. For example, you can look at your staff costs as a percentage of your profits – how does this compare to your benchmark industry leaders? And what about marketing or operations? Where can you restore the balance by creating new positions, restructuring or training your staff to increase efficiency?
In a benchmarking report, you can clearly see where fat can be trimmed and your time be better spent. Again, it’s about restoring balance – economising where needs be and investing where it’s worth it. If you’re considering trying something wildly experimental, benchmarking can be your sense-check. Translation: it can give you the confidence you need to take a risk or stop you making costly mistakes! Things like expanding too soon or cutting frontline staff. If you see a competitor tried a similar thing and it didn’t work for them, you can re-assess.
Work with your accountant if you don’t know where to start. Time is at a premium for business owners and the idea of gathering and interpreting your own data can be overwhelming. An advisory accountant who specialises in benchmarking services can access the gross profit, loss and operations data you need to crunch the numbers, guide you through the process and devise a clear, actionable strategy with you.
A little curious about how you measure up against others in your industry? Speak with your usual Exant advisor or alternatively our expert Scott Hutton on 07 3218 3900, about how a benchmarking analysis can help your business.