While running a business you will find that you are constantly asking yourself questions. Am I spending too much on wages? Am I paying too much rent? Am I spending enough on advertising to generate sales? How is my business performing compared to my competitors? With today’s business climate becoming increasingly competitive it is crucial to the success of your business to spend more time working on your business rather than working in the business. Benchmarking can play a key role in this by identifying what is working in your business but more importantly what needs working on.
What is Benchmarking?
Benchmarking is used to measure the performance of your business by comparing it to your competitors. It is common practice for business to compare their financial results with budgets and historical data, whether it be against last month or the prior year. Benchmarking differs to this in that it compares your business performance to others in your industry or related industries. These comparisons may be made against the best performers in the industry as well as the worst. By doing these comparisons it allows you to assess what other businesses are doing differently and how this may improve your own business practices and results. To make these comparisons as easy to understand as possible we generate comparative reports and graphs. We will also spend time running through these with you to ensure that you understand your industry averages and analysis.
You can benchmark your business against a variety of characteristics including:
- Sales and turnover
- Key performance indicators such as Gross Profit, Wages to Turnover and Net Profit
- Pricing structures and fees
- Number of customers
- Staff turnover
After assessing characteristics such as those above and identifying any weaknesses in your business, the next step is to make changes to strengthen those areas. However, it may not necessarily be a weakness that is identified but an area that presents an opportunity for growth. Without going through these steps to improve your business, benchmarking really serves no purpose.
If you’re looking for practical, down to earth business advice and tax effective solutions contact us today. We are ‘business and profit builders’ who enjoy working with ambitious business owners looking to accelerate their business success.
To take the next step we invite you to book a FREE, no obligation, one hour introductory consultation to discuss your business needs. You’ll get practical business, tax, marketing and financial advice that could have a significant impact on your bottom line. To book a time, call us today on 1300 789 844 or complete your details in the box at the top of this page.