Benchmarking your business is important for understanding how successful your business is in comparison with others in the market. You don’t know how your business is doing in terms of its overall health and security until you know what normal looks like for your type of business such as size, profile etc.
By exploring the businesses that are similar to you in profile and size and analysing what constitutes their success or failure or average performance, you can ensure that your business is doing well or if it not doing so well, then create business plan to get in shape!
It is simple than it sounds, at least to get started. In order to benchmark your business, you need to go through a process of researching and comparing, finding averages and standards of your competitors and your industry and matching them to your business.
The most important things to look for are:
This is the most essential benchmarking measure. You need to analyse how much money your business is making. Understanding the average profit benchmark in your industry is the only way to know this. If you don’t know what that is, then researching is the key. You can generally count on independent studies available through trade associations. If they are not available, then look for financial experts in your network who may have access to that level of data and information. Does the average industry profit match yours? If it’s below it, then that’s surely a sign that there’s something going on in your business that is holding you back!
Another essential category is industry spends across various departments such as Marketing, IT costs, staff re-reimbursement – you need to know whether you’re spending above or below the average. This will help you understand where you’re allocating funds and what effect it could be having on your operations. It could also be some vital areas that your business could have overlooked, where you’re falling behind other industry competitors.
If you can understand the general direction that other players are moving in, you can highlight any strategic opportunities you may be missing out on. Do you think the client retention or service strategy for your industry stand up to yours? If yes then extend those services, if no then you need to figure out some other strategies that you could put in place. Do you think there are important strategic differences, why is that? Or have you simply overlooked some important avenues that could lead to you losing out strategically? You will need experienced and qualified Accountants who can analyse the different strategies and offer you the best suitable advice according to your business conditions.
This is the area where you’ll definitely find some interesting facts. Customers have ample of choices in the industry; it all comes down to the level of customer service and support you and your competitors are offering at the moment. When benchmarking customer service levels, you should be looking at information in industry wide customer satisfaction or experience, and the customer support options and strategies your competitors are employing. How does that compare with your own business?
You don’t need to be on the cutting edge of technology, but you surely do need to be keeping up with both industry and consumer trends. The real purpose of almost all the technology you’ll use in your business is either customer service or communication, and those are two areas where you can’t really afford to be lacking. If you can find data around what technology is being used, from hardware to software to websites, you will be able to match it to your existing systems and determine where your technical resources are lacking – or, if you’ve been leading. The information here can guide your future technology decisions or show you areas and processes that needs to be improved.
Benchmarking the businesses is a tool ATO is actively using to audit businesses. Any businesses that vary considerably from industry benchmarks are being consistently red flagged by the ATO.
Call our expert accountants Cranbourne at 1300 300 106 to discuss your business plans and Benchmark your business!!