Have you ever wondered how your business is performing compared to your competitors? Benchmarking is a way of assessing your business' performance by comparison with your industry peers. For example:
- Are you spending too much on advertising?
- Are you paying too much rent?
- Are your staff costs too high?
- How does your profitability compare?
Survival in today's business climate requires you to spend more time working ON your business rather than working IN the business. It's also important to know what is working in your business and what areas need working on. This is where industry benchmarks can help you.
What is Benchmarking?
Most businesses compare financial results with budgets and historical performance - usually last month or last year's results. All these comparisons are internal but benchmarking compares your performance with others in your industry or related industries. You can measure your business against the best, average and poorer performers. Benchmarking also allows you to assess where other businesses are doing things differently which may help you to improve your own business practices and results. You can generate comparative reports and graphs that highlight the differences and we can spend time with you making sure you understand your industry averages and analysis.
You can generally benchmark your business against a variety of characteristics including:
- sales and turnover
- pricing structures and fees
- number of customers
- staff turnover
- key performance indicators such as Gross Profit, Wages to Turnover and Net Profit
Benchmarking is of limited value unless you use the results to improve your business and having identified the weaknesses in your business, the next step is to make changes to strengthen those areas.
Here at Scotts Chartered Accountants we primarily work with ambitious business owners who are generally part of a family group. They recognise the importance of marketing and are willing to invest in their business. They are prepared to work hard but they also want to work smarter.
If you're a committed and ambitious business owner we invite you to book a FREE, one hour introductory consultation to discuss your business needs. You can expect practical business, tax, marketing and financial advice designed to help you accelerate your business success. To book a time, contact us today on (03) 5224 1133 or complete your details in the box at the top of this page. Let's get to work ON your business so it is more profitable, valuable and saleable.