Ten reasons to benchmark your business
More and more businesses are discovering the benefits of benchmarking and of developing a plan of best practice. Is it something that your business could consider?
What is benchmarking?
In a nutshell, benchmarking involves measuring the performance of one's business against that of others in similar markets. It has been described as "the practice of being humble enough to admit that someone else is better at something, and wise enough to try and learn how to match and even surpass them at it."
A good benchmarking review will allow you to determine how well each aspect of your business is faring, discover areas where you need to improve, and develop a plan for achieving those improvements. Before you can decide where you are going, you need to know where you are now - and benchmarking can help you do this.
The Government-funded Small Business Service cites ten key reasons for implementing a benchmarking process for small businesses:
- Improving productivity: businesses following action plans can expect productivity gains of up to 40% with a 10% increase relatively easy to achieve
- Beating the competition: learning about adaptability and change is a benchmarking essential
- Addressing growth issues: learn how to develop the right products and services at the correct pace
- Customised to fit all: businesses of all sizes can benefit from the generic principles of benchmarking
- An holistic approach: it is both qualitative and quantitative, ensuring more accuracy in developing a whole picture of your business.
- Opens minds to new opportunities: whilst the results can make uncomfortable reading, the process usually raises new challenges for businesses
- High quality of data: it allows direct statistical comparisons to be made with competitors
- Helps businesses attract funding: in some areas of the UK, it has been used as part of the bidding process for grant aid
- Leads directly to an action plan: Rather than simply highlight problem areas, it undertakes a strong review of turnover and profitability
- Maintain client relationships: by being an ongoing process, benchmarking keeps clients in contact with advisers over the longer term.