You probably know how to measure your business’s performance “against itself” – for example by conducting budgeting and variance analysis, using key performance indicators, or even comparing your revenue and expenditure this month to the previous month, or this year to the previous financial year.
But do you know how to measure your business’s performance against your competitors, and other businesses in your industry?
The answer is business benchmarking.
What Is Business Benchmarking?
Business benchmarking involves comparing your business’s performance against data about comparable businesses in your industry. This data includes figures for best practice and average performance.
Benchmarking isn’t just about your more obvious financial numbers. In addition to covering areas such as revenue, profit, expenses, and key performance indicators, benchmarking data can also compare your business’s performance in areas such as customer service, process management, staff productivity, and more.
It provides you with the information you need to discover how your business is really performing.
Benchmarking Benefits: Transform Your Business
Your business benchmarking report is individually tailored to your business and its numbers. It doesn’t simply provide you with generalist information – it provides you with real, actionable data that specifically applies to your business, so you have the information you need to transform it. Your report outlines how your business is performing, identifies areas for improvement, and provides suggestions on actions you can take to improve these problem areas.
The benefits of benchmarking fall into three main categories.
Understand Your Business
Business benchmarking highlights your business’s strengths and weaknesses. It compares your performance to industry benchmarks, and provides an indication of the level of improvement you should be aiming to achieve in under performing areas if you wish to reach – or exceed – industry averages.
For example, your benchmarking report may suggest that your profit per client is below industry averages. However, it will also give you an idea of what your profit per client should be, so you know how much improvement is required. This helps you to formulate realistic goals and targets for your business.
On an even more positive note, business benchmarking highlights those areas in your business that are performing as they should, and those that perform above industry averages. This provides reassurance that the hard work you put into your business is paying off.
Improve Your Business
Your business benchmarking report won’t just show you what needs improvement – it will also help identify how you can make those improvements.
Your report provides suggested strategies for addressing certain problems. For example, if it suggests you need to pay less interest on your business loans, it may also put forward strategies such as negotiating a lower rate with your bank, or seeking alternative loan products with more competitive interest rates and conditions.
Sell Your Business
Benchmarking also has the power to make your business more saleable. If your benchmarking data shows that your business performs at or above average, or that it has consistently improved its performance over time, your business will be attractive to potential buyers, who will be more likely to pay a higher price than you might otherwise receive. So if you’re planning on exiting your business now, or even in the future, benchmarking is a great investment to make.
Information is power – and in the case of benchmarking, the information in your report will provide you with the power to transform your business.
If you would like to enjoy the many benefits of business benchmarking, EzyAccounts can help. Call us today on 1300 313 397 to arrange your business benchmarking report. We’re also happy to answer any specific questions you may have about benchmarking.
What’s In A Report?
Your business benchmarking report compares your business to other business in your industry in Australia. It includes the following sections:
• Basic industry statistics – for example, the number of people employed in your industry nationwide, their ages, and other general information
• Revenue statistics – compares your business’s income against the average for all industry members, and against more specific groupings arranged according to profit or revenue
• Expenses statistics – compares your expenses to other businesses’ expenses, which are shown as a percentage of revenue
• KPI feedback – compares your business’s ratios, such as gross profit per person or total overheads, to other businesses’ ratios
• Action list – suggests strategies for improving under performing areas in your business, such as recording time or improving staff productivity in order to increase profits
• Definitions – defines the terms used in the report for ease of understanding
• Statistical breakdowns – provides more detailed breakdowns of industry statistics, with businesses grouped according to turnover
Business Benchmarking Data & Reports
At EzyAccounts, we have access to Australian benchmarking data for a range of industries and business types, including hospitality businesses (restaurants, cafes, motels, etc.), retail businesses (bakeries, butchers shops, gift shops, etc.), trade businesses (plumbers, plasterers, electricians, etc.), plus many, many more.
To discover whether we have statistics for your industry and business type, call us today on 1300 313 397.