Benchmarking is a method used to discover areas of your company that may be improved. Often, by comparing your own business with competitors, you can see where improvements to your performance can be made. You can also use benchmarking to compare the business when it first started to its current position, to see how you have improved and grown over the years. Benchmarking can also be used within a company, perhaps to measure levels of sickness absence between departments.
What are your key business drivers?
Decide what your main business drivers are. This may be the productivity levels if output is the main activity, or client care if you provide a service. The key business drivers will vary depending on the type of firm you have and the sector.
Who will you benchmark against?
You should pick a competitor that is around the same size and has similar business objectives. You could also look at other companies to focus on a particular driver. For instance, if customer care is your priority, locate a company that excels in this area and see how it achieves its success. You could also benchmark within the company, comparing various departments and look at how they differ.
Processes
How efficient are your current processes? Can they be improved? Consider another company or department that has efficient processes in place and see what it is doing differently. Think about implementing a new process, or making changes.
Measuring your financial performance
The success of your business can depend on the implementation of a solid management and financial system. If this is an area in which you have little expertise, consider management accountants to help you manage and plan for future growth. When you review your business finances, consider cash flow and a forecast of income and expenditure. Costs should also be reviewed on a regular basis so that you are sure they are covered in the price.
How to use benchmarking data
Once you have secured data for benchmarking, either from an external source or from your own company, use this information to improve processes. Set a number of targets and work towards them, possibly using the continuous improvement process. You could focus on setting SMART targets, which are Specific, Measurable, Achievable, Realistic and Time-bound.
If you have any questions at all about benchmarking or would like some advice, please contact us today.