Benchmarking is a method that enables you to compare your business to your competitors. Through appropriate benchmarking, you can point out the areas where your organization requires improvement. It is more than a mere competitive exercise. It is the most reliable way of ameliorating the business performance and rectifying the mistakes. Australian Tax Office has introduced a small business benchmark guide for the small enterprises. It can help a business to draft an effective plan for benchmarking their business. However, appointing specialists to benchmark your business is a wise decision. This article has outlined nine irrefutable benchmarking tips that can help you ensure your success.
- Find out Key Business Driver
Which are the forces that drive your business? It is imperative to find out these business drivers. These drivers are nothing but processes that determine the success of your business, and they keep varying from one sector to another. For instance, if you provide a service, customer care is your business driver. If you provide any product, high-volume manufacturing and production-line-speed is more likely to be the key drivers of your business. When you know what your key driver is, benchmarking becomes easier. You can easily compare the key driver with your peers.
- Determine who to Benchmark Against
You’ve decided to conduct benchmarking; well, your decision should be applauded. But, do you know who benchmark against? No? Then, how can you expect your benchmarking to be successful? You must determine with whom you should compare your business. You can consult with your business network or trade associations to help you choose the organization. You should select firms similar to your organization in respect of size, services or offerings, and business functions. Your processes should be in the same line with the chosen organization. For instance, when you involve benchmark experts for cost reduction in logistics management, your logistics management should be similar to the logistics management of the chosen firm.
- Compare Strategic Objectives
A comparative analysis of strategic objectives helps you learn the strategies that have increased the efficiency of your benchmark collaborates (your chosen organization). Do they focus more on the quality standards? Are the generating online sale funnels? Look at their overall strategic objective and bring it to your business if you find them worth consideration.
- Review the Existing Processes
How good your existing processes are regarding efficiency? You need to look at the mechanics of your business, the manufacturing methods, quality controls, inventory management, etc. It is important to determine how far these processes are effective. Before jumping over the benchmarking, you should review your existing processes.
- Examine the Resource Allocation
If you want to achieve your business goals, you need to put your resources into the right areas. Look at your chose organization. Where are they putting their resources? Is it paying them back? If yes, then you should follow their path and put your resources in the same areas where they have put their resources. You should always remember that the right allocation of resources plays a vital role in securing the success of a business.
- Cut down Cost Against Industry Norms
Most of the businesses want to attempt at benchmarking for reducing their expenses. If you are going to benchmark your business for cost reduction, you should cut down the cost against the industry norms. These norms may include utility bills, wages, and developmental costs. You need to highlight the areas where your cost is comparatively higher than the average. It will help you make sound savings.
- Look at the Ratio between Sales and Employees
It is important to analyze the sales regarding the employees. Look at the ratio between sales and employees. It will help you measure the efficiency of your sales force. If you find your sales down, you should find out the reasons. Sometimes, the problem is inherent in the products you are offering. Even pitching in the wrong market can decrease the sales.
- Work on Profit Margin
When you look at your profit margin, you will be able to determine the efficiency of your production processes. Moreover, you should compare this with your net profit margin. A comparative analysis between your profit margin and that other business will tell you where you are standing right now and where you need to go.
- Assess your Customer Service Standards
Customer service is the most effective weapon for every business. Are your customers coming back to your business repeatedly? Then, it’s a good sign for your business. If customers are not coming back to you, you should look at your partners. If you find their customers are coming back to them, you may learn what customer service standards they have applied to ensure the coming back.