Benchmarking your results

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Benchmarking your results

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Benchmarking your results

What is benchmarking?

“Benchmarking” and “best practice” are popular terms today. These concepts involve comparing similar products or processes and using the results of the best performers.

Financial performance comparisons are one example of benchmarking.

Financial performance comparisons allow business owners and principals of professional firms to pool confidential information. Each firm can then compare its performance with similar sized businesses and the top profit earners.

Businesses can then evaluate their:

Overall profitability and efficiency;
Performance productivity of staff;
Control of cost;
Use of equipment and other assets;
Salary structure; and so on, against the benchmarks being achieved by the rest of their industry

Other criteria can be easily incorporated, for example:

State location;
Regional location (city centre, suburban, regional, rural);
Business situation (shopping centre, main street, etc);
Rate of growth in turnover; and
Type of business

Benchmarking is a way of analysing your firms’ performance in comparison with other firms within the same industry and, in doing so; identify ways in which it can be improved and pinpoint opportunities for growth.

It is an exercise in “Working on your business, not working in your business”.

You can choose to measure and compare your business with similar businesses that may either be in the same industry or you may choose to make comparisons with a broader range of industry sectors, as most business processes are shared across many industry sectors. For example, take Human Resources (HR) – there are shared HR processes in virtually all firms for appointing and developing staff. Therefore, effective business benchmarking can be undertaken within your own industry as well as across other industry segments with comparable business processes.

What are the benefits of benchmarking your firm?

The potential benefits offered by benchmarking your firm may include but is not limited to the following:
You can evaluate the results of your SWOT (strengths, weaknesses, opportunities, threats) analysis in terms of your business performance;
You can incorporate best practice in many different targeted key performance areas; and
You can identify ways to improve financial performance and profitability, operational performance and service delivery, which consequently results in increased client satisfaction and loyalty.

Ongoing benchmarking practices and the adoption of ‘best practice’ methods will keep your firm as competitive and profitable as possible.

Disclaimer: This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in this newsletter is for guidance only and should not be relied upon without obtaining professional advice having regard to your specific circumstances.
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