Using Financial Benchmarking for your business

Benchmarking is the process of comparing the business processes and performance metrics including cost, cycle time, productivity, or quality to another that is widely considered to be an industry standard benchmark or best practice. Essentially, benchmarking provides a snapshot of the performance of your business and helps you understand where you are in relation to a particular standard. The result is often a business case and "Burning Platform" for making changes to make improvements. The term benchmarking was first used by cobblers to measure people's feet for shoes. They would place someone's foot on a "bench" and mark it out to make the pattern for the shoes. Benchmarking is most used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others.

Also referred to as "best practice benchmarking" or "process benchmarking", it is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices.

A key element to growing your business is to keep a watchful eye over your industry...and to know the benchmark data to keep you profitable and competitive.

    * What are your industry’s financial metrics, such as gross profit margins and return on assets?
    * What are growth metrics such as profit and sales growth?
    * What about income and balance sheet data…why does that matter?
    * What strategies do you need to put in place to guard against competitive inroads and help secure a profitable, leadership position? Industry research is especially imperative during economic uncertainty.

 Staying informed with updated financial benchmarks and industry profile statistics help to eliminate guess-work and helps optimize your business performance and drive your success.