It’s Aintree week and we’re all getting excited. But, whether it’s the Grand National or running a business, it’s important to be a winner.
But how do you know whether your business is winning? It’s vital to know whether your sales are on budget, or whether you’re making enough profit. But is that enough?
Where are you in the race with your competitors?
Do you know how you compare to your competitors? If not, how do you know whether that profit is good, or actually well below what you should be making? If you’re making a 50% gross profit, you might be really pleased. But if all of your competitors are making 60%, it suddenly doesn’t look so good.
Would you like to know how you do compare? And how you can learn from the competition to improve your business performance? If so, the best thing to do is benchmark your business.
What is benchmarking?
Benchmarking uses your figures to compare your business to other businesses in your industry and region. This is all done confidentially, but it’s possible to compare to a wide range (eg construction companies) or be really specific (eg construction of arts and leisure facilities).
Benchmarking then allows you to compare key figures, eg gross profit or debtor days (ie how quickly you collect debts). These figures can be compared to the average, but also to the top companies so you can see what is possible in your industry.
The results can sometimes be surprising – for example, you may think that nobody in your industry will pay invoices quicker than 60 days, but you may then find out that some companies are collecting debts in only 30 days.
What are the benefits of benchmarking?
It’s really beneficial to see how you compare to your competitors. If somebody else has a higher profit margin than you, there’s no reason why you shouldn’t be able to increase yours.
By focusing on the top businesses, you can learn from them and emulate them. Or beat them!
And if you are one of the top business, you can give yourself a quick pat on the back….and then look for ways to improve even more. After all, it’s great to be winning, but you need to keep it up. You don’t want to be a Devon Loch!
But my business is different!
You might initially think it’s not worth comparing your business to others because “my business is different”. But that argument completely misses the point. The reason it’s worth comparing is precisely because your business is different.
After all, one business gets better results than another because it has different products, different prices, different customers, different suppliers, different productivity, different marketing or something else that makes it different and therefore better.
And you should use benchmarking to learn from this.
Free benchmarking report
So, are you keen to find out how you compare?
By comparing you to businesses in your sector that do things differently you can see whether your results could be better if you did things differently too. And learning what’s possible from others in your sector, makes it easier for you to work out what you should do to improve your business and your results.
We can help you do this by providing a benchmarking review that compares 19 key figures with your competitors. As a taster, we will happily meet with you and provide a free one-page summary of these 19 figures, with an action plan so you can start to improve your business.
Just get in touch with us on the contact details below and you can start to move up the field and win the race.
If you would like to arrange a free meeting with a Liverpool accountant to discuss benchmarking, either at our office or at your premises, please contact us on 0151 724 3960 or by email at [email protected].
Alternatively, you can use our website contact form.
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Added by Jon Davies