Use benchmarking to improve your business
Benchmarking shows you whether your performance is stronger or weaker than your competitors. It will give you a clear picture of where improvements are needed and how to increase profits.
You may discover that:
- you are spending too much on rent and need to consider negotiating lower rental rates
- your inventory costs are higher than your competitors, so you may need to reduce waste or negotiate better rates from your suppliers
- your income per employee is lower than the industry average, meaning you may need to examine productivity and training.
When benchmarking, you should analyse in detail how your business compares to others. Once you understand where you can make improvements, you are ready to develop a plan to put changes in place.
Remember to keep your employees and customers informed as you make changes to your business. If any problems arise, act on them immediately. Learn more about managing people through change.
Benchmarking is a process of continual improvement. Once you have implemented changes, you should benchmark your business again to see the results. This will tell you what is working, and where you can still improve.
- Think creatively about ways to improve your business
- Ask staff for their input
- Study other, similar, businesses and how their processes work
- Implement changes based on observations and research
- Evaluate the results of the changes you have implemented
- Review whether you have the business skills to improve your business
Benchmarking before you buy
If you are considering buying a business, benchmarking is an essential resource. Benchmarking can help you to measure the past performance of a business to see how it performed against industry averages. The information you gain from benchmarking makes it easier for you to decide if:
- the business is a good buy
- the purchase price is reasonable.
Find out more about buying a business.