Business Benchmarking is the process of analysing industry data to determine what the general trends are for the industry in which you operate. These benchmarks provide a picture of the industry as a whole for the area in which data is collected. Business Benchmarks often provide data for a range of different business levels so that you can compare your results with similar sized businesses.
Business Benchmarking is useful in determining where there is scope for your business to improve results. If you compare your financial data to the industry data, you will be able to see exactly which income streams can be adjusted or which cost items are higher than expected.
Using benchmark information is useful in creating budgets for the business as you know the revenue that your business is capable of making and so you can create budgets to monitor business performance against. Additionally, this budget information might not be for an existing business, but for a scenario analysis to determine expansion plans into a new area of business or purchasing another business.
Comparing your data on a monthly basis to the industry benchmarks as well as to the internal business budgets will be the most useful use of the benchmarks. This will allow the business to constantly identify opportunities for improvement.
As benchmark data is always shifting, it is important to keep updated with any changes that are made to the business benchmarking data.
If you require any assistance with analysing your business against benchmarks, please make contact with us.