Benchmarking; Why it’s Important to Understand Where Your Business Stands
In the ever-evolving business landscape, small and medium-sized enterprises (SMEs) face a unique set of challenges. Limited resources and changing market landscape makes the race to remain relevant daunting. So, how do business owners navigate these challenges and understand where they truly stand? One answer lies in benchmarking.
What is Benchmarking?
In simple terms, benchmarking is the act of measuring a business’s processes and metrics against your past self and peers in the industry. For business owners, this isn’t just about numbers; it’s about understanding their position in a broader context and using this knowledge to drive growth and innovation.
Why Benchmarking matters to SME business owners?
- Guided Decision Making: For business owners, every decision can have significant repercussions. Benchmarking provides robust data, ensuring decisions are strategic and not just based on gut feelings. You can develop strategies to improve your position against your competitors.
- Understanding your current position and uncovering Improvement Areas: Benchmarking can shine a light on your business’s current state compared to the past and compared to your peers. It can help identify areas needing attention. By looking at how you stack up to the leaders in your industry, business owners can identify gaps and work towards bridging them. Remember, benchmarking is not about copying what others are doing. Its about learning from them and adapting those insights to your own unique business situation. It is a strategic and structured approach to improvement.
- Achievable goal setting: Once these gaps and plans to bridge gaps are identified, its important to create goals around these findings. This ensures there is a focus on continuous improvement. These goals will be realistic given they will be based on industry averages and what your peers are already achieving. Working on goals that are achievable are a better use of resources and helps ensure the focus is in the right place.
- Performance Measurement: Benchmarking provides a means to measure your performance objectively against the industry standards. This can be beneficial when communicating with stakeholders such as employees, investors or board members. The tangible metrics that you share may resonate better with your stakeholders and those that are not as involved with the business decisions.
At Ausure we provide relevant benchmarking data to our Authorised Representatives. This project has been valued by our partners. The feedback we have received on our benchmarking project includes “benchmarking will help me do by reviews and set budgets for staff”, “this is the kind of information I need to help me work ON the business instead of IN the business” and “I’m going to be discussing the gaps highlighted by the benchmarking data in our next team meeting.” – Ellie Laidlaw, Ausure’s Chief Financial Officer