Benchmarking is a useful tool to measure a business by comparing to a set of standard performance measures. Benchmarking can assist in:
- Indicating where improvements can be made
- Analysing how high performance levels can be achieved in the benchmark standard
- Using the gained information to implement strategies for improvement
Benchmark measures include what you would consider to be the standard performance and status for your business. You can use this information to set targets and goals.
There are two key ways you can benchmark:
Internal benchmarking involves establishing standards based on how your business has performed in the past. For example comparison of turnover for the month of January 2017 to turnover achieved for the month of January 2018.
External benchmarking is comparing your business against other businesses. This can include similar businesses, direct competitors and industry-wide. Take for example a fast food franchise. This business may choose to benchmark against another location’s store, a fast food outlet in the same region or standards for the fast food industry.
Using the benchmarking measures, under performance can be identified. Based on these areas identified you can then review instances where high performing standards have been achieved, what those businesses doing to produce better outcomes, and how can this be applied to your business.
Benchmarking can also be used to identify your business’ strengths. This shows you what you are doing well and what strategies are working. With this information you can then identify the factors and ensure you continue to perform at a high level and ahead of benchmark standards.
Don’t know where to start with benchmarking? myCEO can assist you in identifying key performance indicators and critical benchmarks within your business. We then work with you to develop reporting tools and periodically compare your business to both internal and external benchmarks.