The best way to measure how you are performing compared to others in your sector, is benchmarking.
At its simplest, benchmarking helps you compare statistics and control costs. By comparing your business activities to others in your field, it helps question key decisions, identifies opportunities for improvement and can give you the motivation to implement change. More sophisticated benchmarking can give you an insight into your strengths and weaknesses as a business, vital in the current economic climate.
Benchmarking will help you compare key ratios such as gross margins, gearing, return on investment, and this is just the beginning. Our benchmarking report will not only show you key performance indicators but also the potential the business has to increase profits if you can match the performance of the top 25% of businesses in your sector. This is based on real data, from real businesses, which means that the opportunity is certainly there.
There are also cash-flow benefits to be derived from benchmarking. For example, if you currently collect your debtors in an average of 45 days, but the top 25% of businesses in your sector collect theirs in 30, there is an opportunity for you to collect cash in quicker and therefore improve your bank balance.
Benchmarking isn’t for everyone though. If you’re in a very niche sector, then you may find that there is not sufficient data available to create a meaningful report. We can, however, look at alternative ways to measure your performance – we like a challenge!
Here at Sibbalds, we are one of only a small number of accountants in the East Midlands who are able to offer an in-depth ‘Bench Marking Report’ which covers sales growth, profitability and cash management. We usually charge £395 plus VAT for producing this report, but as a gesture of goodwill to our avid blog readers (you), we are offering a complimentary ‘Bench Marking Report’ for your business. If this sounds of interest please feel free to contact us at firstname.lastname@example.org quoting ‘Free Benchmarking’ in the subject field. We look forward to hearing from you.
Image adapted from an illustration by: Bernhardt Soccer