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Business Benchmarking: What is it and why you should doing it

Your business is finally up and running!

There are lots of questions that you can ask yourself to be able to gauge how well your business is performing and how to make it even better.

How are you doing compared to other similar businesses? Are you on the right track? Do other companies use methods that could benefit your company by increasing productivity and growth?

Don’t get overwhelmed: there is a way to help answer all these questions and provide you with straight forward tools to help measure your progress.

Benchmarking is a great tool to use. It lets you evaluate the efficacy of your business processes compared to similar businesses as well as measuring your business’ performance on specific key indicators.

Benchmarking can help accelerate the growth of your company and can help you find meaningful data when identifying and analysing your competitor’s successful approaches.

From there its easy, implement these methods and procedures within your own organisation.

You can set yourself up for success by using your competitors tried and tested models by observing what has worked for their organisation.

 

Benchmarking basics

Benchmarking involves observation, there’s no way around it. By focusing on the processes used by other companies – what worked for them, and what didn’t – you can use their findings without spending loads of time and money testing new procedures yourself. Not only can you recognize WHAT worked, but you can also see HOW to use it, saving yourself even more time and money

The 4 steps of benchmarking:

1. Have a clear understanding of your business processes first

2. Observe and analyse the competitor’s business processes in a very detailed manner

3. Review your business practices and compare those to the other company’s

4. After identifying the successful processes you’ve observed from the competition, apply these processes to your own company

Benchmarking isn’t a one-off process. Your research needs to be constant and adapt to the needs of your business as it evolves and grows

Just as you may have a regular review schedule of other processes or functions within your organisation, benchmarking also requires a regular review. To stay current on what is happening with the competition and in the marketplace, add this regular review to your business practices. Markets are constantly changing and it’s important to always be aware of the changes in order to stay current and competitive.

5 Reasons to benchmark


1. Benchmarking keeps you on top of your game. By observing the top players, identify which of their practices are the most (and the least) beneficial to their businesses so you can implement these practices into your own business.

2. Look closely at your own business processes and identify their respective strengths and weaknesses. By using the benchmarking process effectively, you can avoid repeatedly making business mistakes that would otherwise have gone undetected.

3. Benchmarking dictates an objective approach to analysing your business performance and looking for ways to improve it. We understand that your business is your baby, but benchmarking forces you to walk away from emotional biases that often cloud your decision making skills as a small business owner.

4. Monitor how productive your employees really are. A thorough review will show you which processes or practices need to be addressed and which ones are already successful. It also means that you can set reasonable expectations for your staff. If you set unattainable goals, your employees may become burnt-out, resentful and their productivity may actually decrease as a result. Knowing how your staff productivity stacks up against your competition will help you identify your productivity gaps and show you where you can make improvements.

5. Benchmarking is also vital in comparing different facets of your financial performance. Your business’s outgoing costs can include payroll, office supply expenditure, ongoing utility bills and more. By comparing your company’s outgoing costs vs. industry averages, you can identify which gaps need to be prioritized and rectified.

Observe and learn from what your competition is doing and apply their best practices within your own business. You can use this knowledge to your advantage, without having to endure financial setbacks that your competitors may have copped during processes of trial and error. As you may have gathered, you don’t need to be afraid if you are setting up a business in an established market – this can be used to your advantage.

In addition to focusing on benchmarking, it’s a great idea to identify and maintain suitable business insurance for your company. You don’t want to implement efficient processes that improve your revenue, only to be hit hard financially with a costly claim. BizCover in New Zealand has access to a network of insurance companies and can quickly compare many policy options tailored for your business’ needs.

Visit bizcover.co.nz to compare business insurance quotes and have policies emailed to your inbox immediately.

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