There are several ways to find data that you can use to benchmark your business.
Speak to your business or industry association
Contact your relevant business or industry association and ask them to provide any information they have about performance standards (or benchmarks) for your industry. Many associations have detailed information that you can use to measure your business's performance against the standards set by your industry.
The Australian Tax Office (ATO) small business benchmarks are a guide to help you compare your business's performance against similar businesses in the same industry.
Use a commercial benchmarking business
Commercial benchmarking businesses can give you data for a fee. Always do your research to make sure that:
- the data you receive is accurate and up to date
- any data you provide is confidential and not linked to your business
- you are receiving value for money.
You could also seek advice from your business networks to find a benchmarking company that will suit your needs.
Do your own benchmarking
If you have the expertise, and the time, you could do your own benchmarking. You will need to set aside time to find access to the data you need, as well as extensive time to research and record your results.
To make this process easier, you could also use a combination of data from a commercial benchmarking company and your own research.
For example, you could examine the ways that you control your stock and compare this to the performance of similar businesses.
Use benchmarking to improve your business
Benchmarking shows you whether your performance is stronger or weaker than your competitors. It will give you a clear picture of where improvements are needed and how to increase profits.
For example, financial benchmarking data will help you to see how much you earn and how much you spend on advertising, rent, staff, training and other expenses compared to your competitors.
You may discover that:
- you are spending too much on rent and need to consider negotiating lower rental rates
- your inventory costs are higher than your competitors, so you may need to reduce waste or negotiate better rates from your suppliers
- your income per employee is lower than the industry average, meaning you may need to examine productivity and training.
When benchmarking, you should analyse in detail how your business compares to others. Once you understand where you can make improvements, you are ready to develop a plan to put changes in place.
Remember to keep your employees and customers informed as you make changes to your business. If any problems arise, act on them immediately. Learn more about managing people through change.
Benchmarking is a process of continual improvement. Once you have implemented changes, you should benchmark your business again to see the results. This will tell you what is working, and where you can still improve.
- Think creatively about ways to improve your business
- Ask staff for their input
- Study other, similar, businesses and how their processes work
- Implement changes based on observations and research
- Evaluate the results of the changes you have implemented
- Review whether you have the business skills to improve your business
Benchmarking before you buy
If you are considering buying a business, benchmarking is an essential resource. Benchmarking can help you to measure the past performance of a business to see how it performed against industry averages. The information you gain from benchmarking makes it easier for you to decide if:
- the business is a good buy
- the purchase price is reasonable.
© The State of Queensland 2017
The content was first published on www.business.qld.gov.au