Better than average

When we compare one business against another it’s often done with a specific question in mind. The average Net Profit. Percentage of staff turnover. Number of hours worked by the Principal Owner. Data and facts are readily available in various forms or another for small to medium sized businesses. There are major suppliers such as the ATO’s Small Business Benchmark online app(1) and the more commonly used Benchmarking Data and Research(2). Using data for comparative reasons can support an already formulated points of view (looking for a supporting statistic), therefore rendering the whole benchmarking process redundant. It’s when a Business Leader is open to look at the numbers they may not like seeing that it’s worth the time and effort.

It’ll only make you stronger

It’s true that when asking for feedback the first response is often to express an opinion back to that person(3). Instead of thanking them for their feedback and leaving it at that, the knee-jerk reaction that so many of people do is to judge the advice. People know that not everything that is given in feedback will be acted on, but we still feel compelled to either block out good feedback or pick at the bits that we like the sound of.

Benchmarking is the same as asking for feedback. It’s a pool of information that other people have discovered and collated in a data set ready to be shared. Cherry-picking the areas to learn about (only listening to part of the feedback) may mean that the “tether” or pain point of a business is overlooked. Remember when receiving a benchmark report that it’s another form of feedback, so take the good, the bad and the ugly. Evaluate the whole picture opening up the data tunnel vision(4). The business may be below the industry benchmark across the board. The good news in is at least the business knows where it stands and it can now make clear decisions on the basis of that information. Benchmark results will not only make a business stronger it provides valuable information which could divert the business away from potential pitfalls.

Stay the best or pitch for better

Taking the Australian Benchmarking Data and Research sample report(5) as an example, it’s easy to see that a host of information on the competition versus the business can be overwhelming. There is a plethora of statistics: turnover figures, the percentage of that divvied out on rent, occupancy rates, vehicle operating costs, the average practice of chargeable hours of labour, the number of days monies are owed on debtors reports, the number of projects which are yet to be completed.

When reviewing an industry benchmark report it’s advisable to begin formulating a strategy for each of the major areas where the business is underperforming. It turns out that more funds are required in marketing campaigns because competitors are currently more active. Or perhaps it’s time to hold a regular debtors meeting every 30/60/90 days to increase the flow of cash. There may be staff members requesting fair pay and the business may be required to place staff on enterprise bargaining contracts to ensure hourly rates are standardised and on par with current pay rates.

Some of the decisions may be difficult to make after reading through an industry benchmark. For example the unpleasant task of reducing the labour force in one area, for example administration, and boosting it in another area of profitability such as recruiting more sales/account service staff. The business may have exceeded the average operating costs which is draining on overall profitability. One strategy may be to call on the internal leadership team to provide all the relevant details to make better decisions on how the business can run leaner.

Reliable data is non-judgemental and an excellent tool to guide a Business Leader into identifying problems and points of weaknesses. It also can identify when a business is hitting it out of the ball park and exceeding positively (low overheads, now turnover of staff, short debtors etc).

Without a comprehensive gauge on the industry’s landscape Business Leader’s are left with disparate anecdotal information and hunches to make their decisions. Finding ways to improve, grow and steer a business using benchmarking was never meant to be easy, smooth or even fun. It’s a necessary, productive Leadership tool.






(3) Goldsmith M. (2007) What Got You Here Won’t Get You There. Hyperion. New York, America. (pp 117-118).



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