The Lazy Franchise Owner’s Way To Profitability
Benchmarking (as defined by Wikipedia), is “the process of comparing one’s business processes and performance metrics to industry best practices.” Today, I want to emphasize the importance of establishing key performance indicators (“KPI’s”) for your organization and measuring and monitoring them on a continuous basis.
These metrics should be flashing in front of you on a daily basis -on a dashboard or something similar.
Benchmarking takes this process one step further in the fact that you are comparing your organization’s performance to that of your peers. Measuring for the sake of measuring is pointless.
In other words, the metrics are useless if you have no baseline for interpreting what they mean and more importantly where the numbers should be landing.
Regardless of the industry or niche your organization serves, there are mountains of data out there that will assist you in facilitating the benchmarking process.
Nevertheless, make sure the data you are compiling comes from a reliable source such as an industry or trade association. Good sources will allow you to view and compare data according to your regional location as well as overall size (revenue, assets, etc.).
No two companies are exactly alike, and each has its own business models and competitive advantages that allow them to separate themselves from competitors.
Nevertheless, benchmarking provides a high-level (think 30,000 foot overview) of reflecting on your organization’s performance. I would advise however that you do not make the fatal mistake of being satisfied with being “in-line” with a benchmark.
Keep in mind that most benchmarks are averages, and that the best of the best will not only meet but exceed these standards while the worst of the lot will far way short of those measures.
Are you using benchmarking within your organization? If so, are you performing at, below, or above the standards for your industry? What steps are you taking to maintain or improve on past performance? Benchmarking should be a part of your strategic planning process if it is not already.
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