Entrepreneur, and author Dr Tom McKaskill has established a reputation as one of the world’s leading authorities on exit strategies for high-growth enterprises.
This month he talks performance.
When we’re deep in the business and working hard to stay on top of daily issues, we often forget that we are not that unique.
But the question we should be asking is how we’re performing compared to our competitors. When we tap into data regarding similar firms we can discover insights about our own business, such as, what do we do well and where are we falling behind. If we can find out where improvements can be readily made, we can make a difference to our business survival and profitability.
This is where benchmarking really can make a difference between a business running at a profit and one making a loss. Often we are so close to the trees that we are not able to step back and see where we need to put our efforts.
Benchmarking helps by allowing us the opportunity to compare our performance over a wide range of business metrics with other firms just like ourselves. If we could match up our business with tens if not hundreds of similar businesses, we would learn a lot about our business. What we do well will stand out as the data will show us that our performance is above average, but to improve, we need to focus on what we are not doing well.
There are lots of benchmarking programs – just do a Google search and you will find them. Start by asking your industry association for some contacts and then check out local, state and federal programs. Some universities run programs for specific industries. There are quite a few commercial ones but they are more expensive to join.
Don’t limit yourself to local ones, firms in the same sector look very similar around the world. While the revenue numbers might be in a different currency, many of the business metrics will be the same. To take part, all you need to do is measure what you do and then compare it to others in your sector.
Even without joining a formal program you can do a lot informally. Many business owners benefit from peer to peer conversations. You can gain real insights into common business problems just by sharing information with people in the same position as yourself.
Even competitors will share information if it is of a general nature or something which, as an industry, you are all grappling with. Try to find business owners in similar firms in other regions who are willing to meet periodically to share information. Similar businesses face the same problems.
What we need to do is to have a conversation with like-minded people. Sharing is essential if we are to learn from others.
But to do it properly, you need to be armed with your own performance data, so begin the journey by ensuring you are measuring your activity levels. The next step is to use that information to compare yourself to others in your sector. You will be surprised how rewarding such conversations can be.
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