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Like any competitive pastime, we determine how well we are doing, by watching at others. This is a reliable way to develop yourself and your business

If you are a sprinter and run alone, how will you know how you relate to others who also sprint? The theory also applies to corporation and small business owners.

For example, imagine you manage a Plumbing shop or big business selling bathroom gear. You might assume your business is performing OK by getting a gross profit measurement of 30 percent

But what if other comparable businesses in your industry are doing better and achieving a gross profit of 45 percent?

That could indicate that there is certainly room to get better and do better. In brief, benchmarking provides you the targets to do all you can towards because they equal operation with other alike businesses in your industry (your competitors).

Benchmarking is a necessary component for big business improvement as it lets you recognize and gives you clarity to determine what it takes to be the best in your area, and what it means to be a leader in your industry.

Benchmarking is a way you can

- Watch for revolutionary ideas and highly profitable operating practices and then relay these to your own undertaking.

- Delve into your own organisation without the emotion by watching the numbers and make the necessary improvements to match or beat your competitors.

- Know and recognise the shortcomings in your own big business and then to create and apply a corporation strategy to eliminate or improve those failings.

- Acknowledge others (your competitors) are performing in some areas then to find out how they are doing it. Then employ and adapt those practices to your small business.

PricewaterhouseCoopers “Trendsetter Barometer Survey” noted that “fast growth companies who used benchmarking information to gauge corporation operation against their peers achieved 69% faster growth and 45% greater productivity over those who did not.”

Forecast / Analysis This feature of company management is generally not well understood. It’s largely neglected by most big business owners but it can generate huge rewards.

As chartered accountants, we’ve seen business accomplishment in our clients progress dramatically after using benchmarking as a tool to gain deeper business intelligence.

Analysis can mean you can see a particular strategy will generate the best return for investment, and then quantify and assess the result of your decisions on profitability BEFORE investing time and money on implementation

The best managers systematically do a review and analyse financial results, key operation indicators and benchmarks prior to making strategic / key discussions.

competent study means you can:

- Identify key operation measures (KPI’s) that drive and support your business

- Look at key performance Indicators (KPI’s) that help your business to prosper.

- Study to communicate and assess your corporation financial accomplishment clearly

- Get clear on how your bottom line is impacted by changes that you make.

- Speak successfully between your company adviser, accountant and financial institution

- Recognize how banks rate company performance

- Understand the most effective ways to boost your cash flow. While examination is vastly enjoyable and even rewarding it can be extremely intricate and is best left to specialists.

Your accountant can advise you how you can use this process in your company.

Paul Easton works in marketing for John Roe – an accountant and partner at Gilligan Rowe & Associates Ltd (GRA). GRA is an accounting firm specialising in property and business accounting in New Zealand. Search Engine Optimisation by Digitalawol.com

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