How to get small business benchmarking right

Setting goals and objectives is a must in the enterprise world, but it can be tough at times to really drill down into what should and shouldn't be measured most closely. This problem can be compounded in small companies.

If you've recently started a business in Australia, or are in a relatively niche field, you may be wondering what to keep track of in your strategic plan.

So, what should small business owners be looking to measure?

Underlying performance

The Institute of Chartered Accountants in England and Wales (ICEAW) explained that it's crucial to really look into key performance indicators, and assess where your business should be getting things right. Using a specific example, if your endeavour provides some kind of product, chances are you'll need to keep a close eye on customer care.

Moreover, if you're more focussed on the fast moving consumer goods space, production line speed and the time it takes to get products into the hands of consumers will likely be a central pillar of your benchmarking.

Ultimately, it's about measuring the assets that are critical to the endeavour, and establishing a framework for a business development strategy that has the most important factors at heart.

Choosing competitors

Naturally, benchmarking is most effective when you compare your own businesses data with that of a rival. However, what's the process of identifying the company that would be most suitable?

Well, the ICEAW explained that industry bodies and associations are a good starting point, and many will be able to provide information about leaders in your particular field. Once you've garnered that data, it's a case of seeing how your business stacks up with your own core performance metrics in mind.

The financial difference

Research collated by the Queensland government explained that benchmarking is a necessity for small business owners, as carrying out the process effectively has the potential to save money. Specifically, financial benchmarking can help you understand how much you're spending on rent, advertising, staff and any other outgoing costs.

By better establishing those facts and figures, the business should be able to put a plan in place to address any areas for improvement.

It's best to talk through the nuances with a small business accountant if you're not entirely sure of where financial practices could be bettered, but benchmarking can certainly allow you to gain a better understanding of the overall performance of your business.