The population of the Land Down Under is growing at a rather prodigious rate. Based on the most recent figures available from the Australian Bureau of Statistics, there are now over 25.5 million people residing across the country, with one new resident arriving every 59 seconds and births occurring every two minutes or so.
The same growth is occurring among small businesses. According to the Australian Small Business and Family Enterprise, there are over 2.1 million companies in operation throughout the nation, the vast majority of which (97.4%) have 19 employees or fewer.
With more potential customers out there – and a greater number of individuals to employ – there's never been a better time to grow your business. But to do it smartly, benchmarking is pivotal. Here's why:
What is benchmarking?
Before getting into the specifics, it's important to understand what benchmarking is all about. At its core, the process involves measuring your company's performance as opposed to your competitors' success – specifically those that are similar in terms of size, composition and products or services rendered. Benchmarking is not confined to any one specific aspect of comparing and contrasting, but should rather be done on an apples-to-apples basis. In other words, if you're evaluating time of production – i.e., how long it takes for a toy, food item or appliance to go from warehouse to store shelves – then you must compare your process to that of your competition.
Similarly, if you're judging customer satisfaction levels, you must look at the same aspects of satisfaction your competitors are monitoring to glean the most ideal insight. For example, customer satisfaction may be evaluated on many different levels, such as repeat buyer behavior, positive testimonials or customer referrals. Whatever characteristic of satisfaction, you're measuring should correlate.
Production is all about balance: utilising your assets to create a quality product or service without devoting too much in terms of time, equipment or labor resources. Benchmarking allows you to peel back the curtain on the processes your competitors are using to see where changes can be made. Your own operations may wind up being better and more cost-efficient due to benchmarking, but at the very least, it will help answer questions and allow you to diminish waste or gaps in service, which is key to growth.
A core component to becoming better and bigger as a company is knowing who you're up against. Whether it's soft drinks, living room furniture, computer software or athletic apparel, many different product providers compete over consumers' loyalty. Healthy competition not only gives customers more options, but also forces businesses to strategise and come up with new ways of appealing to their target audience, based on consumer trends or buying habits.
It's often said that change is life's only constant – and that is one of the truest statements there is. Many people are resistant to it, including employees who may thrive off of routine. Benchmarking allows you to see what's different about your competition and come up with ways to introduce process or structural changes wherever there may be opportunities. This could be in the supply chain, logistics, asset utilisation or quality improvements.
There are a number of avenues you can pursue to implement a benchmarking process. You may want to go about it on your own by doing research into what your competition offers in terms of products or services. Some of this information is easily available online. You can also buy financial benchmarking data so you can see how you stack up compared to similarly sized companies, such as in revenue or profitability.
Benchmarking is one of many customised services we provide at WMC Accounting. Please contact us to learn how we can help your business get to the next level.