4 reasons to benchmark your small business performance

Benchmarking is an important tool for measuring business performance.

Organisations that wish to learn more about how they are performing often turn to benchmarking as a solution. If you own a small business, understanding how your operation compares with similarly sized enterprises in the same industry and location is valuable information.

Recent statistics from MYOB show that 25 per cent of SME owners already run more than one business, while 16 per cent want to start a new venture. Clearly, SMEs need all the help they can get if they want to succeed in an increasingly competitive environment.

Benchmarking can be a complex process and many businesses need help identifying what data they should analyse.

Here are some of the key advantages that benchmarking can bring to your business performance in 2017.

1. Understand your strengths and weaknesses

Benchmarking provides an objective, quantitative analysis of how your business compares to industry averages across a variety of areas, such as revenues, expenses, profit and productivity.

Having a better idea of your strengths and weaknesses enables you to divert resources into more profitable activities or provide greater support to underperforming departments.

2. Become a more informed buyer

You should always do your due diligence before buying a business, and benchmarking is a powerful tool within your arsenal to ensure the organisation you are purchasing is as successful as it looks.

Similarly, you can use benchmarking when selling your business to judge whether you should negotiate a higher price based on your industry performance.

3. Cut costs

Benchmark reports identify multiple business cost areas, including advertising, rent and stock among many others. Seeing how much your competitors pay for office space or inventory may help you negotiate better deals with landlords and suppliers.

You may also wish to consider budgeting services if your costs are regularly outweighing revenues.

Benchmarking services at WMC Accounting. Benchmarking can help business target key areas of strength and weakness.

4. Improve productivity

The latest figures from the federal government's Productivity Commission revealed that labour productivity jumped 1 per cent in Australia between 2012-13 and 2014-15.

If you want to jump on the productivity bandwagon, benchmarking will tell you how well you are performing based on your number of employees. Again, this can help you tailor your procedures and target areas of improvement.

Taking the next step

Benchmarking can be a complex process and many businesses need help identifying what data they should analyse to spot weaknesses and effect change.

At WMC Accounting, we provide comprehensive benchmarking services that give you the insights you need to better understand your organisation. We will also work closely with you to develop the best strategies to optimise performance.

Please contact us today for more information.

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