Benchmarking is a vital part of any successful business. No doubt you’ve questioned many times how well your company is performing compared to your competitors? But without a way of tracking the business’ performance, it’s nearly impossible to maintain its success and profitability. Your business is a valuable investment – and without a way to measure the way it functions; sales revenues can decrease and your internal costs will significantly rise. Here’s what you need to know about business benchmarking and how it can help your business grow:
Getting Your Head Around Business Benchmarking
Business benchmarking offers detailed insights into where improvements can be made within your company to increase profits. While you may do your usual month-to-month financial reporting, business benchmarking goes more in-depth. It provides you with a means to compare your business to competitors in the industry and offers an effective way to see exactly how you’re performing and lift your potential.
This tool is ideal for small to medium businesses predominately, but something every company can – and should – benefit from. To evaluate opportunities for improvement, you need access to all the information. From here, a plan can be developed to help achieve your business goals and push the company ahead of its competitors.
How Business Benchmarking Boosts Your Business
Through detailed insights customer’s needs are identified, the company’s strengths and weaknesses are highlighted and performance expectations can be prioritised for specific areas of opportunity. This boosts your business by encouraging and meeting set goals and allows you to understand your competitors better. Without this knowledge, how can you become more competitive and effectively manage change?
The Vital Correlation Between Business Benchmarking and ERP
Business benchmarking and Enterprise Resource Planning (ERP) work together to collect the information and help report your growth data. Benchmarking is paramount to understanding your industry and customer’s needs to create niche goals for your industry. These strategies become better established through the adoption of systems like ERP, which allow you to utilise process management software to manage the business and automate data relating to human resources, technology and services.
Without a process management software like ERP, effective management to boost your business’ performance is hard. Business benchmarking involves a variety of tools, software applications and indexes to collect relevant data and provide reports to give you the information you need to work with to grow.
6 Essentials to Implement
To benchmark your business through ERP, you need access to these detailed reports. But exactly what information should you be looking at?
- What You’re Benchmarking: Be specific! Client satisfaction is the most common driver for small businesses. Review your business goals and focus on something special and targeted for your niche.
- Your Competitors: Who are you benchmarking against? Define your competitors and work out what they’re doing differently to you that’s working for them. Consider both current and future competitors and how they’re operating within your industry.
- Review Objectives and Trends: What strategies are your competitors using that give them a competitive edge? Leverage benchmarking tools and the date compiled from ERP to put together a competitive analysis, see what direction your industry is heading in and how to keep your business aligned with the latest trends and customer needs.
- Look at the Efficiency of Your Business: Benchmarking and ERP will give you a good indication of how streamlined your processes are. Review whether they’re bringing in new leads and converting to sales and what gaps there are here. Make sure your business is moving forward with the latest trends rather than being stuck in old habits and getting left behind.
- Expenses and Sales: Benchmarking helps to determine whether you’re spending too much on rent, inventory costs and employee income. By using tools like ERP to collect data, you’ll be able to make some cut backs.
- Develop an Actionable Plan: Benchmarking and ERP are useless if you don’t devise a plan to put the work into action! Use your research and data to create a tactical plan for your objectives. Define actionable, realistic steps with timeframes and specific tasks to make it happen. Track the progress of each goal on a weekly basis to ensure you’re meeting set milestones.
Benchmarking is the ultimate way to understand where your business can make improvements. Once the above essentials have been implemented, it’s important to continuously monitor the results. Through this, you’ll gain a better understanding of your business, competitors and the industry. Business benchmarking and software management tools like ERP will ensure your finger is on the pulse when it comes to industry trends and internal and external data.
For more information about how Horizon Business can offer tools for your benchmarking, contact us today.