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Benchmark Precision

How to Benchmark Your Business to Improve Margins

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How’s your business going? Do you know how your business stacks up against the competition? It’s healthy for a business to critically review and revise your business at it compares to competition around it. In this blog, we’re going to be discussing how to benchmark your business.

Do you know how your business stacks up against your competitors?

Would you then know where and how to improve your business?

You could if you benchmark your business.

Business Benchmark: Good, Better, Best

What is a Benchmark?

To benchmark a company is to compare your business’ performance or practices to others in similar industry (NAICS) and organizational size (revenue).

Simply stated, “To continuously improve performance by learning from others” and prevent re-inventing the wheel!

WHERE ARE THE OPPORTUNITIES TO IMPROVE?

Anything that matters to you!

WHAT ARE SOME BENCHMARK EXAMPLES?

1. Financial ratios

2. Productivity outputs

3. Customer related results

4. Human resource measures

5. Quality metrics

6. Market share percentages

You may be asking yourself why. Why do you need to benchmark your business or what’s in it for me. Forward looking businesses that wish to attain and remain competitive, need to improve their financial and operational performance. Let’s say you’re on top of the market right now. If you aren’t evaluating the competition, you might end up getting blindsided and knocked off the top spot. Or if you’re just starting out – there’s no need to reinvent the wheel.

In general, businesses need to do the following:

1. Acquire Customer Loyalty

2. Maintain Long Term Profitability

3. Establish Employment Security

4. Promote Quality of Work Life

HOW?

1. Improve the Consistency of Product Quality and Provide Excellent Customer Service

2. Reduce Cost of Labor, Material and Overhead as a Percentage to Sales

3. Quicken Delivery with On-Time Order Fulfillment and Eliminate Returns

4. Maintain a Safe, Secure and Healthy Work Environment

5. Enhance Employee Morale and Ignite Team Collaboration

Starting from the executives, owners and investors, ACCEPT that change is required and then take BOLD ACTION.

 

WHAT ARE SOME JUSTIFICATIONS TO BENCHMARK?

1. Market conditions and customer expectations constantly change as best performers set new standards

2. Better awareness of how we’re doing compared to other organizations

3. Builds core competencies as an agile company for competitive advantage

WHAT ARE SOME ADVANTAGES TO BENCHMARK?

1. Facilitates improvements quickly such as reduction of cost and process times

2. Eliminates trials and errors such as product and/or service enhancements

3. Enhances company’s performance such as customer satisfaction and revenue growth

WHAT ARE SOME DISADVANTAGES TO BENCHMARK?

1. One size does not fit all; everyone is unique

2. Poorly defined benchmarks leads to waste of efforts and meaningless results

3. Incorrect comparisons due to reluctance to share information, lack of support, commitment and participation by key organizational leaders

4. Incomplete process could make things worse if not better

WHAT IS THE BIGGEST CHALLENGE TO INITIATE A BENCHMARK PROJECT?

Biggest Challenge to Benchmark Your Business?

HUMILITY…as to accept that someone else is better at something, and wisdom…as to learn how to match and even surpass them at it.

Therefore, if one seeks their organization to be recognized for its exemplary business performance in various metrics such as exceptional operating margins, BENCHMARK YOUR BUSINESS; it’s an effective and proven method to achieve this worthy goal.

Check out how I can assist you with this process at https://www.linkedin.com/in/nelsonowax

Or you can head over to the Get In Touch page.

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