What is Benchmarking?

Benchmarking is the act of measuring a specific metric against an established, or set, indicator. When it comes to business benchmarking, this is a process undertaken to determine how an organization is performing compared to other similar businesses within the same industry. The process of business benchmarking involves obtaining high-quality data from real businesses and then undertaking a detailed analysis to determine a range of best practice indicators.

Benchmarking for Businesses

For businesses, it is important that benchmarking data not only compares business demographics such as size and income, but also performance metrics. There are many types of benchmarking which business owners can utilise to drive sustainable business growth, however, the most important are:

Performance benchmarking: undertaken to analyse overall business performance. This includes comparing overall revenue and expenses, profitability, business value and cost of goods sold.
Process benchmarking: to assess how a business performs operationally against industry peers. This includes analysing productivity, asset usage, employee performance, stock turn rates and investment decisions.
Strategic benchmarking: the process of analysing a competitor’s decisions. This includes comparing how much focus competitors have on products vs. services, how much do they invest in customer services, how many employees do they have to achieve high profits, how valuable is a good location and what areas of the business do they invest in.

External and Internal Benchmarking

Business benchmarking can also be broken into two categories: external and internal. External benchmarking is the process of comparing statistical data of an individual business against a wide range of other similar businesses. Whereas internal benchmarking is setting internal goals and then assessing the businesses achievement against these targets. Internal benchmarking can also be the process of comparing internal departments against each other to establish company benchmark standards. Our software delivers a range of both internal and external benchmarking solutions:

Industry-Wide Benchmarking

Benchmarking an Individual Business

Internal Benchmarking

Industry-Wide Benchmarking
Benchmarking an industry involves analysing a large range of businesses within a specific industry to review key trends and best practice. An industry-wide Business Benchmark Report can provide accountants, business advisors and business owners with a high-level overview of how all businesses within an industry are performing. Our Benchmarking Suite enables our clients to drill down deeper into industry reports and view results based on business size (employment) and income brackets. This provides more in-depth insights designed to support industry-wide growth.
Benchmarking an Individual Business
Benchmarking a business against other businesses in an industry is the process of inputting high-quality date for one business and analysing this data against a range of similar businesses within the industry. To improve the quality of analysis, individual businesses should be compared only against businesses of similar size, income and location. Our world-class benchmarking software enables benchmarking of individual businesses to identify gaps, thus highlighting areas for improved performance.
Internal Benchmarking
Internal benchmarking is a method of comparing an individual business’s performance against management established targets. Often, companies will aim to improve results annually and therefore, benchmarking targets are set as the previous year’s results. However, businesses can utilise our tools to enable more strategic benchmarking goals. Utilising our Benchmarking Reports, businesses can compare their scores annually to asses continual improvement across performance metrics such as profit per owner, stock turn rates, pricing of products and services, the productivity of employees and business value. Further, via our Benchmarking Projects packages businesses can establish department or franchisee benchmarking to establish best practice across teams and stores.

Why Should Businesses Benchmark?

One of the most important uses of benchmarking is to assess a business’s performance against direct competitors. This enables business owners to keep a competitive edge in a growing economy.

Annually benchmarking a business against the industry enables business owners to gain a clear accurate picture of how their business is performing. This enables companies to see their real performance levels and identify opportunities for improvement.

Business benchmarking should also be used to assess spending habits to ensure management is investing wisely. For example, if a business is spending much less than the industry standard on information technology, it may be worth investing in systems to increase productivity.

It is also important for businesses to review the pricing of products and services regularly. This ensures companies know how much they should charge for products and services based on the industry benchmarks.

Benchmarking annually can further support businesses to address any issues with customer service by assessing how much to spend on servicing and value-adding for customers. This process can increase customer satisfaction and ultimately lead to increased repeat business.

Compare your business with our benchmarking software

Our Business Benchmarking Software gives business owners a complete review of all performance metrics relating to a specific industry. This enables owners to see key insights such as:

How much am I spending on advertising compared to other businesses?
How much should I be charging for my services?
Are my employees productive enough?
Should I increase or reduce my stock?
Am I paying too much in rent?
Should I purchase a new vehicle or equipment?
Is my equipment performing well compared to other manufacturers?
Am I paying my employees too much or too little?

Our software is not only Australia’s most comprehensive business benchmarking tool, but in every report, we provide a range of strategic recommendations based on a business’s benchmarking results. In addition, every report includes an industry analysis so business owners can assess key trends and opportunities that may be relevant to their businesses.

Interested to Learn More? See Our Tailored Packages:

BENCHMARKING FOR ACCOUNTANTS

The Benchmarking Suite has been designed specifically for accountants and business advisors. With the Benchmarking Suite, you can create unlimited Business Benchmark Reports for your clients, giving your accounting firm a competitive edge.

BENCHMARKING FOR BUSINESS ADVISORS

The Benchmarking Suite is a specific platform, designed for accountants and business advisors. With the Benchmarking Suite, business advisors can create unlimited Business Benchmark Reports for clients, adding a new offering, and revenue stream, to your advisory services

BENCHMARKING FOR LEGAL FIRMS

The Australian Legal Industry is highly competitive. So how do you know if your law firm is performing better than your competitors? Working with FMRC, benchmarking.com.au has developed the Legal Business Monitor: a tool designed to take the guesswork out of assessing your law firm’s performance.

BENCHMARKING FOR BUSINESS OWNERS

Ever wondered how your business compares to your competitors? The Australian Business Benchmark Report has been designed to give business owners understanding and insight into what is driving success in your industry, and how well your business is performing.

BENCHMARKING PROJECTS

Our benchmarking software is not only used for business comparisons, we also work industry groups, franchises and governments to create customised benchmarking projects. All our projects are created to enable large and/or diverse organisations to both undertake collection of high-quality data and easily analyse results.