How do you know that your fantastic idea is actually successful? After your business is past its launch phase and you are actually generating sales, how do you know if your business performance is the most profitable?
Now let take it back to basics. If you want to know how you are doing in your personal life, let’s say are you a good footballer or are you a good cook? What would you do, perhaps you would compare yourself to someone who is also a footballer, in fact comparing ourselves can give us enormous insight into how we are doing. I remember thinking I was doing quite well in terms of my twitter followers, until I looked at a colleagues Twitter page and realised she had 10x the number of likes as me. I was gutted! But then at least it gave me an indication of what I should be aiming for given my time in the market.
Business benchmarking then is a powerful way to measure ourselves. If you click here this takes you to the website of Company Check. On this website you can put in a competitor’s name and you can download, for free, the accounts of any UK registered company. That would be their abbreviated or full Profit and Loss and their summary Balance sheet. The level of detail will depend on the size of the company.
By the way if you are looking at larger companies you should be able to source their accounts from their own websites.
Alternatively, please find below some Benchmarking data for some key metrics by industry which will allow you to see, on a number of fronts, how well you are performing.
The metrics shown will help you to see your performance on the key metrics compared to the rest of your industry.
Excerpt, Please see link at the bottom of the post for the full report
I have tried to explain the significance of these metrics below so you can understand why it is important to benchmark these.
Gross Margin: How much profit margin do you make on each sale. How efficient is your Operations?
Debt/Equity: How much debt are you carrying. If you are too highly geared, you may face higher than normal interest costs which could be eroding your profits. You could also be carrying more risk in your business as more money is being used to service this debt rather than helping you to build up your reserves.
Cash/Assets: How liquid is your company, how much of your cash is tied up and may be impacting your cash flow.
Payroll as a % of sales: Payroll costs are generally fixed in the short term. Therefore, this shows a measure of how fixed your costs are in the short term. This could be detrimental where sales are fluctuating or trending downwards as these costs will still need to be covered, despite lower sales.
Advertising as a % of sales. This gives a good indication of the size of the marketing budget required for your industry.
I hope you find this useful and it provides you with some valuable insight into how your business is performing as compared to the rest of your industry.
You can access the full Benchmarking report by Clicking on the the link below ..
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