If you haven’t already started to benchmark your small business, then now is the time to do so. While large businesses are more likely to benchmark than their smaller counterparts, it can be hugely beneficial for small businesses, too. Benchmarking is about comparison; it’s a way of comparing your business, your processes, or your products against your competitors. The aim is not only to highlight your strengths, but also to find weaknesses and identify the best methods to help you improve and develop.
But benchmarking isn’t always simple and straightforward. In fact, there are many barriers to benchmarking for small businesses, such as time, cost, and ability. That’s why it’s essential that you thoroughly plan your benchmarking technique to ensure you derive the most value from the method.
Here are 3 tips to help you create a strong and effective benchmarking strategy:
1. Conduct Competitor Analysis
When benchmarking, it’s easy to want to compare the business against an organisation that we look up to; an organisation that we admire and aspire to emulate. However, this is not the best way to benchmark. Instead, it is much better to conduct a competitor analysis to identify those businesses that are most like your own in terms of products/services, size, customer base, and profits. This can provide a more realistic overview of your place in the market, and highlight achievable growth opportunities.
2. Know What You’re Measuring
There are many different aspects that you can measure during a benchmarking activity, but it is important that you are clear on exactly what part of the business you are comparing in order to achieve the most valuable results and feedback. What you measure will really depend upon your industry and your plans for growth and development. In terms of marketing, you may wish to measure content performance, SEO, and social presence. For IT, you may look at overhead costs and disruptions.
3. Be Prepared to Take Action
Benchmarking can be a very useful tactic for growth, but it does have its limitations. While benchmarking can identify areas where there is room for improvement, it doesn’t always identify the best techniques for improvement, or take any action towards improving your methods. Therefore, you will need to be prepared to act on the findings of the benchmarking survey. It is advised to consider budget and time constraints prior to benchmarking so that you are clear on what options you can take to improve.
Benchmarking as a Growth Tool
Research shows that small businesses may not trust benchmarking as a growth tool, but this method can be very useful for small businesses, as it provides you with an in depth look at how your organisation operates, and also allows you to view your company from a different perspective. In understanding the differences — and the similarities — between you and your competitors, it becomes easier to see things through your buyer’s eyes… why would they choose you over another company? Why wouldn’t they?