GRA Blogs

Articles by John Rowe

Get the low-down on your competitors - Benchmark

AUTHOR: John Rowe

POSTED: 26 July 2009

As in sport, we improve our performance by competing against others. If you run by yourself you will never know if you will win a race.

The same applies to business. For example, suppose you operate a Paint and Panel shop. You might think your business is doing well by achieving a gross profit percentage of 30 percent, but what if similar businesses in the industry are achieving a gross profit of 45 percent? That would suggest there is significant room for improvement. Benchmarking gives you the goals to aspire to.

Benchmarking is an important component for business development because it allows you to understand what it takes to be the best in your field, and what it means to be a leader in your industry.

Benchmarking allows you to:

Search for innovative ideas and highly effective operating practices and then apply these to your business.
Look at your own organisation and make the necessary improvements to match or better your competitors.
Recognise your business’ shortcomings and develop business strategy to eliminate them.
Acknowledge others are doing a better job in some areas, learn how they are doing it and then implement and adapt those practices to your business.

PricewaterhouseCoopers “Trendsetter Barometer Survey” noted that “fast growth companies who used benchmarking information to measure business performance against their peers achieved 69% faster growth and 45% greater productivity over those who did not.”

Planning / Analysis

This element of business management is poorly understood, largely neglected, but can generate huge rewards. Without over-simplifying it, analysis allows you to identify what strategy will generate the largest return, and then quantify the impact of your decisions on cash and profitability prior to implementation.

Top managers systematically review and analyse financial results, key performance indicators and benchmarks prior to making strategic/key discussions. Good analysis allows you to:

Identify key performance measures that drive your business
Use information to develop sound financial and business strategies
Learn to communicate and measure your business financial performance clearly
Clarify the impact of changes to the bottom line
Communicate effectively between your business coach, accountant and bank
Understand how banks measure business performance
Learn the most effective methods to improve your cash flow

While analysis is very rewarding it can be very complex and is best left to specialists.

Please contact us if you would like help to learn more about benchmarking and understanding what's going on in your business.

Request a Meeting

John Rowe
Director
Business Accounting Services

09 522-7955

jr@gra.co.nz

© Gilligan Rowe & Associates LP

Did you like this article? Subscribe to our newsletter to receive tips, updates and useful information to help you protect your assets and grow your net worth. We're expert accountants providing expert advice to clients in NZ and around the world.

Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

Comments

Testimonials

Thanks John, You have been an excellent person and firm to deal with over the last ten years. Kerrie and I have really appreciated your advice. - Andrew and Kerrie - Brisbane, August 2018

Seminars and workshops for property investors, business owners and anyone seeking to create and protect their wealth.

View all our upcoming events

Learn More

Investing in residential property?

Put this at the top of your reading list.

If you're investing in residential property, seeking to maximise your ability to succeed and minimise risk, then this is a 'must read'.

Matthew Gilligan provides a fresh look at residential property investment from an experienced investor’s viewpoint. Written in easy to understand language and including many case studies, Matthew explains the ins and outs of successful property investment.