As a business owner, competition can be intimidating. However, it can also drive us to achieve impressive results. The important factor is knowing how to beat the competition.
With this sentiment in mind, for business owners and advisors, gathering intelligence on a business’s competitors in a systematic and rigorous format is critical to success.
Which brings us to the process of competitor benchmarking.
Undertaking competitor benchmarking requires measurements that can be analysed against one or more businesses within the same industry. The specific measurements could include anything from revenue and sales results to customer experience to operational and financial performance indicators.
Perhaps the most challenging aspect of conducting competitor benchmarking is gaining access to your competitor’s data. Whilst financial results of other companies is sometimes available in press releases and sales reports, most business owners and advisors don’t have the time to find a consistent source. Fortunately, there are other means of obtaining competitor financial benchmarks.
The most comprehensive way is via companies who conduct benchmarking research for these purposes. Through this kind of service there are two main ways competitor benchmarking might be achieved:
- Compare your business against an existing sample of businesses with similar attributes (turnover, staff numbers, geographic location and so forth), and choose from a wide range of metrics and levels of granularity (eg, right down to individual expense items)
- Contact your competitors, via an industry association for example, to participate in a mutually beneficial competitor benchmarking project, often referred to as an Inter Firm Comparison.
Whichever approach is taken, it is safe to say any effort or cost in conducting competitor benchmarking will be outweighed by the value of the information gained, and, can give business owners the insights they need to push their business to the next level.