This article has been extracted from How Much Should An Entrepreneur Or Small Business Owner Earn?
The best way to look at business in terms of likely potential for extra sales, profit and growth would be to be able to compare your key performance measures to your main competitors.
This is a process called competitive benchmarking.
Imagine learning that an average competitor makes £100k profit per year before owners remuneration but your business only makes £30k.
Imagine the power of knowing that the best competitors have sales of £150k per employee while your business generates £65k per employee.
That would make you think hard about your business and the methods you use in your business, wouldn't it?
Unfortunately this information isn't publicly available in the UK which I regard as a disgrace.
I don't agree with the abbreviated accounts that can be put on public record because it means that one business can't find out how another business is performing. Some people regard this confidentiality as a benefit but I see it as a curse.
Are There Other Ways To Access Competitive Benchmarking Information?
Sometimes a trade association will carry out a benchmarking study.
If you're offered the chance, I urge you to take part.
The DTI in UK tried to create a very valuable service called the Benchmark Index. It has since passed into private hands.
I was very keen on this idea and trained to be an advisor/facilitator but unfortunately the scheme has rarely hit critical mass in enough different industries.
Still I couldn't let a good idea stop me so I held my own private benchmarking study into marketing practices for business coaches, executive coaches and life coaches. In total I got 262 coaches to share details with me.
There is no reason why you couldn't do something similar, either yourself or by paying a professional like myself to create the survey and write the final report.
If you get invited to take part by someone else, it is well worth paying some money to help fund it. The information you get will bring considerable insight into what is happening in the market.