By following the 9 steps you can successfully Benchmark your business.
Taj Accountants stands high among the renowned small business accountants in London for offering outstanding accounting and taxation services and advice to corporates, as well as individuals. Our leading firm is always eager to offer advice to our clients and take on every challenging situation. We understand the importance of improving performance of your business and standing out among your competitors, thus we have come up with the significance and strategies to Benchmark your business.
What is Benchmarking?
Benchmarking is a process of measuring the performance of your company's products, services, or processes against those of another business considered to be the best in the industry, aka “best in class.” It’s the process of improving performance by determining the best practices for sales and operations, then implementing them. Benchmarking can be conducted by comparing your company’s performance against competitors or entirely a different industry or even with your own performance over the past years. Through benchmarking you can compare and identify areas where you can improve your performance.
What are the types of Benchmarking?
The types of benchmarking are determined depending on a company’s environment, products, services, resources, culture, and current stage of Total Quality (TQ) implementation. There are four primary types of benchmarking as given below:
Internal Benchmarking: A comparison of a business process to a similar process within an organization.
Competitive Benchmarking: A direct competitor-to-competitor comparison of a product, service, process, or method.
Functional Benchmarking: A comparison to similar or identical practices within the same or similar functions outside the immediate industry.
Generic Benchmarking: Broadly conceptualizes unrelated business processes or functions that can be practiced in the same or similar ways regardless of the industry.
What are the advantages of Benchmarking?
Business owners use benchmarking for promoting business systems and processes. For example, Taj Accountants and other accountants in London build the concept of setting measurable goals and measure them against industry-grade benchmarks. Benchmarking has helped us increase efficiency and the performance of our bookkeeping, taxation along with our overall services. We believe by benchmarking you can attain the following advantages:
What are the steps of Benchmarking?
In order to successfully benchmark your business processes, it is important that you have used a systematic and structured approach. We have divided the required strategies into 9 easy to follow steps:
Step 1: Determine the Processes to Be Benchmarked
To initiate the benchmarking process, first you have to identify which benchmarking indicators are fundamental to your business. It’s important to prioritize what’s important to all your stakeholders. Then you’ll need to exert your time and effort in analyzing and upgrading them. This step is the cornerstone of the entire benchmarking process and this will help you establish the scope of the benchmarking process by focusing on the key indicators.
Step 2: Determine Who You Want to Benchmark Against
The second step determines which organizations should be studied by identifying which organizations’ practices can be adapted to your requirements. So it’s important to determine who you will benchmark against. You need to compile a list of the potential organizations, whether you decide to benchmark against a competitor or a company outside the industry. Your own company’s past processes can also be benchmarked against when you need to determine the best practices for implementing a particular task with efficiency.
Step 3: Documentation of Current Process
Documentation is vital as you’ll need a lot of information for the comparison. So you need to keep record of the current processes of your business and align them for further comparison. Documentation will help you specify which areas need improvement and make it easier to examine and compare them against competitors or internal past processes, as required. This will make the process more structured and coherent.
Step 4: Collect Required Data
For this step, you need to gather data from various sources. Proceed by preparing a preliminary survey on your competitors’ best practices through formal interviews, informal interviews and questionnaires. You can also collect information by researching their websites, blogs, reports, marketing materials, and news articles. For internal benchmarking, your previous documentation can come in action at this point.
Step 5: Analyze the Collected Data
Once you're done with your research, you can start analysing your data. You can effectively analyze the compiled data by the produced output and customer satisfaction of the benchmarked organization. In addition to that you need to analyze the sources of how they result in the particular output and customer satisfaction. If you are internally benchmarking a process, then you need to analyze the operational and financial data which are readily available. After compilation of the required data, you can begin evaluating it.
Step 6: Measure Performance Against Collected Data
After you’re done with analyzing your competitors or the processes between your own business, you need to further proceed to discover to what degree your present performance lags behind the best in each area and then you need to combine the best features from the best practices into a standard process at your convenience. If you implement this step correctly, it'll result in a clear picture of your processes in comparison within or with the industry.
Step 7: Create an Action Plan to Fill the Gaps
After measuring what needs to be amended to close the performance gaps, you need to create an action plan to implement those changes. The plan should cover gaps as well as create an opportunity to brainstorm measures that can be required in the future. This step requires you to think ahead.
Step 8: Establish the Plan and Monitor
This step involves execution of the formulated plan. Now you need to apply it to your company processes and monitor the execution on a day-to-day basis. You need to monitor the changes and the performance of the employees over a specific period of time. For better and effective performance, you need to present the changes to your employees and train them accordingly. The correct implementation of this step will result in a closely watched process in which deviations from the plan will be corrected and the ultimate goals achieved.
Step 9: Repeat the Process
Once you have successfully implemented your plan, you need to proceed to the last and the most important step. In this last step, you need to examine the implemented new process to see if there are any changes that you need to make. This step requires you to continuously evaluate the benchmarked practices and reformulize the benchmarked process if necessary. If your re-evaluation leads you to certain modification then you need to adapt a new plan and implement the plan accordingly.
How can you attain a successful Benchmarking Process?
Benchmarking is a continuous practice which requires you to carry out a constant monitoring. The success of a benchmarking process depends on the constant evaluation of your processes and benchmarking them with the best practices. The consistency will help you sustain in the market and overshadow your competitors. Thus, you need to be committed to the process and be flexible towards improvements.
How can we assist you?
Our client base ranges from individuals who are seeking general accounting and taxation advice to sole traders, limited companies or partnerships. At Taj Accountants we provide businesses in East London with assistance and advice on a wide range of business issues. Contact us for any business related issues and help yourself by reading our blogs.
DISCLAIMER: The purpose of the blog is to provide information and insight regarding the situation. The readers must contact experts before making any decisions based on the information. We highly appreciate you to contact Taj Accountants for further assistance.