In the current economic climate my clients are increasingly interested in how they have fared compared to industry averages. This naturally leads to the questions: “how can I do better?” and more importantly “how can I make more money?”. The answer to these questions is fairly simple – compare yourself to your best performing competitors and adopt all of their best practices. How you do this is the tricky bit…
The process of comparing your business to your competitors is called benchmarking. Benchmarking can be difficult because it is unlikely that your competitors will be willing to open their doors and let you see all of their business secrets. Similarly, the amount of publically available information on Companies House and other websites is very limited.
Trade associations for your business sector may collect some data from all of their members. The difficulty with data from trade associations is the diversity of the businesses taking part – you could be comparing your business to one which is a different size and operating in a different part of the country.
This is where Armstrong Watson can help. We can act as a confidential collection point for benchmarking information. We already do this for hotels in the Lake District and Legal firms across the country. Once we have collated the information we provide a report to compare your business against the average for all businesses. This ensures that the information from each business remains confidential, but everyone can benefit from the collective results.
In order to make benchmarking effective requires three things:
Firstly, you need to know what you want to measure. Good examples for a hotel would be: occupancy rates, margin on food sales, margin on drink sales, average wages cost, trip adviser rating.
Secondly, you need to compare your business with similar businesses. I’m currently working on benchmarking specifically for hotels in the Lake District as, for me, there is little value in comparing a hotel in the Lake District with one in Blackpool, for example. They operate in a completely different market place with different profiles.
Thirdly, you need to interpret the results. This is the most important part. You may be able to see that your competitors are achieving a higher occupancy rate over the winter season, but why is that? How could you achieve the same thing? This is where we at Armstrong Watson, can really help.
I believe that all businesses can benefit from benchmarking. If you know that businesses in your sector would be willing to participate in a benchmarking exercise then please let me know. If you would like to participate in the Lake District hotels or legal firm benchmarking exercises we are currently undertaking please get in touch.
