Spring 2006 issue of Horizons

THE LIFE CYCLE OF YOUR BUSINESS

Growing Your Business

Benchmarking to Better Results

Liz Arro, CPA

Felicia Malter, CPA

Management teams and boards of organizations are charged with navigating through many business environment and economic challenges to deliver results for the stakeholders. Decisions are made to improve or offer new products and services, cut costs of operations, expand into new markets or businesses, and potentially sell the organization to another. In order to make sound management decisions, much data must be reviewed before next steps are taken. How often does your management team analyze the current period's performance and ask, “How are we really doing? Where are the areas for improvement? How are our competi- tors faring?” Without knowing the results for other organizations within your industry, it is often hard to determine if you are ahead of or behind the com- petition. Benchmarking can help you answer these questions and assist you strategically in defining your goals. The benchmarking process may be one of the most powerful tools available to determine inter- nal strengths and weaknesses, assess market trends and facilitate productive change. Benchmarking assists in the determination of industry leaders, as well as the identification of a company's strongest competitors. Benchmarking standards allow a company to view itself in compari- son with its peers and establish a point of reference for areas in which it may be strong or areas in which it may need improvement. It is an effective management tool that can be used with any industry, department or function within the organization. Benchmarking provides insight to best practices linked to a company's success. The process helps a company honestly discuss what is relative to the leader and what areas within the company need to be addressed to reach a higher level of performance. This assessment requires a certain level of humility, wisdom and foresight to envision positive change. Rather than budgeting the same increase in revenue, goal- setters are encouraged to analyze data to determine realistic opportunities for improvement and then stretch and move out of their comfort zone.

Starting

Business Life cycle

Growing

Selling

19 • spring 2006 issue