Secrets aren’t any fun. When you’re left in the dark about what other companies in your industry are up to, growing your business can be difficult. That’s why benchmarking—especially financial benchmarking—is so important. As Arthur Rothberg from CFO Edge explains, “Benchmarking is one of the most effective things businesses can do to improve their operations and boost profitability and productivity.” Essentially, you need to know where your business stands now in order to move forward later.
Financial benchmarking tools help you determine the overall health of your business. They are a resource for finding strengths and weakness in your strategies—then they help you patch up sections that need the most work. Benchmarking tools also offer a great way to motivate your employees and push them to the next level. When you lay out numbers, steps, and goals so everyone can see, it gives your team a concrete message that everyone can understand.
Although sifting through the abundance of information could seem daunting to some, learning how to efficiently benchmark your company (and using the information to improve your business) is fairly simple. We suggest trying out these three steps for a powerful financial benchmarking experience.
1. Find the tool that works best for your company.
Many financial benchmarking tools exist, but you may find that not all of them help you with your goals. For example, the U.S. Census lists many statistics for the printing industry. However, the wealth of information may prove too broad for your needs. The Printing Industries of America Ratios Report includes 16 volumes, each segmented to a separate part of the printing industry. Therefore, if you’re an advertising printer or if you just want information on product specialties, you can find financial stats based on those parameters.
2. Decide which areas need your attention.
After reviewing all of the reports, it sounds tempting to jump into making improvements. But as the leader of the operation, you should give careful consideration into which areas of your business needs addressed first. “Do not attempt to tackle everything en masse,” says Scott Slater of Charles Schwab Advisor Services. “The key to a successful action plan is to focus on just one or two initiatives that the data indicates will generate the biggest return on your investment of time and resources.”
3. Develop concrete goals for improvement.
Again, before rushing into any concrete plans, sit down with your team and discuss your needs. Develop measurable short- and long-term goals for success. Reviewing progress over time is much more manageable than trying to—for instance—“double our profits.” What would you see as success in a month’s time? A quarter’s time? A year’s time? When you lay these items out for everyone to see, you create feasible stepping stones for advancement.
As you can see, financial benchmarking is an important tool for all businesses. With a proper plan, any business owner can take this wealth of information and turn it into profitable strategies for growth. If you’d like to learn more about Printing Industries of America’s financial benchmarking program, the Ratios Reports, you can visit www.printing.org/ratios. You can also purchase your own copies by visiting our store or contacting Member Central by clicking here.