The year is coming to an end soon, but the adversities which mark 2020 as one of the most difficult years for national and international business are not all going to end on December 31st. The pandemic is still going strong, and lockdowns ae being practiced periodically, further crippling the economy. Entire sectors have crumbled, while others have managed to survive only through massive downsizing.
On top of the globally prevalent problems that came with the quarantines, businesses in the UK must also to deal with the various, unique issues that came with Brexit even before all that. For example, a good number of British companies are still having trouble receiving payment from partners, suppliers, and/or customer companies located within the European Union. At a time like this, business benchmarking is not just important – it can prove to be a very crucial tool for preparing an adaptive business strategy that is in sync with everything that’s going on.
A brief overview of business benchmarking
Business benchmarking in its general sense is used to describe the procedure of comparing a company’s current systems, performances and all other crucial business processes against what is considered at that time to be the most effective standards within the industry or a subsegment. In other words, it’s a comparison between what and how a company is doing, with what and how the most successful companies in the same sector are doing.
It should be noted that benchmarking is an adaptive tool, therefore its application need not be generalised either. It can be used for creating a comparative analytics report which details any one, multiple or all of the KPIs that are relevant to the concerned business. A few common examples of key metrices that provide the most benefits when benchmarked would be:
- Sustainable growth rate
- Revenue generation, concentration and growth
- Profit margin
- Long-term profitability
- Cash conversion cycle
- Working capital
- Quick ratio/acid test ratio
- Staff retention rate
- New customer/client acquisition rate
- Stockholder value
There are several other KPIs which could also be needed in order to produce impressive and practically useful results, but the variability is too great to mention every one of them here.
What are the goals?
The primary goals of benchmarking a business are to detect, find and close gaps in between the best-in-class practices, and those of the company being benchmarked. Once the gaps are closed by as much as possible, the organisation’s performance will improve, although major changes, if any were made, might need more time to mature and produce results.
The secondary objective of business benchmarking is that it allows for estimating the competition in clear, metric terms, which could then be turned into a competitive advantage for both the present and especially the future.
How can companies affected by Brexit and Covid-19 benefit from benchmarking?
As previously defined, the objective of any business benchmarking process is to find and minimise the differences between what has been established to be the most successful set of processes, and the standard practices of the company in question. These best practices are not static, but extremely dynamic in nature, which is to say that they keep on changing in response to the situation and time. It is for this specific reason that a benchmark in crisis always reveals the best possible measures and courses that companies in the sector can take for producing optimal performance, even under the most adverse circumstances.
Consequently, any company affected by the present situation will be able to find their best options, which are proven to be effective in solving the exact issues which companies such as them are facing. Data from the benchmark will reveal which of their competitors have adapted the best strategy, as revealed by their performance within the category. The comparative analysis will also allow them to identify what changes they must make to improve their position or standing in the present market.
When a crisis of this proportion hits, it is easy to panic and make quick mistakes in an attempt to fix things that were not broken to begin with. In addition to providing a roadmap towards the necessary changes, the internal benchmarking results will reveal what or where the company is doing particularly well. Such insights are crucial for avoiding rash mistakes.
Benchmarking is just one of the many tools necessary for creating a comprehensive counterstrategy
As should be clear at this point, benchmarking is a tool with multiple and diverse uses across all major departments of a company. The data provides insight regarding internal processes, overall performance and how each metric compares in respect to the present market conditions, as well as in comparison to the competition. However, it’s not a comprehensive solution to all problems, but just one of the many tools which are necessary to create a sound, financial counterstrategy – one that can keep the company relatively profitable, even in the middle of everything that’s going on.
This is precisely where Goodman Jones comes in with their comprehensive financial services that cover all aspects necessary to create that comprehensive and dynamic financial strategy. Although these services include business benchmarking, financial advice and tax consultation for any British family investment company that needs it, Goodman Jones is much more than just another accounting firm. For example, they are particularly acquainted with the typical issues that are faced often by family owned organisations exclusively. Instead of ignoring the emotional difficulties and complications which may at times prove to be obstructive against steering the company towards the best possible route, they work with the problem to find middle ground and mitigate internal conflicts with the tact necessary.
The need for business benchmarking goes beyond the present
The situation is dire for multiple sectors in the UK at the moment, and without a sound financial strategy, backed by data analytics and up-to-date financial advice, things are not going to improve automatically for anyone. At a point of time in the future, when the vaccines are finally rolled out and quarantine measures are no longer necessary, it is quite possible that many companies that exist today, will not exist then. The ones that do manage to scrape through, will find it impossible to meet the sudden surge in business with their severely diminished resources. As a result, they will lose customers and clients, along with their previous status in the market to competitors, who were best prepared both during the market’s downturn, as well as its future redemption. In other words, the recession might never truly be over for them, if they do not start adapting right now. Scraping by is not an option at all, but making the right changes at the right time, and in the right places is the only way to persevere, as well as prepare.
It is easier said than done of course, but with regular and well-timed benchmarking, businesses can have all the internal and market data that they need in order to prepare for making dynamic shifts in business strategy and processes. Complemented by adequate financial consultation services to make the best of their benchmarking analytics, it is possible to not just prepare, but also implement the necessary steps with perfect timing.