04 Jan You Will Get More From Your Business Data if You Benchmark
You probably track a variety of data to determine where your business stands. Monitoring both financial and nonfinancial key performance indicators (KPIs) — such as debt to equity ratio and customer service response times — can help you spot problems and set objectives. But a great way to take your business data one step further is to see how your KPIs stack up against previous periods or those of other companies in your industry.
Start by benchmarking your KPIs from one period of time (for example, a quarter or year) to another. Doing so will help you spot trends pointing to future problems so you can deal with them before problems actually arise. If your accounts receivable days are lengthening, for instance, this might indicate that your collections are lagging and a cash flow crunch is looming.
For industry benchmarking, various sources are available. A good place to start is your industry trade association. Bear in mind, however, that some ratios have slightly different versions. It is important to know exactly which ratio is being used when comparing your results to those of other companies.
We can help you find the right industry benchmarking data and crunch all of the numbers, both internal and external. Please give us a call.