Three Ways of Using Business Benchmarking to Help Create a Company
Business benchmarking involves reviewing the practices of other companies and adopting what makes the most sense for your business. During this process, youd typically review the practices of the companies that are considered the best in your industry. This will help identify potential solutions to problems that you might face as a business owner before they happen.
The Benefits of Benchmarking
If you can, start going through the business benchmarking process during the startup phase of your business. By starting early, you can identify areas of opportunity, set performance goals for your employees, and monitor the performance of your company in the marketplace.
One of the best ways to use business benchmarking when youre involved in the company setup phase is to benchmark the hiring processes in your field. First, examine the hiring practices of leading companies in your industry to determine which practices help them identify the best employees. Then see if that process helps reduce the amount of time it takes you to fill an open position and reduce your turnover rate.
Another way to use business benchmarking is to use the information you gather to create a business plan. If you plan to solicit funding for your business, you need to have a strong business plan that convinces potential investors that your idea is viable. By doing some research beforehand, youll be able to identify the growth patterns of existing companies and apply that data to your own business plan.
You may also be able to use benchmarking to determine the market penetration, which will help you adjust the numbers in your business plan to reflect real-world trends.
Staying Current with Technology Through Industry Benchmarking
Lastly, try benchmarking technology applications and processes. The technology tools you use will help determine the efficiency and productivity of your employees, so it is important to identify the best practices in your industry. This method is preferable to older methods of company setup, as business benchmarking helps you apply the best practices of industry leaders to your own startup immediately.
Cost and Pitfalls of Benchmarking
Before you conduct business benchmarking activities, make sure youre aware of potential pitfalls. One of the biggest is that other businesses' processes and systems may not produce the same results for your business. Every company has a different culture, so you must be careful to apply the business practices that make sense for you.
Also, you should consider your budget. If you perform your own business benchmarking tasks, itll cost nothing more than your time. If you hire a consultant, expect to pay either an hourly fee or an overall project fee. The amount you pay will depend on the consultant's credentials and the tasks you hire them to perform.
The Bottom Line
If youre getting ready to launch your business, try benchmarking. Itll help identify best practices that will serve as the foundation for your company. From hiring the right people to creating the right business plan, its helpful to understand which tools and processes have helped other businesses to succeed.
To get the most out of your benchmarking endeavor, try investing in educational tools thatll help you learn how to gather the right data and apply it to your business.