One thing we’ve learnt over the years is that whenever we release a new white paper, research or profit drivers about the adviser landscape, we’re assured that they’ll generate interest – our phones will ring and emails will be received with lots of comments, questions and a few challenges too (‘that surely can’t be right’)! And that’s a good thing as we’re very happy to share our data and learnings – in the hope that they will advance the spread of ‘best practice’ and generally strengthen advice practices everywhere.
What does surprise however, is the small number of owners who actually go to the effort to benchmark their business. Surely it’s ‘best practice 101’ to know how your business compares to the broader marketplace?
As Peter Drucker observes – “What a business needs most for its decisions — especially its strategic ones — is data about what goes on outside it. Only outside a business are there results, opportunities and threats.”
Whenever Business Health undertakes a business valuation, facilitates a business planning forum or provides coaching/mentoring support to an owner, we will invariably begin with – benchmarking. You have to be confident that you know where the practice stands today before you begin to build plans for its future!
While the exercise of benchmarking can be a relatively easy one to implement, there are a number of parameters within which we suggest the owner should operate:
- Be honest and realistic with your data input. Benchmarking isn’t the time to gild the lily!
- Retain an open mind as to your results. They will be what they are and at the end of the day, it’s far more important that you know.
- Ensure you’re comparing your practice to similarly placed businesses (like with like).
- Focus on a small number of metrics which are important to your business – productivity, profitability and activity for example.
- Keep an open mind as to your results – if you’re not going to accept the benchmarking intel, then there’s really no point in undertaking the exercise in the first place.
- Maximise your effort (ROI) by asking – why do I compare as I do. And, if you don’t like the answer, move quickly towards ‘how’ – how can I lift my performance to that of my competitors?
- Make benchmarking a regular feature of your business cycle and track your results over time.
Let the benchmarking begin!