It is important for small business owners to have up-to-date and reliable information on the operating performance of their business and also to regularly analyse the factors that are most relevant to the continued viability of the business.
Business benchmarking is an extremely valuable management tool and is the process by which a business systematically measures its operating performance over time and may involve comparison against other similar businesses. The key to good benchmarking is firstly obtaining accurate financial information about your business. This information is then used to calculate statistics or ratios on the keys areas of the business known as "key performance indicators" or KPIs.
The KPIs should be calculated on a regular basis and compared with prior periods and also to any available industry data. Graphical illustration of these KPIs may communicate this information more effectively.
The calculation and monitoring of KPIs should not be limited to financial factors. A simple and cost effective method of increasing sales is to measure the "sales conversion rate". The sales conversion rate is the number of inquiries received versus the number of sales made, usually expressed as a percentage.
It is important that systems be developed to measure the conversion rates accurately and then to analyse the results.
The major benefit of business benchmarking is that it will identify the key strengths and weaknesses of your business and thus will allow you to develop strategies to improve the operating performance of the business.
A valued added feature of this site is that businesses can instantly calculate a number of KPIs on a monthly basis including:
- debtors turnover
- stock turnover
- average mark-up
- average monthly breakeven sales
- return to shareholders
A definition of the KPIs is also provided to assist in the interpretation of the results.
You can choose to calculate the KPIs on either a financial year or calendar year basis by selecting the appropriate dates below. If you have previously saved data, please choose an item from the list below.
This information is provided as a guide only and is not intended to constitute professional advice. You should obtain appropriate advice concerning your particular circumstances.
Australianbiz and its representatives disclaim all liability for any loss or damage to any person or organisation, whether a user of this site or not, for the consequences of anything done or omitted to be done by any such person relying on this information.