Using the roadmap analogy from Part 1 of the Planning Series, how can you start the journey if you don’t even know where you’re at?

Benchmarking is a very effective tool for knowing exactly where you’re at. Benchmarking has several meanings and can be used in number of manners.

Some companies benchmark themselves as a starting point for internal process improvement or profit improvement. Other companies benchmark themselves in relation to an industry or to national, regional or local competition.

This latter benchmarking is the kind of benchmarking I’m going to discuss. Benchmarking your company against similar style, similar sized businesses on a national, regional or local basis has many benefits:

 Identifying areas of concern you weren’t aware of
 Comparing yourself versus your competitors
 Providing realistic goals and objectives
 Indicating necessary strategies
 Helps dictate tactical plans
 Identify and rectify problems
 Development of a process for continuous improvement

In one instance a recently purchased sign company was carrying high levels of inventory because the previous owner told the buyer to keep it at that level. The new owner was benched marked versus his local and regional competition and it turned out that the inventory levels were almost ten times as high as the competition.

This information prodded the new owner into selling off over 85% of his inventory (at a profit – although a small one) and he gained over $350,000 of cash from the sale of the inventory. He would have never known (or found out too late) that his inventory levels were a problem without benchmarking.

This type of benchmarking drives a stake in the ground and says “We are here; this is where we will start our journey”. It will help determine your roadmap for the rest of your journey.

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