Having analysed your business and compared it against others, you are now ready to look at strategies for improvement.
Before you put in place any changes to your business it is important to make sure that these are actually the most effective changes you can make.
What, after all, is the point in expending all that time and energy if it does not result in an appreciable improvement to your business?
Essential benchmarking strategies
Once the areas to be improved are identified, you must be careful to make sure the strategies are as effective as possible. This includes ensuring that:
- The most important areas are concentrated on first
- Improvements are realistic
- Improvements are achievable
- Improvements are measurable.
You have already started analysing your data by looking at how your own business is run and comparing it to other similar businesses.
Your next step is to identify key areas for improvement. Each business is different. So it is obviously up to you to decide just what you should change and how you should go about it.
You will need to answer the following questions:
- Is what you want to change important to the business?
- Will it bring in more money?
- Does it comply with the future direction of the business?
Some businesses will want to implement a range of changes straight away and others perhaps just one or two. That is up to you to decide.
Don’t forget that benchmarking, and planning for the future, is not a finite once-only, process. If you identify factors that need improving you can just as well plan to improve them next year or the year after that. That will become part of your business plan.
Part of the benchmarking process, after all, is planning to keep abreast of what is happening in your industry and adapting your business accordingly. Some changes may best be made when there have been further developments in your field.
It is really important to work out just what are the best things you can do for your business, as making changes always takes time and money.
It is also important not to tackle too much at once, as there is no point in trying to implement a large and unwieldy set of strategies. These are more likely to disrupt the normal day-to-day working of the business and cost the business too much in the long run.
Furthermore, it is vital to determine at this stage who exactly will be in charge of the benchmarking process and who will have the final say in any decisions.
Ideally, this will be the person who has a complete understanding of the business and will have the time to follow the process through. Obviously this will depend on the size and nature of your business and is a decision you have to make yourself.
Concentrate on important areas first
Having a close look at your own KPIs, and those that relate to the rest of your industry, will give you a good idea of the important performance indicators in your industry. The Key Performance Indicators in EBC’s Benchmarking Guides will provide you with recent figures relating to your industry throughout Australia. Have a good look at them and compare them to your own.
It is more than just a matter of comparing two sets of figures, however. You will have to try and determine what factors impact on these figures, particularly if you notice a marked discrepancy. If, for example, the staffing costs in a similar size, but more successful business, are greater than your own, but everything else seems much the same, you should consider your staffing policies carefully. They could be paying more for better-qualified staff. On the other hand, perhaps they offer incentives or bonuses to their staff for high achievements.
It is also worth considering what these KPI discrepancies could indicate about other skills or assets you might have to put in place. Learning a computerised accounting system could help you keep up-to-date control of your costs and cash flow and enable you to budget for new products and systems.
Areas that you will need to consider include your product, distribution, pricing, promotion and advertising.
You must choose the most important area to fix first. It must be some aspect of your business that will help you develop in the direction you want for your business. You must also determine the order of procedure. This should be straightforward and logical.
Remember that multiple processes create confusion. If you ask staff to put a range of new procedures into place at the same time, they are highly likely to make mistakes. It might be sensible to make sure one new system is working correctly, before you start introducing another change.
Choose realistic, achievable and measurable improvements
Likewise, it’s important that you don’t pick a process that is too complicated, or too intangible. The danger in doing this is that it all becomes too hard and you abandon the procedure.
Analyse each change you want to make into individual and complete strategies. This has a number of benefits. Firstly, they ensure that each action is measurable. Secondly, marking off a process as being completed gives a sense of accomplishment, as well as providing an indication of how far along you are with the change process. Additionally, if you encounter any problems, they will impact on just one part of the change process and not hold up the whole thing.
It’s essential that all your staff understand just what you are trying to achieve and how you plan to go about it. Nothing can hinder the change process more than an obstructive staff member. On the other hand, if everybody in your business sees the real benefits of instituting the changes, they will be more motivated to embrace the different tasks and processes and be just as excited as you are when tracking the noticeable improvements.
So when developing your strategies for change bear in mind the following. Are the changes:
Then list the following as part of your preliminary planning program:
- Specific and measurable strategies to achieve the outcome you want
- Who will make the changes
- Draw up a schedule detailing the start and completion dates
- Estimated costs of undertaking the process.
The more carefully a plan is thought through, the more likely it is to be completed properly and on time.
Implement the strategies
A couple of important things must be mentioned before we launch into discussing what strategies to develop and how to put them in place.
It is tempting to identify some aspect of your business and then rush in and try to do something to fix it, especially when there appears to be a glaring discrepancy between your business performance figures and those of your competitors. However, this isn’t the best way for you to proceed.
Another temptation for some business owners, is to do all the research, get a comprehensive idea of how the business is functioning and how other effective businesses perform, and then not actually do anything about it.
It’s no good just collecting information without actually working on it. Effective business people take action.
We are trying to make the process of creating improvements as hassle-free as possible. We know that change can never be problem free, but we are doing our best to help you.
Remember, the reason you are undertaking this whole process is because you want to improve your business.
Obviously we cannot make the changes for you. Instead, we are giving you the tools you need to undertake the process. Our aim is to help you as much as possible, but the rest is up to you.
Before we finish we would like to stress, again, that benchmarking is not a once-only project. Instituting improvements once will not sort out a business’ challenges forever. Unfortunately, change is a fact of life and the effective business person plans for change.
To this end we must stress that benchmarking your business should become an ongoing process, preferably repeated annually.