Many small business owners think that external benchmarking is a complicated process, which only large corporations can benefit from. They believe that there’s no advantage to be gained for their small company by doing it. Also, even if they wanted to do it, they think the process is cost prohibitive, in addition to requiring time and manpower they don’t have.
And while this can be true, one methodology has a 12 step procedure, it doesn’t have to be that way. There’s no universally accepted template for the process. In its most basic form external benchmarking is simply a way to measure your company’s performance in a certain area (i.e., operations, quality, profit and loss, technology) against the best practices of other companies.
Comparing your company practices to another’s best practices provides you with 2 important things. One is benchmarking gives you insight into how your procedures, operations and costs compare to other companies who’re “doing it right”. Small business owners who lack basic, broad based knowledge of standard business practices, let alone best practices, is epidemic.
Secondly, benchmarking is a way to learn from the mistakes and experiences of others, without having to go through them yourself. If you’re willing to learn from the process it’ll give you the perspective, insight and knowledge you need to stay competitive through effective management of goods, services, operations and costs. External benchmarking provides numerous competitive advantages.
For example, a fictional Akron machine shop had significant employee theft. The owner learned the best practices for correcting the problem from the owner of a plastics fabricator in Elyria. However, when the problem was maintaining calibration of his machines, he sought out the best practices of the non-competitive machine shop 2 streets over.
External benchmarking doesn’t have to be complicated or costly. It can be a onetime event related to a specific problem or an on-going course of action focusing on one or more problems. It’s impossible for a small business owner to know everything he needs to know to stay competitive and make a profit. Therefore, it’s worth the time to learn if external benchmarking is right for you.