Most of the time when people ask “How are you doing?” they are extending a courtesy and may not even listen to the answer.
But really – how are you doing? More precisely, how is your business doing?
We are entering the final quarter of 2019, a good time to stop and measure your company in order to really see, “how you are doing?”
There are two, equally valuable, benchmarking approaches .
We’ll discuss the first measurement- internal benchmarking or goal setting and tracking – today and follow up with the second measure tomorrow.
Internal benchmarking is tracking and analyzing critical internal data against a budget or goal. Usually the most useful data is data that reveals how you are doing long before financial information are available.
For instance, if you perform mechanical maintenance work and an average bid is $10,000. You need $100,000 of work a month to meet your goals. You should track the number of bids and total dollar value of bids going out. You should track the number of awards from those bids. This should be on a simple chart and reviewed weekly.
If, over time, you know that you typically win 1 in 3 bids, then you know you need to have 30 prospects or bids per month in order to have a shot at winning 10 jobs. If you bid 40 prospects last month, things should be going well (stay focused on your wins though, “should” is dangerous) and,if you bid only 20, you need to ramp up prospecting.
From this data, you know how your business is doing in real time as opposed to 60 days later when all the invoices are paid and financials are produced.
In all likelihood, you can drill down to 5 or 7 key indicators that will tell you how your business is doing early enough so you can make adjustments. Typically, these tie into your sales pipeline (described above), your production/delivery progress, and your billings and payables. Your system (which could be tracked using an Excel or Google spreadsheet) should include both units and dollars. You want to see across your entire business yet keep the system simple so the data can and will be collected, tracked, and reviewed.
Next up, the second benchmarking measurement – competitive benchmarking – comparing your business to against your peers based on industry data.
Clients choose Harvest Business Advisors for our sage advice on profitably growing their business, accurate business valuations, and when the time is right, a consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at email@example.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.