How Are You Doing? Internal Benchmarking for Your Business

How Are You Doing? Internal Benchmarking for Your Business

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 info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.

Jay Fishman Covering “Right of Publicity” to be on “Around the Valuation World”

Jay Fishman Covering “Right of Publicity” to be on “Around the Valuation World”

“Around the Valuation World”, the NACVA’s monthly continuing education webinar on business valuation, has the following upcoming lineup on November 19:

  • Jay Fishman is being interviewed by Cheryl Hyder on the  “Right of Publicity”.  Jay has been involved in the Estate of Michael Jackson case and other cases involving this right.  This interesting intangible asset will be further explored.
  • Essential Business Valuation Industry Updates by Michael Gregory.  News from BV Resources summarized.
  • Robert Castro is bringing us valuable information on Building Your Brand, techniques to improve your Business Valuation practice.
  • Ed Mofrad is interviewing Zachary Meyers on Business Valuation Standards.

This November 19 webinar begins at 1:00 P.M. Eastern time and runs until approximately 2:45 P.M. eastern time.

Members of the NACVA may click here and login to receive a free inviteOthers may click here to learn more. 

For Harvest’s complementary E-Book “7 Things You Should Know Before Ordering a Business Valuation” click here.  This guide will help you save money and simplify obtaining a business valuation.

“Around the Valuation World”, is the NACVA’s monthly continuing education webinar on business valuation.  It is edited and hosted by Greg Caruso, JD, CPA, CVA and Partner at Harvest Business Advisors, business valuation experts and business brokers.

Remodeler’s Advantage Webinar; Gregory Caruso on Building Business Value with Succession Planning or Business Exit in Mind.

Great stuff if I do say so myself.  While geared for residential remodelers the talk applies to any cyclical business owner such as general contractors succession planning, subcontractors including electrical contractors succession planning, plumbing contractors succession planning, HVAC contractors succession planning, engineering firms succession planning and all sorts of distributors, manufactures, professional service firms and the like.

What I covered in the webinar was:

1.  Why Succession Planning?  Because with a succession plan you will build a better business that will be more manageable.  You will resolve management and family conflicts (take it on if you really are willing to do what it takes).  You will sell your business when you want to for more money in less time.  Why would a business owner not want that?

2.  What is a valuable business?  Think of an ATM.  Simple systems that can be mastered by ordinary people.  The ordinary people (who are extraordinary at this point) use the systems over and over and in effect stay around.  Works every time.  Money or profits come out.  While simplified that is what creates value in a business.

3.  How do you actually capture and collect the value you created?  How to minimize taxes, minimize risk, and maximize price through the preparation and sales process.  Some of this is not what you think.

Click here to learn more about Remodelers Advantage

Gregory R. Caruso, JD, CPA, CVA
Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver the highest price in the smoothest sale transaction possible. Harvest 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 info@harvestbusiness.com or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.

 

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