Public market and company data can help you keep track of how your market is developing, understand how viable businesses in your market are today, and what it takes to be successful. By doing so, you can learn from others, act at the right moment and save yourself a lot of money and trouble.
When to benchmark
Benchmarking provides an objective measure of your business by comparing your performance with similar companies. This allows you to see in which areas you are doing well and where you need to focus on improvement. This provides insights into who is winning and who is losing in their market - and why - by looking at various financial KPIs. But during which 6 key moments can you benefit the most from financial benchmarking?
1. Annual Business Review
Did your competitors make as much profit as you? What is the average growth pace and did you outgrow this pace? These are typical questions during an annual business review you don't have a direct objective answer to. Competitive benchmarking with peers helps to:
- Objectify discussion and give context
- Discover market trends and dynamics
- Set ambitious targets for coming years
2. Strategy session
Fuel and inspire your team to make the best decisions. As a board member, it is your responsibility to guide the organization. Plan a strategy session to put aside the day-to-day priorities, and look outward to what’s to come. Gain insight into the market in which you operate and determine the strategy for the future on that basis. You have to proactively spot risks and opportunities and get perspective on:
- How cost-competitive you are
- Who gets in trouble first if this intensifies
- How to build price variability into your pricing model
- What grounds to base your 5-year strategic plan and related investments on
3. Budget cycle
The budget cycle is a key moment for companies, as it determines for a large extent where your resources will be allocated. Benchmarking helps to objectively validate your decisions and determine the right focus. By benchmarking your own performance against the competition, you can see where your company can improve and become more competitive. Benchmarking during the budget cycle helps to set growth & profit targets that fit your company’s strategy.
4. Performance comparison with peers
With help of financial benchmarking, you can identify and substantiate improvements and investments. How much do your peers invest and how do they finance these investments? Is there financial room for further investments? This provides a picture of the strategy of competitors for the future. It’s also interesting to compare investment levels with the growth pace and profitability: do they pay off equally for everyone?
5. Spot opportunities & threats
Always approach the benchmark from three angles: individual companies, the average of the peer group and the average of the broader market. Together, these provide you with the most comprehensive insight into strengths, weaknesses, opportunities and threats.
For example, with help of benchmarking, you can spot M&A and competitive opportunities. You can find out about the potential M&A targets with the best fit with your company. But you can also learn from others; if a company has made several acquisitions in recent years, but the figures show that this has put the profitability of the group under pressure, then acquisitions may not be the best way to grow in this market, and other regions or channels should be explored.
Empower your customer & supplier negotiations with facts & insights. Smart players use times of increased uncertainty to get the upper hand in negotiations. Easily get insights on the current status of all your retailers, suppliers or key customers and look at trends in the margins. Benchmark them against their substitutes and peers, and discover hard to refute arguments you can use in your negotiations.
Benchmarking with the Performance Monitor
The Performance Monitor is the perfect tool to start with financial benchmarking. It allows you to easily benchmark your own performance against the competition, so you can focus on improving your strategy with the insights it generates. Curious about our tool? Discover the added value of insights into your competition during a demo with us. Schedule your demo today!