BENCHMARKING FOR YOUR BUSINESS
A "benchmark" is a tool that you can use to measure your business' progress towards meeting your goals. The idea is to take financial information from a sample of businesses in the same industry as you are in and are about the same size as your business and compare various metrics in them to metrics from your business. Then measure the differences, both positive and negative and track the changes in these metrics over time. Benchmarking is a way to empower yourself to evaluate and change your company's performance.
Frankly the most difficult step in this process is to obtain relevant bench-marks that can be used in that analysis. Where ever you get your benchmarks they should be accurate and come from a large enough group of similar businesses as to be representative of the industry. The information should also be timely. For instance getting last year's data is much better than getting data that is ten year's old. Finally just to be sure, check that the financial data you are using for your benchmarks are from companies that correspond to your company's NAICS classification. This final test will ensure comparing "apples-to-apples".
Sources of benchmarking data can be gathered from your Industry Association, if you belong to one, a Small Business Development Center or from us. We have access to data bases that allow us a great amount of flexibility in bringing data to the analysis.
Net Profit Margin: This is generally expressed as Net Profit Before Taxes
These are just a few ideas on how to keep employees and customers honest. Would you like to discuss other ways to keep your assets and business safer from theft? Please contact us to discuss your situation.