As the new year begins, How Benchmarking improves Budgeting for Small Business is the perfect start for success in FY22.
It is best practice for every business owner to review their financial budget at least annually. Budgeting is a daunting task, especially for small businesses, but it doesn’t have to be difficult! There are plenty of ways to make the process more streamlined, and benchmarking is one of the best ways to do that.
If you’re looking for some clarity among the mayhem that comes with budgeting, this blog will give you some insight into the benefits of benchmarking for small businesses!
What is Benchmarking?
According to the NSW Chamber of Commerce, “benchmarking is the standard by which all inputs and outputs of a business are compared and measured. It allows you to compare your business to similar businesses in the same sector. It can enable you to identify and resolve excessive costs, inefficiencies and wastage.”
The Australian Taxation Office (ATO) provides a benchmarking tool that makes budgeting easier for the busiest of business owners! This tool allows you to quickly compare your business performance to your competitors without the pain of having to do market research on your own. How Benchmarking improves budgeting for small business as discussed here provides other benefits to using this tool.
Focusing on your competitors shouldn’t be at the forefront of your mind every single day, but an occasional competitive analysis can reveal things that you didn’t realise you were missing in your business.
The ATO small business benchmarking tool also allows you to check you are abiding by industry standards. No one wants to get caught red-handed during an audit!
Most business owners who violate the ATO standards aren’t doing it on purpose. It’s usually a lack of knowledge and direction. Get ahead of the crowd and take full advantage of the ATO benchmarking tool!
While the benchmarking tool is pretty simple to use, I highly recommend you book a free consultation with our team so you can get everything you need out of it and keep the ATO out of your hair.
The Benefit of Benchmarking in Budgeting for small business
Budgeting for Small Business can be a daunting process. Benchmarking is an important tool that can assist this process and can help your small business succeed and stay on course. If you veer a little off course, it’s not the end of the world.
Everyone struggles with sticking to their budget sometimes, but benchmarking has been proven to help you achieve your ultimate business goals.
Studies have shown that regular benchmarking improves overall business operation and goal achievement, and there are even more benefits of benchmarking in budgeting!
Maintain a Competitive Edge
Benchmarking allows you to have an edge over your competitors. 45% of business executives reported having zero plans to benchmark their performance. Choose to be a part of the 55% that realises what benchmarking can do for their business and reap the benefits!
Budgeting is an essential factor for any successful business. Small businesses without a unique strategy and budget risk being lost among the rest of the competition. Ask yourself these important questions about your competitors:
- What services do they have to offer?
- How much do they offer for their services?
- What can you offer that your competitors don’t already offer?
You know what your products or services are worth. Market your business in a way that potential clients can’t resist choosing you over their other options.
Improve Cost Efficiency
Since benchmarking improves your overall business outlook, this allows you to simplify your expenses. Benchmarking can help you realise if a certain investment is worth it based on the target you have to meet.
Take a look at how much your competitors are spending on lead generation and marketing and see if it will be profitable for your business way before you have to take out your business card!
Focus all of your energy on reducing costs, improving profit margins, and skillfully growing your business.
Spend more time working instead of worrying about your budget! Using the ATO benchmarking tool helps you identify the main problems in your small business so you can solve them and improve your efficiency. Increased efficiency results in increased productivity!
When you increase your productivity, you can drastically decrease the time and effort it takes you to complete a project. You will have less brain fog, increased concentration, and better decision-making skills!
Improve the Quality of Your Team
Benchmarking allows you to improve your team members’ skills. It can give you an idea of the type of training you should invest in for your team. You might also think of some new ideas you’ve never thought of before!
Gather feedback from your team members. There’s no reason why you should have to run your business on your own! This can ultimately improve the quality of your team. No matter how awesome your team is, there will always be room for improvement.
Develop More Effective Strategies
Benchmarks are exactly what they say they are. They are simply guidelines and standards to follow. You don’t have to copy everything that your competitors do. In fact, we strongly encourage you not to do that.
Please don’t spend X amount of dollars on ads when you know it isn’t within your budget! If you can figure out a cheaper and more effective way to market to your audience, do that instead.
Don’t forget the power of organic reach. All you have to do is market yourself correctly, and it’s completely free.
Benchmarks are an invaluable tool for small businesses looking to improve their budgets, but like all things, they have their limitations.
Our team of qualified bookkeepers, accountants, and consultants here at Inline Partners understand that your time is precious, and we are devoted to helping you achieve your business goals. We are experienced in how benchmarking improves budgeting for small business.
For a more in-depth, personalised benchmark analysis, please book a free consultation with us to discuss your specific budgeting needs!