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Starting in 2025, AIM/R members will have access to the CoMetrics platform to benchmark their financial and operational performance. CoMetrics has helped groups of businesses gain perspective and increase competitiveness for more than 25 years.
So, why benchmark? How does it work? How can you use these metrics in your business? Read on ...
How to use benchmarking to gain a competitive edge
Running a business can sometimes feel like navigating into a storm without a weather report. Are your strategies delivering the results you need? How far have you come? You must understand where you truly stand to find the best path forward. That’s where CoMetrics benchmarking comes in — it offers the clarity necessary to guide your next steps.
We are that weather report, providing critical perspective.
AIM/R’s new financial benchmarking program will allow members to measure themselves against peers and the industry at large and find ways to adjust and optimize their strategies.
What is benchmarking?
Benchmarking involves collecting relevant business data and using indicators to measure your growth and progress, individually and in relation to other businesses. Benchmarking provides a standardized analysis of your company’s financial health.
The AIM/R benchmarking program will make it easy for members to input their data. The more members participate, the more useful it becomes for everyone, as companies get a clearer sense of how they compare with similar members and what they can learn from members who may have different product mixes.
How to use benchmarking
Let’s say your strategy is to operate as a higher-margin business in HVAC markets. Higher-margin HVAC products make for more complicated sales. That means you must spend more on qualified employees to execute those sales consistently.
The Personnel Productivity Ratio (PPR) benchmark measures the percentage of your gross margin you spend on the personnel needed to sell and deliver that equipment. Using the PPR, you can better understand whether your high-margin strategy works. This ratio can be useful for any company with any product mix, as lower-margin companies can also better understand whether their approach is working or if they need to consider revamping how they spend on personnel.
In other words, benchmarks such as PPR don’t offer an arbitrary, one-size-fits-all target for companies to hit. They help companies of all types and mixes gauge how they’re trending financially in terms that make sense for them.
Benchmarks also offer a point of inquiry; they help you uncover areas of opportunity in your business that might warrant a closer look. For example, the benchmarks show that your sales are growing faster than your peers in a competitive market. You can use that data to work with your sales team to identify what’s working best and apply those practices universally.
Benchmarking can also help companies find areas for improvement. A CoMetrics user distributor found that it was spending up to three times more than peers on telephone and internet service, a surprising finding.
This prompted the company to dig further and find that it was being overcharged. It acted immediately to find a new provider. The distributor now saves more than $100,000 per year and has better service. Now, it can consistently complete high-quality video training, strengthening its personnel and setting the stage for long-term improvements.
Benchmarking took an easily ignored line item and turned it into an immediate, sustainable return on investment.
Benchmarking myths
Even if you don’t stumble on a major cost sinkhole hiding in plain sight, simply going through the benchmarking process can give you a better grasp of your company’s overall performance and position in the market. However, some misconceptions about benchmarking often prevent companies from participating and reaping those benefits.
Benchmarking will give my rivals access to confidential information
All data provided to CoMetrics remains confidential (AIM/R staff does not have access to any individual data), and all the benchmarking outputs are 100% anonymized. Benchmarking merely puts your company’s data in a broader market context; it doesn’t reveal which figures belong to which companies. Nobody will be able to crack your company’s business secrets. They’ll better understand how they’re performing compared with their peer group.
Benchmarking poses a cybersecurity risk
It’s fair to worry about whether you’re putting your company’s data in a safe place. Rest assured: In more than 25 years, CoMetrics has never had a cybersecurity incident. Our North America-based engineering team is fully insured, independently audited for security and protected by a new multifactor authentication login system.
Plus, every bit of data is backed up on a secure cloud server. While there’s some measure of risk any time you share data, considering CoMetrics’ track record, AIM/R is confident that the benefits of participation greatly outweigh it.
Benchmarking is a daunting task
Even if your company hasn’t done a physical inventory in ages and you feel your data collection is a mess, it’s well worth participating in. Benchmarking isn’t an official audit — it’s a way to determine where your company stands and uncover opportunities to improve. So, your data doesn’t need to be perfect. As long as you can offer reasonable estimates, you can benefit from participation. CoMetrics is always happy to hop on a call to review the results so you don’t have to navigate them yourself.
Join AIM/R and start benchmarking your performance with CoMetrics. We encourage you to join the AIM/R benchmarking program and start strengthening your business today.
Paul Giudice, CoMetrics CEO, is an experienced leader with a successful track record of planning and executing growth strategies. His background in financial and strategic advisory work is critical. As one of the first hires at Next Street, an economic development firm helping small businesses and nonprofits grow, Giudice has experience working closely with owners and executive teams to navigate long-term strategic planning as well as weathering the day-to-day challenges of running a business.