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How many times have you sat back and asked yourself, “How well is my company really doing compared to competitors?” Our guess is a lot, especially at the beginning of the new year.
Now, how many times have you gotten an answer that truly satisfied your business management needs? Maybe once, but more likely, never.
This is a common problem facing small and mid-size (SMB) businesses. Gaining an accurate sense of how well your company is performing against similar businesses can be an incredibly difficult task. While benchmarking is easy for larger retailers who have vast resources and public companies as competitors, it can be tough for SMB retailers to assess their business’s performance. And yet, it’s arguably even more important for SMBs to develop reliable, competitive benchmarks than it is for big-box retailers.
As an SMB retailer, you may already have a good handle on your own daily, weekly, and monthly sales and operations performance metrics through your POS system, but how can you begin to track and measure your business against others in your space?
Five steps to benchmarking success
The first step in effectively growing your business is to benchmark how your current sales and operational efficiencies stack up against similar companies. When establishing your business goals for the year, wouldn’t it be valuable to know how many orders your competitors processed last year? Or how many different channels they’re selling through, and what e-commerce solutions they’re utilizing?
And benchmarking is not only good for assessing where your company stands today. It can also help identify where the best opportunities are for market expansion and operational improvements.
To establish a competitive benchmark for your business, you must:
- Determine key metrics. What data points are most central to your business? Focusing on key retail metrics like revenue, order volume, and cost of goods sold makes researching competitors and measuring success much more clear.
- Identify competitors. No business exists in a vacuum. It’s important to know who your current and future competitors are and how they’re operating within your market and any marketplaces in which you hope to expand.
- Research and assess competitors. How are your competitors differentiating themselves in the market? What different sales channels and retail technologies are they utilizing? These are the types of questions you need to answer and competitor actions you need to anticipate.
- Leverage benchmarking tools. Aside from costly industry analyst reports, data that can provide a competitive analysis about how you’re performing against your competitors is sparse. Thankfully, there are free tools (which we’ll get into below), that are becoming available to help make the research and discovery process easier.
- Develop an actionable plan. What insights did your research bring to light for your business? Once you’re clear on what your competitors are doing and what changes you need to implement to drive business success, it’s time to determine key goals for the year and start developing tactical plans to achieve those goals. Make sure you’re tracking your progress on a weekly and monthly basis to confirm that you’re meeting important milestones.
Benchmarking made easy
If you want to see how your company truly stacks up against SMB retail competitors, free retail amplification tools can provide you with a detailed custom report comparing your business details with that of other SMB retail companies. Now business owners can quickly see how similar retailers are performing and identify (and prioritize!) areas and processes in need of improvement.
With quick and easy insights into other companies, you can effectively improve your operations, boost productivity, and ultimately increase your business’s revenue.
About Stitch Labs
Stitch is an online inventory control solution that simplifies multichannel retail business. It automatically syncs inventory, orders, and sales across channels, providing retailers with a holistic understanding of their operations. With Stitch, retailers save time, make better decisions, and grow their business. Stitch integrates with top sales channels such as Square, as well as add-ons including QuickBooks, Xero, and ShipStation. To learn more, visit www.stitchlabs.com.