The Lazy Franchise Owner's Way To Profitability

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Benchmarking (as defined by Wikipedia), is "the process of comparing one's business processes and performance metrics to industry best practices." A few months ago I addressed the topic of strategic planning.

As part of the process I emphasized the importance of establishing key performance indicators ("KPI's") for your organization and measuring and monitoring them on a continuous basis.

These metrics should be flashing in front of you on a daily basis -on a dashboard or something similar.

Benchmarking takes this process one step further in the fact that you are comparing your organization's performance to that of your peers. Measuring for the sake of measuring is pointless.

In other words, the metrics are useless if you have no baseline for interpreting what they mean and more importantly where the numbers should be landing.

Regardless of the industry or niche your organization serves, there are mountains of data out there that will assist you in facilitating the benchmarking process.

Nevertheless, make sure the data you are compiling comes from a reliable source such as an industry or trade association. Good sources will allow you to view and compare data according to your regional location as well as overall size (revenue, assets, etc.).

No two companies are exactly alike, and each has its own business models and competitive advantages that allow them to separate themselves from competitors.

Nevertheless, benchmarking provides a high-level (think 30,000 foot overview) of reflecting on your organization's performance. I would advise however that you do not make the fatal mistake of being satisfied with being "in-line" with a benchmark.

Keep in mind that most benchmarks are averages, and that the best of the best will not only meet but exceed these standards.

Are you using benchmarking within your organization? If so, are you performing at, below, or above the standards? What steps are you taking to maintain or improve on past performance? Take this important step in your strategic planning process.

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I happen to like numbers, but I also happen to procrastinate about collecting numbers and data.

Unless of course it is google analytics - I love pouring over that stuff trying to guess what will make a difference to our traffic numbers.

Putting off bookkeeping chores comes naturally to most people and in franchising it's not surprising that franchisors are disappointed that their franchisees don't report correctly, on a timely basis or often not all.

But it is important.

And franchisors and franchisees need to extract the value from having good financials.

A generically sound reminder to keep an eye on your operation. No two companies, or for that matter, no two franchisee operations are exactly alike. What are reliable & consistent sources for franchise owners to get the comparative benchmark information our experts suggest?

Lon -

Too many franchisors rely only on what the POS systems spits out in terms of unit level performance.

A few very good franchisors get their franchise owners to report full P&L information. And the franchisees send in their numbers gladly because the franchisor provides them with valuable KPIs.

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About this Entry

This page contains a single entry by Chris Frye published on July 29, 2013 9:49 AM.

What Your Utility Company Doesn't Want You to Know about Lowering Your Energy Costs was the previous entry in this blog.

10 Ways to Understand Your Franchisor's Business Model is the next entry in this blog.

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