It is difficult to find specific market performance intelligence that is timely, factual and that covers financially relevant and comparative periods. Many sources consolidate financial data from whole industries and an annual comparison can be made without specific business sizes being identified. However, the performance ratios are extremely broad-based, of little use to an individual business owner and bear no relation to the standard financial reports used to determine operational performance “fitness”.
The process of best practice benchmarking [see separate page], management identifies the best firms in their industry, or in another industry where similar processes exist, and compares the results and processes of those studied (the “targets”) to one’s own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices.