While some small and medium businesses are slow to grasp the benefit that technology can bring to their success, many more are starting to learn that it is a key element of achieving longevity and sustainable growth. The latter is an important mindset if you want your SMB to succeed.
One of the most transformative opportunities for your SMB lies in data analytics and metrics, both its own and those of your competitors. You don’t have to hire data scientists and research firms to gather those metrics. If you know where to look, your small business can gather, analyze and make sense of data you already have in several ways.
IBM’s Watson Analytics makes advanced and predictive business analytics easily accessible to small businesses, for example. And Google Analytics is a free web-traffic monitoring tool that provides data about website visitors and traffic sources using a multitude of metrics.
A less frequently considered, but important step in effectively growing your business is to benchmark how your current sales and operational efficiencies stack up against similar companies. After all, how can you strive for success if you don’t know definitively what success should look like for your business in comparison to your competitors? While establishing your 2016 business goals, 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 eCommerce solutions they’re utilizing?
According to Stitch Labs, Inc., to establish a competitive benchmark for your business, you must:
1. Determine Key Metrics – What data points are most central to your business? Focusing on key business-driving metrics like revenue, order volume, and cost of goods sold will make researching competitors and measuring success much more clear.
2. 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 the market.
3. 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’ll need to answer.
4. Leverage Benchmarking Tools – Although there are costly industry analyst reports or anecdotal trade stories, the data generally available to small and mid-sized business (SMB) retailers will not provide enough specific information for effective planning. Thankfully, free business insight tools are becoming newly available to help make the research and discovery process easier.
5. Develop an Actionable Plan – 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. Follow these plans weekly and monthly to confirm you’re meeting important milestones.
While the concept of benchmarking may be a little intimidating at first, rest assured there many sources that can help you get started with it. The U.S. Small Business Administration offers a free tool called SizeUp that lets you see how you compare with your competitors. You just provide your industry and the city you’re located in and the tool will display information for your top three competitors.
You can also benchmark on your own your company’s key statistics against available industry norms like salary surveys and published information on financial ratios for your industry.
You don’t want the success of your small or medium business to depend on a hunch. The more information you have about your own data points and those of your competitors, the better your chances are for moving the needle on your bottom line.
Toni Bowers has been in the tech publishing world for over 25 years. She currently tackles the topics of small to midsize business technology and introducing new tools for IT. Follow Toni on Twitter @tbowers928.