Any good resources for benchmarking/comparing a small business?

The Coffee Shop
1

Somewhat hating to admit this as I feel badly for others, but I will: My employer is a small business that is growing.

My apologies to those that have lost their jobs, or will, etc. But nonetheless, we’re growing. We have a niche, we have great people, and things are going well.

We’re trying to plan ahead for hoped for growth, making sure we don’t wake up one day and say “Holy crap, we have 85 people working for us, how’d that happen? What do we do next?” etc.

I’ve been searching in vain for some good rules of thumb, analogs, heuristics, benchmarks, whatever you want to call it that we can compare ourselves to. I’ve looked at HBR, some of the big consulting firms that have good publications, various websites, etc. So far nothing of use.

The gist is: what types of processes/methods, skills, resources, IT components, etc do most companies have as they grow from 10 to 40 to 80 people (# people being arbitrary to $ we realize, but the focus is on people because that’s how we make money, we can’t get to $20M/year with 5 people with our model).

We’re looking to talk to some of our business partners that were in our shoes previously, but we’re concerned that they’ll not be willing to share for fear of competition etc.

Anything would be helpful.

We initially outsourced a good bit, but are starting to bring things back in. I’ve gotten the President and other senior people to realize they have been making decisions with no real rhyme or reason, just “well that seems like a good idea”. So far the ideas have truly been good. But I want to add some rigor to the process and make sure that the next bright idea helps get us from today to tomorrow.

Example - we just hired a full time IT guy, but have no real reason other than “the guy who is doing IT on the side said we should”. We could have fired our current HR person and gotten someone better (and there are a lot of great options there).

Maybe bringing in some of the finance is smart, or maybe we should have gone the other way and outsourced more. But the decisions were made on a whim and I’m going to fix those cultural issues.

What I’m hoping to find is some comparisons so we can say “Most small companies outsource X” and then we can figure out if doing it ourselves is part of what makes us special and better than the competition.

2

I’ve done quite a bit of benchmarking. You basically want to find another company that you can learn from, BUT you really need to be able to offer something in return. You need to look for someone (ideally in your area) that is not a direct competitor that is at a different growth stage. Don’t fool yourself into thinking that a bigger company has nothing to learn from you. How do you go about finding “that company”? Start with contacts, personal or professional. An example: my previous company made injection molding equipment. It was largely high volume, custom work. Good benchmarks for us were generally customers and suppliers, but there were also custom extrusion molding companies. They played in a similar market, but they were not competitors…

I’d be happy to give you advice if you want to PM me with more specific details (industry, products, etc.).

3

Hi there. This may not apply but I have access to benchmark data regarding Employee Benefits. I can run a study based on your size, location, industry, etc and develop an 80 page report of what similar companies like yours are providing their employees regarding benefits.

Do you work with a broker? 80 employees is a great time to start looking for the next level in customer service and client deliverables.

I’m a consultant for USI. Perhaps we should chat off line. I’m sure I can whip up some data for you…pro bono! I’ll check with my business consultant buddies to see what they can come up with.

-Steve
Write me back at stephenleblanc at yahoo dot com

PS: This is my first experience of mixing work with pleasure. My co-workers tell me I should hang up my tri gear and learn to golf… this’ll show them.

4

If you want quick and dirty numbers take a look at this resource:

http://books.google.com/books?id=5nEsDHfsfFwC&printsec=frontcover&dq=almanac+of+business+ratios#PPT21,M1

You won’t get the entire thing on Google Books, but worth a look.

5

Find your NAICS code, or one that is most applicable, and get a professional market analysis. The results of these analysis’ are from banks that do buisiness with companies in your NAICS code, so you can compare your financials to your competition (or like companies).

The growth part can best be discovered through the book Flamholtz, Eric and Yvonne Randle, Growing Pains: Transitioning from an Entrepreneurship to a Professionally Managed Firm, Jossey-Bass, March 2002. It’s an academic book, not very fun to read but is a great resource.

There you will see stuff like this: edit: sorry about the format, I put / where spaces should go. Don’t have time to get it all pretty.

Stages of Organizational Growth

Approximate Organizational Size (in sales)
Stage /Description /Critical Development Areas /Manufacturing Firms /Service Firms
I /New Venture /Market and products /Less than $1 million /Less than $0.03 million
II /Expansion /Resources and operational systems/ $1-$10 million /$0.03-$3.3 million
III/ Professionalization /Management systems /$10-$100 million /$3.3-$33 million
IV /Consolidation/ Corporate Culture /$100-$500 million /$33-$167 million

There will be few ‘hard and fast’ rules, but you can establish where you are and where you want to go. This can set the stage for a strategic plan and execution.

FWIW - I got my MBA focusing on small business in these situations and am a VP of Ops for a company in stage III. I don’t come to the Lavender Room much, though.