Benchmarking

Get the analysis you need to achieve your goals

The digital era has given rise to powerful data analytics tools. These are helping firms to make more informed decisions in an increasingly disruptive environment.

Benchmarking is one such tool. Goodman Jones’ benchmarking service compares your financial performance with a carefully selected peer group.

Our benchmarking reports allow you to:

• Gauge your overall performance – find out how you’re doing against your sector as a whole, and its best-in-class organisations
• Make detailed KPI comparisons – see how your growth, revenue, cost base, profits and shareholder value stand up against your competitors
• Get a five-year outlook – understand the risks to your industry, and the economic context your business faces

Benchmarking benefits

Benchmarking takes the emotion and subjectivity out of performance measurement and strategic decision-making.

It provides crucial strategic context for your business plan, by shedding light on important issues such as:

• how well aligned your objectives are with the prospects for your sector
• the optimal structure for your organisation, in the UK and overseas
• your future funding and acquisition requirements
• what your sector outlook means for your exit plans
• what contingency planning you might need to do

Having this insight at your fingertips helps you to anticipate threats, make the right decisions, and ultimately improve business performance.

Benchmarking reports are also highly useful when seeking investment or acquisitions, or planning your exit. The analysis they offer can help justify your reasons for borrowing, selling up or purchasing other businesses.

Our tried and trusted approach

Our team has developed a thorough process for benchmarking exercises. We begin by working closely with your senior team to:

• define your benchmarking aims, ensuring that our analysis will give you the intelligence you need
• identify the methods and assumptions that will generate granular and accurate comparisons

We then collate and analyse economic, industry, demographic and government data from specialist reports – in collaboration with research house IBISWorld. And we combine this with the data we have on your own business to:

• understand your market and its outlook
• assess the competition
• make forecasts
• conduct due diligence on financing and acquisitions

Finally, we present our findings in a plain-English report, written for your financial and non-financial stakeholders.

How we've helped:

Benchmarking stakeholder value for a trade association

The board asked Goodman Jones how they could verify that the association was offering best value to its member associations.

With Brexit looming, they also wanted to check that its UK headquarters was competitively located in terms of its cost base.

Benchmarking performance

We recommended conducting an industry benchmarking study.

Benchmarking analysis looks at how an organisation is performing compared to its sector as a whole. It examines growth, revenue and costs in granular detail, giving an in-depth view of profitability in relation to the business’s peers.

By looking dispassionately at what the numbers say, benchmarking takes the emotion and ‘gut feel’ out of performance analysis.

Framing the parameters

We worked with the board to define their benchmarking objectives, so that the exercise would analyse exactly what they needed.

We selected suitable peer organisations to evaluate against, and the right metrics too analyse. The performance measures chosen for comparison were:

• revenue growth
• revenue per employee
• gross profit margin
• operating profit margin
• costs and stakeholder value per £1 of revenue

Looking at revenue growth would provide a barometer of the scale and popularity of the federation’s events.

Meanwhile, the profit margin analysis would indicate how
efficiently they were running these activities.

Revenue per employee was intended to show how much income is being generated for stakeholders by the contribution of the workforce. Finally, comparing their cost
structure for each £1 of revenue would shed light on how its income is being spent, and how much is being retained as profit.

Combing the data

With no industry reports for trade associations available from third parties, we went about gathering and analysing publicly available information, including:

• financial reports
• corporate websites
• relevant ONS statistics

We also identified the methods and assumptions that would to allow us to make detailed and accurate comparisons.

Then, having run our analysis and interpreted the results, we presented our findings in a plain-English report written for financial and non-financial stakeholders.

A reassuring outcome

Our analysis highlighted the federation’s robust financial performance:

• It demonstrated that the association generates an excellent return for its stakeholders, through the highly efficient management of its events and underlying costs.
• It also provided the evidence about the return on the investment in staff. The report showed that it was well rewarded and incentivised, the workforce generates a greater return to stakeholders than their counterparts at many competitor organisations.

“As a non-profit organisation, we’re always focused on giving a best-value service to members.

Goodman Jones’ benchmarking analysis was designed specifically around our needs and the metrics we were most interested in.

The exercise not only underlined our robust financial performance, and the value generated for our national associations; it gave us a better feel for how we compare to our peers, and highlighted areas for deeper consideration.”

Head of Finance – Client Organisation

“The inescapable conclusion was that their members are getting excellent value. Our benchmarking solution demonstrated to the board and stakeholders that the organisation is competitive, efficient and has the right structure in place. As such, no corrective action was considered necessary.

With this level assurance, the board could focus on its mission to invest in the industry with renewed confidence.”

Sarf Malik, Partner, Goodman Jones