It’s a question that gets asked every day, but what does the answer really mean? For most companies, “doing well” means sales are better than last year while “doing okay” means sales are about the same.
The problem is that nobody is an industry of one. Everybody competes for customers and clients.
You might think you're doing well but what if you're not?
CEO: Turns out we suck.
BOARD: But you told use we were leading our industry.
CEO: Uh... I guess I was wrong.
BOARD: Uh.... guess we were wrong, too — about you.
As University of Wisconsin professor Jordan Ellenberg noted in this Wall Street Journal article about using data to make good decisions, "A number by itself is often meaningless; it is the comparison between numbers that carries the force."
One thing we’ve learned since launching our small business management tool it’s that a company that only compares itself to itself isn’t getting the outside perspective it needs to stay competitive.
- 1. Performance is relative.
- 2. Everybody sucks at something.
- 3. Nobody expects the Spanish Inquisition.
The challenge for most small- to medium-size businesses (i.e. $1m to $50m in revenue) is that as much as they know they need to benchmark their performance this way, they don’t have the resources to do it themselves — even those with dedicated CFOs, COOs, CPOs and CMOs find that the process of aggregating and analyzing all that industry, trend and competitive data is not only time consuming and difficult, but expensive.
What can they do?
We think our Strategic Management & Planning tool is a great resources, of course, but government agencies like the SBA, peer groups like Vistage or CEO Roundtable, industry newsletters and business-specific bloggers can provide valuable competitive data, too.
The point is not where you get your information but why you need to, because if you're not comparing, you're not competing, and if you're not competing, you're not gonna be in business for too long.
(For more on alternative sources of competitive data and business intelligence, check out “CEO School: Compare or Die.”)
Are you doing as well as you think you are? Find out how you compare to your competition with our Strategic Management & Planning Tool.
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