Best Practice For Thriving In The New Decade - Measure Well And Benchmark Versus Your Competition

How well does your company stack up against other companies in your industry in terms of fundamental financial measurements, such as: gross profit percentage, net profit percentage, cash flow, average days receivables outstanding, average days inventory on hand, bad debt loss percentage, and return on equity?

The results of the question will be helpful on two levels. One, and most important, it will reveal the fiscal fitness of your company. Two, it will serve as a guide to help you evaluate risks you take relative to potential gain. I have also left space below the question and comments for you to write your answers to the questions why and why not, so you can refer to them time and time again. So, step on the scales, dear reader and tell yourself truthfully, How fiscally fit is your company, in relation to this question?

To help you answer this question, think about the following comments:

Every industry has certain benchmarks for financial performance. While it is not always easy to see the full picture of how your competitors are performing, but relying on certain agreed-upon benchmarks for your industry as a whole, you can get a sense of how fiscally healthy your company is in relation to others in your field.
When he was CEO of GE, Jack Welch always rated his managers not according to their absolute results, but relative to the performance of their industry as a whole. For example, if a division had a 5 percent profit for the year, but the industry as a whole was doing great and business was up 10 percent, that division manager would be rated lower than a manager who outperformed the expectations for his/her particular industry.
In the same way, your company fiscal health can be assessed in relation to industry benchmarks. It is not enough to know that your company made a 5 percent profit last quarter. You should ask yourself, how well are we doing relative to the industry? Are we under-performing or outperforming the average results of our peers?
Sometimes companies get complacent during good times. When your industry as a whole is growing fast and everyone's making money, it can be easy to ignore underlying issues that explode into problems once the economy turns. On the other hand, during a recession when everyone is retreating and retrenching, even a 2 percent loss might be a sign of a relatively healthy company.

You may see different versions of this question in your life as: A rising tide lifts all boats. (Proverb) Tell me what company you keep and I'll tell you what you are. (Miguel de Cervantes, author of Don Quixote) A company is only as good as the people it keeps. (Mary Kay Ash, Mary Kay Cosmetics, Inc) It is a lot better to initiate change while you can than it is to try to react and adjust to it. (Spencer Johnson, author of Who Moved My Cheese?)

Do you truthfully answer this Yes or No?

Why?

Why Not?

How can the notes you just made help in your life, job and business? What one issue from your thoughts you noted when truthfully answering this question, will you start improving, TODAY?

Because risks are what really go wrong when you are not looking: stupid things like bounced checks, losing your best customers or best people when you are blindsided. You need to create peripheral vision in your business so you are not blindsided.

You need a perspective of life under the microscope and to have lived to tell the tale. Insights give a common sense approach to what people make complex, as companies grow.