We all want to effectively grow our businesses but many of us never stop and consider what that should look like for what we want. Effective benchmarking allows you to quickly know if you’re on track or not with your business. If you’re falling behind, it’s much easier to realize what needs to be done to correct the issue. It’s something we do here at Vendrive each month!

 

Whether you want to double your business in the next thirty days or comfortably grow 10% each month this post will help you clarify your method for successfully doing so.

 

Benchmarking The Right Way

 

The famous Peter Drucker said, “What gets measured gets managed”. Nothing could be closer to the truth. Want to ensure you have the correct amount of Vitamin D in your body? Measure it once a week. How about growing your business 30% each month? Measure it.

 

The actual act of measuring something puts more focus on it, regardless of what it is you’re measuring.

 

Before you can begin measuring anything you first need to ask an appropriate question: what’s the single most important metric for my business?

 

Is it monthly sales, monthly growth rate or possibly how much you spend on inventory each month?

 

There are no right or wrong answers but you must choose just one to measure effectively.

 

When I started growing my business 30% each month I quickly realized that I didn’t care how much I did in sales because I couldn’t control that number. What I could control was how much money I spent on inventory each month. I knew that if I spent $25,000 each month on inventory I would do roughly 30-50%+ in sales based on my margin and because I only buy inventory that fits my buying criteria, I was safe to use this metric.

 

I then quickly realized that if I wanted to double my sales I would need to focus on spending $50,000 each month, instead of the current $25,000. In my opinion, that’s a much better way to approach the problem of growth as it forces you to ask very different questions.

It’s no longer how can I grow sales, but how can I add 10+ suppliers this month. What would I need to change in my process to allow me to do that? What would stop me from being able to reach this goal?

Once I’ve answered all of these questions, I get to work applying my answers. I solve any potential roadblocks and change what needs to be changed.  

 

My personal benchmark became increasing how much I was spending on inventory by 30% per month, essentially growing my sales by 30% by default as well.

 

Whatever percentage of growth you want is your choice, but make it personal and work backward from where you want to be in 6 months or a year from now.

 

Once you’ve chosen your metric, find the simplest way to measure it, either weekly or monthly.

 

Side Note: Are We In A Harvest or Winter Month?

 

There are only two seasons as an entrepreneur and business owner: a harvest season and a winter season.

 

A harvest season is one filled with progress, financial gains, and pure joy. On the other hand, a winter season is filled with anxiety, struggle, and stress. Typically when an entrepreneur fails it’s because they never survived their winter season. These seasons can last anywhere from a few weeks to a few years but it’s important to know which season you’re currently in because it’s cyclical.

 

Being in a winter season should never worry you as it simply means you’ll have to survive just long enough to reach your harvest season. Likewise, don’t relax too much while in a harvest season. Save for the upcoming winter.

 

Being ready for these two seasons ensure you never rest on your laurels and never quit because of struggle. You become quite Stoic.

 

Ask yourself right now which season you’re in. If you’re in a winter season that means you have a lot to look forward to. If you’re in a harvest season it means you need to prepare for what may be coming so you never feel the pain of a potential downturn.  

 

Closing Thoughts

 

Knowing where you want to go, understanding where you currently are and what is required to bridge the difference of the two is incredibly important. It will tell you whether you need to double down on your efforts to get back on track or keep steady if you’re already on track.

 

You decide the track.