Maybe it’s an inherent competitiveness or just the pursuit of improvement, but it is commonplace for people to seek out benchmarks that they can use to assess their relative position or performance. It interests people to know how they compare to their peers. Benchmarks have a place in business, too, and can be an invaluable instrument to help business owners succeed.
Equipped with an intimate knowledge of their clients’ finances, accountants are uniquely positioned to help their business clients think strategically to achieve success. With assistance from accurate and relevant data, accountants can help their business clients by comparing their financial performance to the performance of their peers. This ability to effectively benchmark is one way to transition from a quarterly tax specialist to a trusted business adviser.
Assuming that accountants are able to get their hands on reliable industry data, it becomes necessary to isolate a few specific metrics that will be especially useful across industries. While different industries and companies measure success in their own unique ways, a few metrics are almost universally indicative of a company’s financial health.