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How to Use Benchmarking to Set Growth Targets

Benchmarking

Growth can feel like guesswork if you don’t have a clear frame of reference. That’s where Benchmarking comes in. By comparing your business performance against industry standards or peers, you can set realistic, data-driven goals instead of shooting in the dark. Done right, benchmarking is one of the most powerful tools in Growth Planning.

Step-by-Step Instructions

1. Define What to Measure


Pick the metrics that matter most for your business model:

  • Revenue per employee

  • Gross profit margin

  • Customer acquisition cost (CAC)

  • Average order value (AOV)

  • Return on assets (ROA)

2. Gather Your Internal Data


Pull the last 12–24 months of financials, customer data, and operational reports. Accuracy is critical—bad data = bad decisions.

3. Identify External Benchmarks


Look at:

  • Industry reports (e.g., IBISWorld offers detailed sector data)

  • Trade associations

  • Publicly available SEC filings for larger competitors

  • Local chamber of commerce studies

4. Compare and Spot Gaps


Lay your numbers against the benchmarks. Highlight where you’re outperforming—and where you’re lagging.

5. Translate Gaps into Targets


If your gross margin is 28% and the industry average is 35%, that’s a clear growth target. Work backwards: what operational or pricing changes can close that gap?

6. Build It Into Your Plan


Roll these targets into your strategic growth plan so they’re tied to specific actions and deadlines.

Helpful Tools or Templates


  • Benchmarking Spreadsheet Template: Create a simple table with “Your Numbers” vs. “Industry Benchmark” and calculate percentage differences.

  • Dashboards: Tools like QuickBooks, LivePlan, or custom Excel dashboards can track metrics monthly.

  • Development Theory: Strategic Planning Services: If you want expert help turning benchmarks into actionable plans.

Pro Tips from Experience


  • Focus on a few metrics: Don’t benchmark 25 things at once. Start with 3–5 critical drivers of profitability.

  • Segment wisely: If you’re a specialty coffee shop, don’t compare yourself to all restaurants. Use the most relevant peer set possible.

  • Update regularly: Benchmarks shift—revisit annually at minimum.

  • Context matters: Sometimes beating the benchmark isn’t realistic—or necessary—if your unique model delivers value differently.

Common Pitfalls (Callout Box)


  • Comparing against irrelevant industries or business models

  • Using outdated or unverified data

  • Setting unrealistic goals that demotivate your team

  • Treating benchmarking as a one-time exercise instead of part of ongoing growth planning

Final Checklist


Before you set growth targets, make sure you’ve:


  •  Collected accurate internal data

  •  Chosen 3–5 key metrics to benchmark

  •  Found credible external data sources

  •  Identified gaps between your performance and industry norms

  •  Translated gaps into clear, actionable growth targets

  •  Incorporated those targets into your strategic plan

Benchmarking takes the guesswork out of growth. By using industry standards as your guide, you’ll build targets that are realistic, motivating, and measurable.


Ready to apply benchmarking in your own business? Explore our Strategic Planning Services to get expert guidance tailored to your goals.

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