One of the business practices that has been very helpful to me over the years is benchmarking. If you’re not familiar with benchmarking, it is simply a fancy term for visiting with a similar company to yours that is located far enough away from you that both parties feel comfortable divulging confidential information about their business. Many years ago, a mentor of mine said, “Somewhere, someone has figured out the answer to every problem.” The question is, “How do you find those people?”
I find those people by networking through trade groups and other business organizations. When I meet someone with a similar business, and they appear to be successful and intelligent, I ask them if I and some of my key associates can spend a day with them comparing notes. The vast majority of the time the answer is yes.
Once another company agrees to benchmark with you, the first step is to create a list of items that you want to see when you visit the other company, that way you don’t show up at their business and just shoot the breeze. If you send a list of items and topics that you want to discuss on your benchmarking visit, the other party should be relatively well-prepared for you and have most, if not all, of those things available for your visit.
One caveat: Don’t ask for anything that you’re not willing to share about your own business.
We have a standard list that we modify for each visit, based upon the type of company we are visiting, where they are located and the particular challenges of their market. This way you don’t have to create the list from scratch for each visit. This makes preparing for the visit much easier for both companies. We don’t have to reinvent the wheel for every visit and the company we are visiting knows exactly what we want to learn during our visit.
When we arrive at the other company’s location, we begin with a general session with the management teams of both companies. Each CEO does a broad overview of his or her company to kick things off. Then we break into functional groups; i.e. the purchasing people from each company go to one breakout room, sales does the same, accounting, IT, HR, etc. We get back together at the end of the day and compare notes. We usually go to dinner as well, and oftentimes we learn more over dinner and a few drinks than we did back at the office. (It must the drinks that loosen people up!)
We have never done a benchmarking visit that wasn’t highly beneficial. You generally get a lot of new ideas as well as validation of things that both companies are doing successfully. Invariably, you also hear some horror stories of things that were tried that didn’t work as envisioned. Those types of stories can save you from some expensive learning experiences.
The company we benchmark with almost always then visits with us at a later date, and sometimes we have ended up making annual visits to each other’s companies. Both companies benefit from these visits. If you’ve never tried a benchmarking visit, give it a try and let me know how it goes. If you have benchmarked other companies in the past and it went well or poorly, I’d like to hear about that too.
Jim Sobeck is CEO of New South Construction Supply, a building products distributor based in Greenville with 10 locations in the Carolinas, Georgia and Florida. He is the author of “The Real Business 101: Lessons From the Trenches.” newsouthsupply.com.
