Establishing benchmarks is of no value if you don't put them into practice. By definition, benchmarks are standards against which you should measure your performance. This holds true for internal benchmarks as well as those established by the industry at large.
How often should you take stock? Monthly comparisons work in most cases, but a few benchmarks ought to be looked at every week and even every day. The more often you measure performance, the easier it will be to make needed corrections before problems grow out of control.
Sales. It's not enough to know where you stand at the end of the year. You need to check sales targets every month. Compare actual sales with projected sales, and this year's numbers with last year's. Look back at the past five years to find long-term trends. Compare historical with current lead counts to forecast sales for the next quarter.
Gross margin. It's difficult to determine this number mid-job unless you follow percentage-complete accounting (another reason to switch). Compare actual with budget, year over year, and the five-year trend. If your margin is slipping, find out why immediately with a close job-cost examination.
Project profitability. Not all jobs are equally profitable, and the biggest projects don't always earn the best margins. Compare jobs by type, cost, and profitability, then look at factors that influence profitability. These include, among others, job duration, number and value of change orders, crew size, and subcontractor involvement.
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