Benchmarking small business performance: barriers and benefits

Benchmarking is now a commonplace term in business and many definitions have been proposed. Despite its increasing popularity there is growing evidence that it is often used incorrectly. ‘Benchmarking’ seems to be confused with competitive comparison studies, which are simply a component part of benchmarking. This paper reviews previous benchmarking studies in general, identifying the background to its growth, and benefits and barriers relating specifically to implementation by small businesses. Finally, the paper proposes strategies that can be adopted to make better use of benchmarking for small business. There are a number of barriers preventing businesses implementing benchmarking processes and the types of barriers may vary with business size. Large businesses have adopted benchmarking in order to gain and maintain competitive advantage. Although large businesses are well placed to take on new quality improvement processes, smaller firms may question their applicability. Previous studies indicate that performance measurement is rarely used by small businesses, as there are many barriers that prevent small businesses from undertaking benchmarking. Some of these barriers relate to lack of time, cost issues, lack of knowledge and poor strategic planning. Despite these barriers there are many benefits that can be derived from implementing benchmarking programs. Some of these benefits include identification of improved ways to meet customer needs and cost-effective collection of innovative ideas. This paper highlights that benchmarking is a huge and complex task, requiring dedication to ongoing effort and suggests that small businesses may require initial support in order to effectively implement benchmarking as a continuous improvement program