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CETA Edge: Benchmarking

CETA Edge

Benchmarking

By Diane M. Calabrese / Published May 2021

Photo by iStockphoto.com/z_wei

Par. Fastest time. Best score. Even top win-loss record for a version of solitaire…When we want to do better, we want to know how much better others have done.

     Benchmarking allows CETA members to self-assess by comparing their companies to competitors, anonymously. Proprietary information shared is kept confidential by the Profit Planning Group, the outside program administrator.

     In 2021, CETA members can participate in benchmarking as part of membership. “Thanks to our member sponsors, Alkota, Kärcher, and Mi-T-M, the normal fee has been covered, and all CETA members can do the benchmarking at no cost,” says Cherie Sparks, the operations manager at River City Pressure Cleaning Equipment in San Antonio, TX. 

     Sparks chairs the benchmarking committee, which endeavors to provide education about the value of participating. “One of our goals is to overcome obstacles to participation,” she says. 

     “There seems to be some hesitancy to share data in fear it will not be protected…” explains Sparks. In response to the concern, she emphasizes the 30-year record of discretion Profit for Planning Group has. 

     “Another committee goal is to look for ways to make the survey easier to complete,” says Sparks. The committee and CETA do not want a tool designed to streamline and add profit to be burdensome.

     A company benefits by being fully aware of its strengths and weaknesses. “Ignorance is not bliss if your business goals include staying competitive and successful,” says Sparks. “Knowing how you stack up in different areas of your business can give you greater insight for planning and execution.”

     More participants and more data make the survey more useful. So, participation matters. 

     “I think the main thing that we get from benchmarking is just seeing where we are at compared to other dealerships our size,” says Greg Sprunk, president of Superior Cleaning Equipment Inc. in Phoenix, AZ. “It takes us out of our own silo and/or group of friends with similar businesses to objectively measure where we are strong and where we are not.”

     Sprunk heartily endorses bench-marking. “I use it as a tool to try and constantly improve our areas of weakness and to be as strong as we can when we get to the next year,” he says. 

     “I find it very valuable and definitely worth the membership alone,” explains Sprunk. “And the more people that participate, the stronger the benchmarking report is.”



     Ferreting out little things that merit improvement is easier when done in context. Golfing round after round alone and making par means nothing if everyone else comes in lower.

     “One important benefit that our company values is the ability to see where our dealership is strongest and weakest,” says Jessica Bowen, the general manager at Aqua Engineers Industrial Cleaning Equipment in Austell, GA. And she adds a striking point about the comparison.

     “Not only compared to other distributorships, but also compared to ourselves year after year,” says Bowen. “Being able to see the weak spot, work on it, and track its progress is quite valuable to us.”

     The compare-with-self facet of benchmarking gets high marks from a veteran of the industry. Al Bonifas, owner of All-Spray in Swanton, OH, gave us an example of what a company might receive in its peer performance metric report.

     Evaluative categories such as cost of goods, asset turnover, and total operating expenses will be assigned a qualitative appraisal (e.g., fair, good, strong). Other categories, such as sales per employee and sales
volume, will be tied to qualitative and quantitative measures. Sales might be good, for instance, and also rank above 65 percent of other companies in the survey.



     “The funny thing is that after 37 years in business, and not having an accounting background, I didn’t know what many of these things meant—not to mention tracking them—for the first 15 to 20 years,” says Bonifas. “After joining CETA and talking to other successful dealers, I found out how important this information is.”

     Take EBIT [earnings before taxes and interest], a measure that many companies—and their creditors—key to when making a strategic plan. The ratio of EBIT to total assets, when strong, points to a profitable company.

     “The biggest improvements at my company have happened over the last 10 years as we have learned more about and paid attention to the financial performance metrics of the business,” explains Bonifas. “After doing the benchmarking for several years, I am now able to evaluate trends, which mostly have been positive. It’s interesting how things coincide like that.”

     The enthusiasm for benchmarking among distributors is mirrored by manufacturers who support
the program. 

     “Mi-T-M has been a sponsor of the CETA benchmarking program since its inception,” says Aaron Auger, the water treatment division manager at the corporation based in Peosta, IA. “There are many ways that we support CETA throughout the year, but benchmarking is something that we can do that directly benefits members by allowing them to participate in a program that is both informative and educational.”

     Positive feedback from members is always welcome—and it’s consistent. “I have yet to talk to a CETA member who has benchmarked who has said they didn’t benefit from the report,” says Auger.

     The ability benchmarking gives companies to “take a look inside” their businesses and eliminate weaknesses and build on strengths gets high marks from Auger. “Because of the direct benefit to CETA members, benchmarking is a program that we will continue to support here at our company.” 

     Kärcher North America Inc., headquartered in Denver, CO, supports benchmarking for many reasons, explains Frank Rotondi, executive vice president, professional distribution sales, marketing, and customer service at the company. “We understand that it is easy to lose sight of the big picture when you are dealing with the day-to-day duties and difficulties of running a small business,” he says.

     “Between sales, service, balancing the books, and any number of other worries, it is hard to make the time to take a step back and really see how your business is performing,” explains Rotondi. “Benchmarking is not just talking about how many pieces of equipment or how many service calls you made, it’s about specifically aligning your goals and future needs with the dealership’s financial performance.

     “Giving the dealers in our industry the ability to benchmark against their peers is a valuable tool, so we not only gladly sponsor the effort but applaud CETA for driving it forward,” continues Rotondi. He adds that he sees much greater potential for using benchmarking results to strengthen the industry in the future.

     “The dealers who take benchmarking a step further and work with others to utilize it see even greater success,” says Rotondi. “Multiple topics, from increasing gross profit margins and billable service hours to decreasing their cost of sales and expenses, or sharing best practices on one specific topic in a small group setting on a monthly call, can lead to substantial gains.”

     Rotondi advocates collaborative building on results. “Meeting once a month for a few hours to benchmark with peers and learn from one another is time well spent. I would encourage dealers to work with the dealers within their distribution networks, or local businesses with a similar sales and service structure, to take their own benchmarking to the next level.”