Establishing performance benchmarks can help you keep track of your business.
Is a benchmark a thermostat or thermometer? Used properly, performance benchmarks help you keep track of your business. But where do these benchmarks come from? You could look to other contractors for guidance but will their benchmarks work for your business? Shooting for the same percentages as another contractor is very much like calling around to determine the going rate. Someone else's going rate won't work for you unless you have the same costs, vision and market conditions that they do.
Operational benchmarks may be stated as percentages, sales or other performance goals. Simply stated, benchmarks are thermometers. They can tell you what's going on and help you figure out what needs tweaking, but they do not control how your company operates. For example, you cannot decree that labor will be 20 percent of sales and make it so. However, you can calculate what you believe to be a good benchmark. If actual performance varies, you'll have a starting point for finding and solving performance problems.