At this time of the year, accountants in business are invited to participate in a number of surveys which are designed to provide a comparison of an individual accounting with similar businesses around Australia. In return, participants are presented with a report containing a bewildering array of data about a wide range factors which are allegedly linked to the level of success of the business.
I’m sure other businesses have similar opportunities to participate in similar surveys (and I’m not talking about those dreadful Australian Bureau of Statistics surveys!) And let’s not forget the “compulsory surveys” conducted every year by the Australian Tax Office (ATO) – every tax return lodged is also a survey response which is used by the ATO to develop benchmarks.
These benchmarks provide a point of comparison for your return and major differences may result in a “please explain” request by the ATO.
The voluntary surveys suffer from at least two shortcomings –
First, low participation rates mean that the results may not be statistically valid representations of the total population, and
Second, the relevance of the results to your business is always questionable. Is a comparison of a business in Rockhampton (a “Regional” location for survey purposes) with an aggregation of the results for businesses in all regional centres in Queensland such as Mt Isa, Cairns and Gladstone useful? Each regional centre has its own unique economy (and economic challenges) which must somehow be part of the analysis.
Of course comparisons in all areas of life are important and inevitable. Comparisons provide an opportunity to identify what is possible and (maybe) inspire higher goal setting. Even those who “at the top of their game” in a particular measurement can identify opportunities to improve in other areas.
It is always important, in business and in general life, to ensure that you are measuring and comparing what’s important to you. Business surveys as I described at the start focus on comparisons relating to profit improvement. The ATO surveys focus on collecting more tax (which may or may not be related to profit improvement).
But you and/or your business may have a different view of what’s important. You may decide that environmental issues or employee welfare issues are more important and therefore comparisons with profit maximisation measures may not be the most relevant for you.
So just because something is easy to measure, noticeable and is readily compared, don’t assume it is relevant to you. Make sure you have a clear idea of what’s important and develop relevant comparisons for that. Even if the best comparison is this year vs last year, focus on that and forget the rest.