Farm Table says:
In Part 1 of this series, Jim Kelm introduces the concept of benchmarking.
Benchmark, Yardstick, Standard, Target, Scale, Rank. Whichever word you want to use, there is value in knowing how you stack up and rate in comparison to yourself and industry peers. Benchmarks are typically used to help you understand and improve your operational efficiency and financial performance.
Kelm introduces standard financial measurements:
- profit margin
- return on equity
- repayment capacity
- yield per acre
- revenue per employee
- capital equipment per acre
- cost of production
Kelm notes, “The objective of benchmarking is not to crunch numbers for numbers sake. The key is how to interpret them relative to your specific business.”
Know your numbers. Know your business.