How to get started with FP&A Benchmarking
Do you want to know how your business compares to others?
You should! Benchmarking puts your performance into context.
Here are 4 ways to get the data (3 are free):
#1 Earnings releases
Even if your company is private, you likely have at least a few competitors listed on a stock exchange. Being public means, they are required to share earnings reports regularly (quarterly in the US). These reports are a great source to build your benchmarking dataset for free. Don’t just look at the financial data you can easily find aggregated on websites like Yahoo Finance. You’ll find many insights only on the slide decks the companies prepare for their investors. You can get them from the investor relations site of each company.
#2 Analyst calls
Public company CFOs try to share only what is necessary to keep investors happy. That’s certainly the case with the investor slide decks. But there are also the calls with Investment Bankers - they are legally required to be shared publicly. And they are an excellent source for benchmarking information you can’t find anywhere else. That’s because investment bankers are professional benchmarkers. They are trying to determine how companies compare to the market average so that they can place their bets accordingly. As a result, they’ll do their best to get the CFOs to reveal more valuable info during these calls.
#3 Venture Capitalists
If you don’t have any public companies whose financials are comparable to yours, there may be another way to get at least some data. Venture Capitalists spend their days determining which early-stage companies are winners and which will likely fail. It used to be challenging to learn from them as an outsider. But fortunately, things have changed. Start with reviewing the websites of VC firms that specialize in your industry. Then, look into the names of the VCs that work there. Google them to read their articles and social media posts. Their Podcast interviews can also be an excellent source for information that isn’t published elsewhere (skim the transcripts to save time).
#4 Benchmarking Data Sets
Use free data providers as a starting point (you'll find several via Google), then purchase only the data sets that you plan to make decisions with. Make sure to compare their data sources and level of granularity before making your buying decision. Are private companies included or just public ones? How many data points are available for companies of your size and growth rate? What are the filters you can apply to drill down into the finding?
So, I’m sure you’ll be able to kick start your benchmarking process by reviewing earnings releases, listening to analyst calls, following VCs, and using modern benchmarking data sets.
If you’d like to learn more about FP&A, I offer help in three ways:
1️⃣ Subscribe to my free newsletter “FP&A Tuesday” here.
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