Lots of people talk about benchmarking figures, and there is often some confusion about what these figures actually are and where they come from.
In many sectors there are groups which will collate data across all businesses with the view of finding an ‘average cost’ of sales and other areas.
In early years there is no one group that collates and publishes that data, which can make finding true benchmarking figures quite difficult and it is tough to see how your own figures compare.
The two most common figures discussed are those for purchases and food, and for staff. Most buyers have their own models as to what they target to spend on food, purchases, and consumables. Some work on a percentage of gross fees and some will look at a cost per child per day.
For staffing, the most common benchmarking figure is 55-60 per cent of gross fees. However, this will vary from setting to setting.
The mistake often made when people see their own staffing cost running at a high percentage is to assume that staff costs must be reduced, and then to worry how to do that and allow for ratios.
While some settings are overstaffed to a point where this is a solution, in most cases, a higher percentage of staff costs indicates other operational changes that can be made in the setting.
The key thing to remember about benchmarking figures is that they can be used as a guide as to what the market may expect to see within your figures, but they will differ from setting to setting and this is to be expected.
If a cost is shown to be higher than the benchmark figure, this may relate to something you do differently or may show that there are changes that could be made. Those changes are not necessarily to reduce the cost base.
When looking at benchmarking, look at what works for you and your setting and find your own benchmark to work towards. Don’t worry about trimming costs to fit into an unofficial token cost bracket, instead use them as a guide and then create your own rules.