5/12 | Benchmarking: Comparing to Spot Your Opportunities
What you can't see from the inside
Most entrepreneurs look at their business through a single lens:
Sales are up, so everything is fine.
The business is profitable, so it's healthy.
The bank is happy, so there's no issue.
The problem: none of these answers tell you how you actually compare to other companies in your sector. Let alone what's truly driving your value.
At Optionality, we have access to data from over 180,000 anonymized private companies across North America. Data historically reserved for private equity funds, major banks, and top consulting firms.
We believe entrepreneurs should have access to it too.
Because benchmarking answers three essential questions
How am I performing compared to similar companies?
Based on your industry, size, and profile: growth, profitability, efficiency, financial strength, valuation.What's driving or limiting my value?
Gross margin, EBITDA, growth, debt.Where should I focus my efforts?
New markets, products, acquisitions, geographic expansion, pricing, cost reduction, automation, reorganization.
Why this changes everything
If your business sells for around 5x EBITDA, every extra $10,000 in EBITDA potentially represents an additional $50,000 in value for you.
Sometimes a relatively simple improvement has a massive impact on value.
Benchmarking is exactly what pinpoints those opportunities.
A concrete example. Two companies each generate $10M in revenue.
The first produces $800,000 in EBITDA.
The second produces $1.5M.
At 5x EBITDA:
Company A: $4.0M in value
Company B: $7.5M in value
The difference isn't the revenue.
It's operational performance.
Simon's Tip:
Comparing yourself to the neighbor at the golf club tells you nothing. Comparing yourself to thousands of real companies in your sector tells you exactly where the money you're leaving on the table is.
Your homework for this week:
If you had access to the performance of the top companies in your industry, what three metrics would you absolutely want to compare?
Because at the end of the day, you can only improve what you measure.
Next article → We'll talk about your "bankability": how to use debt as a growth lever.