It feels like in this economy we should be monitoring some external indicators, I can think of a few for our business, but are there companies using external indicators to measure or drive their business? If so where are they consistently finding them, how are they bringing the information in?
Are there companies using external indicators to measure or drive their business?
Answers
I agree with you, companies should be monitoring external indicators to understand both macro and micro level changes in the economy that impact their business. Companies of all sizes and industries like Dick's Sporting Goods (Retail), Marsh (Insurance), Zipcar (car rental) and many more are bringing in external macro and micro economic indicators and powering their portals, enterprise applications and corporate websites with leading indicators to make better informed decisions.
Public company benchmarks are available from EdgarOnline. This allows you to compare your P/L, Balance Sheet, Cash Flow to public companies.
There are also a lot of "free" data out there from government run websites like data.gov. You can find things like leading economic indicators, durable goods measures, census changes, housing starts, consumption, etc. I say free in quotes because you are on your own to figure out how to parse it and present it along side your financial and operational information.
If you are looking for things like what you should measure in your business (i.e. internal KPIs) you can look at a website called www.kpilibrary.com.
Just as a real life example on the use of external indicators. There are companies whose business will not take off until housing turns around. Every week we are pelted with different housing indicators, some or up, others are down but had you tracked the five key housing indicators over time (monthly permits, existing home sales, new home sales, housing prices, inventory of houses for sale) you could have seen 2008 coming and you will know when the economy is turning around. If your business is regional you can get the same indicators for any region or metropolitan area.
There is a SaaS CPM vendor who is providing much of this information through their application and the available data sources are growing.
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I've got a different twist on this issue. I can enter a formula in an
However, I've found very few resources that suggest ways that operating businesses can use external data for forecasting, benchmarking, or other purposes. Can anyone recommend some resources? Can you explain how you've used such data in the past or how you would use it if it were easily available?
A source I have used historically is analyst reports from my specific industry. These are available typically for free and you an investment banker or the analyst themselves and ask to be added to their list for distribution. They do a great job of benchmarking key data for the market and their customers and will share, especially if you are in the industry, private and willing to talk a bit about your business with them as well. Find the best analyst coverages in your industry and then use the work they do to help manage your business!
I would also add that shareholders in this economy want to see external comparisons when evaluating company performance so if you use KPI, you will be "ahead of the game".
Companies monitor external indicators from published reports of- companies,
credit rating agencies,analysts reports,Inter Firm Comparison surveys by
associations for each industry.In UK Centre for Interfirm Comparison did
lot of work in the last century to standardise ratios.Now Business Magazines
also publish indicators.But all these relate to past performance.
Future information/indicator monitoring is the need of the hour with
turbulent changes happening externally.
Silicon Valley Bank is offering a new service - SVB Analytics Benchmarking - that enables private companies in the software, hardware, life sciences and cleantech sectors to benchmark their financial performance against an aggregate of relevant peers. You can sort by sector/segment/niche, and if at least 5 companies meet the criteria you've selected the median and mean of the aggregate will be displayed - income statement and balance sheet detail, along with key financial ratios.
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