Eight Easy Steps to Higher Profit (Internal Benchmarking)

1. Pull your historical annual financial statements. Make it five or seven full years.

2. View your statements side by side. Decide whether you want to work on improving every line item/department or just a few key ones. It makes sense to focus on the ones that have the biggest impact on the bottom line. That is, the largest revenue- generating areas and the largest expense areas.

3. Design your spreadsheet. Enter the pertinent historical income statement data as in the sample CFS spreadsheet on page 4 that accompanies the cover article in this issue (Internal Benchmarking).

4. Identify the historical-best line-item performance for each line item. Circle or color them for ease of visual identification (as we did with the CFS sample).

5. Create your pro forma "best of" income statement. Take care to transfer the correct type of data - dollars or percentage of revenue. Revenue and fixed-expense items should be plugged in as dollar figures. Costs of goods and variable expenses should be plugged in as percentages of revenue.

6. Assign one person to each line item you wish to tackle. Make it clear. Make them accountable. Give them the support they need.

7. Investigate strategies for hitting the "historical best." Every line item will need a strategy, execution of strategy and rigorous monitoring.

8. Track results and pay incentives for success. It's out of sight, out of mind. Make the effort and the results part of your daily and weekly routine. It won't be comfortable at first, but stick with it.