Benchmarking and Best Practice - Utilization Rates

Benchmarking and best practice is a way for you to measure your success against others who have made the leap into computer consulting before you. By measuring your own performance against industry benchmarks you get an idea of what you need to work on to be successful.

A key element in your benchmarking and best practice is to look at utilization rates. Your utilization rate is the ratio of how many hours you bill clients compared to how many hours you work in a given period.

Utilization Rate = Hours Billed / Hours Worked

The typical benchmarking and best practice comparison is based on a 40 hour work week. If you work 40 hours in a week but only work with clients for 10 billable hours, your utilization rate is 25%.

Utilization Rate Benchmarks

Benchmarking and best practice in the computer consulting industry suggests using a utilization rate of 50% as a minimum tolerance level. This may not be realistic for the first few months of start-up though. What you want to monitor is whether your utilization rate is showing an upward trend toward the benchmarking and best practice standard.

A 50% utilization rate is a good place to be within six to nine months of launching your business. By the time your business matures, a utilization rate of 75% (30 billable hours per week) is a benchmarking and best practice ideal. Once you get higher than that your quality of life begins to suffer. The huge invoice payments coming in are great but the resulting burnout and stress are not worth it.

The Bottom Line on Benchmarking and Best Practice Utilization Rates

It is important to measure your performance against others in the industry. A benchmarking and best practice comparison, particularly with utilization rates, is a great place to start. Your ideal rate will vary depending on the phase your business is in, but remaining within the benchmarking and best practices range is a good indicator of sustainable business operations.

Copyright MMI-MMVI, PC Support Tips .com. All Worldwide Rights Reserved. {Attention Publishers: Live hyperlink in author resource box required for copyright compliance}

By Joshua Feinberg | This article was posted on 2007-07-03 01:06:42

About The Author:

Joshua Feinberg helps small business technology providers get more steady, high-paying PC support clients. Sign-up now to get your free access to Joshua's field-tested, proven secrets for generating more monthly recurring service-contract-revenue with PC Support Tips - http://www.pcsupporttips.com/

Definition:

Benchmarking (also "best practice benchmarking" or "process benchmarking") is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices. A process similar to benchmarking is also used in technical product testing and in land surveying. See the article benchmark for these applications.

More Articles for "Benchmarking":

• About Benchmarking
  What is Benchmark?
  
  Benchmark is an extremely accurate tool or a device to assess the standard or performance or improvement of a business or an...
  
  
• Benchmarking-Improving Major Financial Processes: A Primer
  Benchmarking - What is Benchmarking?
  
  Benchmarking refers to a series of actions performed to systematically measure the products, processes, and services again...
  
  
• Benchmarking and its Effectiveness
  Benchmarking was introduced as we know it now in 1979 by Xerox. The company had a problem with the product sales because of the Japanese competitors. To so...
  Benchmarking