Written by Alex Pirouz
Australians reportedly work some of the longest hours in the Western world, yet businesses often miss out on efficiency gains. Running your small business as efficiently as possible is vital for its continued success in the ever-changing marketplace. Achieving maximum productivity in everything your business does is a difficult feat but it is entirely possible with the right strategy in place.
In today’s business world small and medium-sized business (SMB) customers and suppliers are increasingly savvy, with high expectations for immediate and personalized service and support. Expectations are rising and yet SMBs are also under pressure to do more with the same or fewer resources.
The pace of competition is accelerating and SMBs must compete with larger, better-funded businesses while keeping ahead of smaller, leaner competitors. So to stay relevant you must find new ways to optimize operational efficiency in order to improve productivity and reduce costs.
Speak to any good businessperson and they will tell you that every dollar you can shave off your expenses is another dollar in your pocket. In a tough economy, that lesson is particularly important.
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A recent study showed that the actual time required to produce a product or deliver a service is about 5 percent of the total elapsed time (Competing Against Time, George Stalk).
For example, a one-hour photo service only spends three minutes to develop your role of film. The week you are told it takes to process your new building permit actually takes two hours; the rest of the time the application is sitting on someone's desk waiting to be worked on. There is a lot of idle and wasted time in most businesses, including yours!
The same study revealed that companies that reduce the cycle time of their processes--the steps from beginning to end-- enjoy growth rates three times the industry average with twice the profit margins. When process speed goes up, and lead-time goes down, you make more money and create happier customers.
To gain a deeper insight into this topic, I recently spoke with Amanda Fisher, Author of the book: Connected Technology – How To Transform Your Business with Cloud Accounting. Based on our discussion Amanda believes there are three key areas businesses need to focus on when looking to create a more efficient business:
1) The accounting processes. Businesses which have been operating for a few years or more are most likely using desktop accounting software which was written many years ago. And, because, the staff know how to use the software, it is working and doing the job, or so the business owner thinks. The reality is, the old desktop accounting software can take 4 times as long to do the data entry and the reconciliations as new internet based accounting systems. With banks feeding your bank statement data directly into the accounting system, automated matching of transactions, your accounting records can be kept up-to-date on a daily basis in a matter of minutes.
2) The integration of business systems for efficiency. We have found that most businesses have multiple databases with the same information. Eg. CRM, auto email systems, spreadsheets for various purposes in addition to the accounting system. With new technology, it is possible to have many of these databases integrated so that a change in one system automatically flows to the others. The time saving on this alone can be worth hours of time, not to mention eliminating errors and omissions.
3) Measuring and reviewing results. The key to improving efficiency in business is to set targets, measure and review the results. Regular meetings with your accountant or adviser to hold you accountable to your targets is a vital component of this.
Taking advantage of business efficiencies can save on business costs and time, while also increasing profits. Author Jarod Kintz said it best, "My goal is to do the most with the least -- get the maximum output with the minimum input. " Take this mantra into mind and adopt these five lessons in efficiency today to better prepare your small business for future challenges.
Have you taken time out lately to consider how your business might boost productivity?