What is Business Efficiency?
Defined by Investopedia as:
Business Efficiency (noun)
“Efficiency signifies a level of performance that describes using the least amount of input to achieve the highest amount of output. Efficiency requires reducing the number of unnecessary resources used to produce a given output including personal time and energy.”
Business efficiency is a concept that is so important to a business’s profitability. Yet so so many business owners look in the wrong areas when trying to improve it. The common areas such as cutting costs or unrealistically stretching employee’s revenue earning capacity are usually the focus points; but these do not lead to long term efficiency gains or even revenue growth.
So where do you look for business efficiency?
Small business owners tend to miss a vital efficiency piece in the puzzle: themselves. One of the most valuable resources that the business has is the business owner. Whether they are working on the strategy, developing the product, servicing customers, searching for customers in business development or guiding and mentoring the next generation of staff in their methods, there are so many functions that the business owner carries out that no one else can do. If you were to think of a business owner as a machine in an assembly line, the production output of the assembly line would be reliant on how efficient that particular machine is. A great and famous book on this is very point titled ‘The Goal’ – is well worth a read. When we free up this resource so that it can produce parts that only that machine can, it will always increase the total output.
If we bring this mentality back into the business context, when business owners carry out tasks that can be done by others, then the resource is not being used as optimally as possible. Tasks such as cashflow management, operations management, change management or technology implementation are some examples. If they are focusing on these tasks, it means that tasks such as business development/product development and other important tasks that only the business owner can do are pushed to the side. This results in possibly a cost containment (short term profitability gain), but does not result in a revenue gain (long term, sustainable profitability gain) so therefore, does not actually contribute to business efficiency.
How do I improve business efficiency?
You, as a business owner need to view yourself as a resource too. How can you best optimise your time in the business? If you feel that you could use your time more optimally on business generation rather than business operation, then you need to surround yourself with a team you can trust to take care of your business operations as if it were their own.
Thankfully, the team at Bizee Management Solutions provide bespoke CFO, COO, and change management services such as these to help small business owners run more efficiently. Contact us today using the contact form below to see how we can free up your time to better utilise you as a resource and improve your business efficiency.