How to improve your business efficiency
Business efficiency is something that has to be constantly improved by managers. The hardest tasks are often the cause of efficiency reduction in businesses. Failure to notice a regression in the efficiency of your business will result in a decrease in profits. No business owner will want that.
Numerous ways exist to improve business efficiency, but not all of them will be effective for your company. What you need to do is identify the problems and then try to apply solutions. This, however, is a continuous process. You need to keep regular tabs on any factor that could affect business efficiency.
What is business efficiency?
This refers to the quantity an organization or company will be able to produce in terms of money, resources, and time. In a nutshell, business efficiency weighs how well a business can transform labor, capital, and materials into products and services that produce revenue.
Types of business efficiency
The efficiency of a business can be measured in the following ways:
1. Return on investment
Investments are usually regarded as current costs that ought to help a company make or save money in the long run. Also known as net present value, and ROI can reduce the current efficiency of a business but actually boost efficiency further down the line.
2. Process efficiency
This measures various business processes to provide effectiveness and efficiency. For instance, you might look at the speed and cost of moving a product to see if there are better ways to ensure that the cost isn’t too great.
3. Operational efficiency
Business operations are vital to the business model. These operations are normally responsible for most of the company’s costs. That is why most of the efforts to increase efficiency are streamlined to this part of the business.
4. Eco-efficiency
When the eco-efficiency of a business is analyzed, the comprehensive impact it will have on the environment has to be calculated. This can be calculated using a percentage of the income of the company.
5. Energy efficiency
Businesses that are energy-efficient will create sustainable practices that will allow them to decrease costs. This kind of efficiency is measured while evaluating the energy amount required to operate the entirety of the business.
6. Labor productivity
The labor productivity of a company is measured by determining how much work employees can accomplish within an hour. This kind of efficiency is affected by automation, equipment, and other technology that the employees will handle.
7. Financial efficiency
The financial efficiency of a business is measured by finding out the percentage of revenue allocated for expenses.
Ways to improve the efficiency of your business
1. Automation
One of the quickest and easiest methods to increase efficiency in your work environment is to consider automation for all monotonous tasks and processes. For instance, you could decide to automate the process of sending pay stubs to your employees. With task automation, you will be able to create more time for you and your employees to focus on other tasks – especially if those tasks require critical thinking or human touch. AP automation can help automate your accounting department’s accounts payable side. Even though process automation will be initially expensive, it normally has a great ROI because it will allow you to improve the efficiency of your business by reducing future costs.
You should note that while you can automate a lot of business processes, it sometimes might not be the best option for your particular business. Do your research on what is appropriate to automate in order to grow your business. You should seek feedback from employees before you implement the new automation and after it has been implemented.
2. Communication
You have to ensure that employees are comfortable enough to offer feedback and voice their opinions. Apart from ensuring a more content workforce, good communication between departments will improve efficiency as it decreases the chances of miscommunication. It will be simpler for experienced employees to determine processes that can be streamlined and areas of the company they can be made more efficient.
Additionally, efficiency can be improved by ensuring that employees embrace face-to-face communication in the workplace. There are some issues that can be addressed with an in-person chat as opposed to drafting an extensive email. By striking a balance between in-person and online communication, you will be able to facilitate information exchange – thereby achieving optimum efficiency.
3. Decrease interruptions
One way to improve the focus and efficiency of employees is to provide them with uninterrupted work times. An effective strategy for this is to limit the number of interruptions during workdays by scheduling most meetings on particular days (instead of spreading it around multiple days). Meetings disrupt workflow a great deal, so by scheduling most of them on one day, you’re giving employees more days to work without distraction.
4. Business analyst
Business analytics is another way to improve the efficiency of your business. Business analysts (or BAs) are meant to bridge the gap that exists between the business and IT. This is achieved while making use of data analytics to evaluate processes, ascertain requirements and produce data-driven reports and recommendations to stakeholders and executives.
Business analysts will communicate with users and business leaders to grasp how data-driven services, hardware, software, processes, and products can improve efficiency and contribute value. These ideas must be balanced against what’s feasible and financially reasonable.
BAs make use of analytics programs and real-time data to determine user trends, potential adaptation problems, and successful functions. With data becoming more and more valuable, business analysts are more important than ever.
5. Streamline work processes
Your workflow goes a long way in determining how efficient your business could become. That’s why it’s important to assess your processes to see if there are steps or stages stopping you from attaining optimal efficiency.
When you identify these roadblocks, you can find a way to nullify them or reduce their impact at least. Tasking work processes in this category include sending paper invoices, manual tracking of inventory, and managing orders through spreadsheets. When the work process becomes seamless, it will save you time and increase productivity in your business.
6. Staff training
Staff training is important if you want employees to completely understand their roles and responsibilities in the business. With practical training sessions being organized by managers and senior staff (as well as training on the job), your business will experience improved output. You will have to encourage managers and senior staff to be willing and available to explain and demonstrate instructions in detail when junior staff members have an issue or question. In the long run, this will ensure that most of your employees fully understand the processes – which will take off some of the pressure and responsibilities from you and the senior staff.
7. Embrace feedback
Another very effective method of identifying where there are inefficiencies is to gather feedback. It doesn’t matter if it’s from your customers or your staff. This information will be valuable. It is a brilliant way to know what people’s experiences have been regarding your business. For instance, with this information, you might find out that your staff feels they’re not being correctly utilized in a certain area – or that some customers feel their products could’ve been delivered faster. Whatever feedback you get, try to take it seriously and find out if there are ways to resolve those complaints or opinions.
8. Technology update
It will definitely feel like a significant cost initially, but it is highly recommended that you update employee software and computers periodically. Since productivity’s fundamental factor is speed, upgrading office computers with the most current hardware and software should be one of your topmost priorities.
Admittedly, you might be able to manage with a simple RAM boost or hard drive upgrade, but the computers will also require regular maintenance and inspection every few years. You should upgrade the system if it has lasted more than six years.
9. Ergonomic standards
You should analyze your employee workspace for ergonomic standards. This will be of benefit to you and your staff. You can consult a professional to attend a seminar meant to educate your staff on these standards. However, if your budget is tight, you can do your research and understand these standards. You can then pass them on to your employees.
Make sure you provide your staff with ergonomic standard office equipment like keyboards, chairs, and footrests. You shouldn’t treat this like an expense. Instead, think of it as an investment that will yield returns in the near future. With ergonomic standards maintained, employee productivity will increase.
10. Set achievable goals
When all the changes have been made, you should take out time to set realistic goals. You can set big goals for the business and then work with departments to decide on their goals. Lastly, you can set goals for employees.
Creating tangible and realistic goals will provide motivation. When these goals have been met, organize a company activity where everybody can relax and celebrate their success.
It can be a daunting task to improve the efficiency of a business, but there’s no need to be intimidated or overwhelmed by the situation. You should rather see it as a challenge – one that will lead to a significant improvement in efficiency when scaled.
