What, in your opinion, is the best way to help any business grow? Increasing production and sales, expanding your reach to more markets, and reaching the top of the business ladder? While all these things are required, the first step is to improve the operational efficiency of your small business from where it is right now. Operating efficiency showcases how a business effectively utilizes its current resources to manufacture goods or services. These resources include not just financial resources but also technology, manpower, transportation, and every other factor that plays a role in running your business.
By first ensuring your small business is making optimal use of the resources it has in hand right now, you can boost your growth goals and save much-needed monetary resources in the future.
Here are five ways to improve the operating efficiency of your small business while keeping your future goals in mind.
5 Ways to Improve Operating Efficiency
Before implementing the following measures, it is important to conduct an honest and transparent survey of your business to determine which areas need more attention and improvement. You should also review how aligned your business is with the objectives you set when you established it. Having identified these factors, it’s time to work on building operating efficiency to prepare your business for the next level.
Setting and Monitoring KPIs
Key Performance Indicators (KPIs) are quantifiable measures used to evaluate a business’s performance in a specific objective over time. Simply put, it measures the gap, if any, between the benchmark you set for yourself and the actual performance of your business in a specific area like revenue, profit margin, or sales. Just like we set personal goals for ourselves and strive towards fulfilling them, setting strong, focused, and achievable KPIs helps a small business grow steadily. Reviewing and regularly tracking these performance indicators is essential to ensure your business stays aligned with its primary objective and strategy. For this, you must collect, compare, and analyze current data, including sales, costs, and customer feedback. Identify gaps in the performance and tweak your business strategies accordingly.
Optimizing Productivity and Minimizing Risks
It’s incredible to see the difference it makes when available resources are used to their optimal capacity. Be it negotiating for better vendor deals, reducing logistics costs, managing wastage better or even saving on utility bills, the amount of money saved (and production increased) can be sizeable. Dealing with unused inventory and unlocking the potential of every employee can also make a big difference to a small business that always welcomes money for operating costs and a smooth cash flow. While optimization of resources is crucial, so is a well-defined contingency plan to save the day in times of crisis, such as natural disasters, supply chain disruptions, or changing consumer trends. By preparing for risks and optimizing resources, you can enhance the performance of your small business and keep your operations running smoothly.
Investing in Technology
Besides compiling spreadsheets, technology dramatically improves business efficiency. Automating specific tasks such as record keeping, inventory management, invoicing, and employee payroll management gives your employees and you more time to dwell on other important matters that can add value to your business and help it grow. It can also help in the transportation and logistics department, where product traceability is vital. Technology can also give your small business wide exposure to global online markets and suppliers.
Investing in Employee Potential Upgradation
The potential of any business can be gauged from the potential of its employees. Hence, ensuring your employees are at the top of their game is essential to improving efficiency. Proper training for new employees and opportunities for existing employees to develop new skills or upgrade their existing ones to match new, emerging standards are ways to unlock the true potential of every employee. Moreover, regular appraisals, appreciation, clear and transparent communication channels, and other employee-focused strategies make employees feel valued, thus inspiring them to work harder to help the business grow.
Improving Customer Relations
At the end of the day, every business caters to a customer. So, keeping the customer happy and building a relationship of trust and brand loyalty with them is key to the success of a business. The more customers you get, the greater your sales and the resources to improve operating efficiency. Taking regular customer feedback through surveys, maintaining high customer service standards, and understanding their preferences to enhance your product can catalyze your expansion and growth ambitions.
Identifying Opportunities with the Right Business Consultant
While all these steps sound pretty easy, they require much time and undivided attention. Also, making data-driven observations and creating customized solutions requires an in-depth knowledge of the business, the entire industry, and the market. This is where working with a seasoned business consultant can be a game-changer for your small business. The right consultant will help improve operating efficiency in the short term and give you tips for sustaining the same for the long term.
Contact McCay Duff LLP in Ottawa to Help You Improve Business Operating Efficiency
Talk to a business consultant to understand how they can help you craft an efficiency plan and monitor its progress to achieve a desired outcome. At McCay Duff LLP, our accountants and business consultants can provide services such as analyzing data and developing actionable insights. To learn more about how McCay Duff LLP can provide you with the best accounting and business consultant expertise, contact us online, or by telephone at 613-236-2367 or toll-free at 1-800-267-6551.
