When a business runs efficiently, it makes the best possible use of its resources.
The ultimate goal of an efficient business is to be more competitive in the market and to reduce costs. But it’s about more than money; efficiency also means you deliver a higher quality product and service, and maintain a strong reputation.
Even the most finely tuned organisation can benefit from searching for more efficient ways to operate.
1. Review your business plan
How do you know whether you’re running efficiently? Your business plan can tell you.
This document shows you whether you’re on track to meet your goals, and gives you the clues to see what needs to be improved to get there.
Helen McIntosh from Operations Genie says, “Take your big goals, and break them down into what resources you have and those you need to bring in. You can’t see it clearly until you write it all down, and this can get you off that hamster wheel of doing a lot but not achieving what you need to.”
“Then you can have a checklist of everything you need to do for the next three months, and then by week and even by day to get you to that big goal.
“Review your business plan every quarter, because things can change really quickly in any market.”
2. Do a machinery audit
If you want your business to run like a well-oiled machine, you first need your equipment to be running that way. You can do this by:
- Conducting a thorough audit of all your equipment, which could include mechanical efficiency, running costs, operator training levels, service history and future requirements, and how well the equipment meets your business’s output goals.
- Ensuring a safety analysis is conducted; a good place to start is making sure all vehicles and machinery meet the safety standards of the National Heavy Vehicle Accreditation Scheme (NHVAS).
3. Draw up a process map
An efficient business has processes in place, which drive efficient practices.
McIntosh says, “There are many reasons that a business might fail, and a lack of strategy and systems is one of those. It means all those little things – like doing the same thing differently each time, or not using systems to automate things where possible – can cost you time.
“Every step of your business needs to be documented: who takes the orders, who sends them out, how the product is packaged, who you use to transport it and how it is installed. This is a process map, and it can even be a one-page checklist to make sure everything is checked and approved.
“It’s also the key to delegating and reviewing staffing levels and performance.”
4. Review your staff
No matter what your business is, it’s only as good as the people working in it.
There are a few aspects of your staffing to check to make sure it’s running efficiently:
- Staffing levels: Being under-staffed or over-staffed will greatly affect your business’s efficiency, by decreasing both performance and employee satisfaction. Your staffing levels should be such that your business is on track to meet its goals and your customers’ needs are being met.
- Performance reviews: How well are your employees performing? This question can only be truly answered through a thorough review process. Whether it’s through open conversations or a formal written review, it’s important to compare your employees’ performance with the requirements of the role, as well as gather their feedback for improvements.
- Employee satisfaction: Employee satisfaction can be tricky to measure, but it’s best done through a series of feedback modes – this may include honest conversations (if you have a relationship with your employees that encourages such honesty) or anonymous satisfaction surveys.
5. Measure your financial efficiency
There’s no doubt that managing financial efficiency is vital for your business’s .
However, as the saying goes, you can’t manage what you don’t measure, so it’s important to keep track of your finances.
Financial efficiency is different to financial success; efficiency means you’re managing a range of operational and strategic factors – generally considered to be assets, profit ratios, inventory turnover, accounts receivable days and accounts payable days. (There are many versions of how to manage each of these, so consult your trusted financial professional for advice on achieving financial efficiency in your business.)
Business efficiency isn’t a target you can meet and then leave to manage itself; it’s an ongoing process of reviewing and making appropriate changes.
The rewards will be worth it.
- An efficient business is mindful of how each of its operations and resources impact the business as a whole
- Your business plan is the key to managing efficiency and can give you clues for improvement
- Your people ensure your efficiency, so manage their performance and satisfaction.