February 9, 2023

When you run a small business, achieving maximum efficiency should be always your aim. Although this could be said for organizations of all shapes and sizes, it is particularly crucial for small businesses because you can’t afford to spend money you don’t have or waste resources that could be better spent elsewhere. 

If your small business is running at a reduced rate of efficiency, every area of your company is affected. Production lines are stretched thin – overworked in certain areas and underworked in others – while customers could become irate with delayed deliveries or poor product quality. 

On top of this, you could be wasting a lot of money in a particular area, which both takes it away from other sections of your business that need it and reduces your overall profit margin. 

Furthermore, a lack of internal efficiency can reveal itself in a drop in team morale, a lack of clear direction from management downwards, as well as poor customer service.

The result is a company that is fundamentally stunted, which could lead to financial collapse or significant damage to your brand image.

At this point, you are probably wondering how your small business can avoid the same fate by ensuring it always maximizes efficiency.

Well, to help you with this, here is a guide to improving the efficiency of your small business:

Get your finances in order

A great place to start with improving the efficiency of your small business is with your finances. The reason for this is that it is arguably the most important aspect of your business to get right.

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Without an efficient financial department, your business could squander its funding, fail to file tax returns through the correct channels, struggle to allocate available money to various departments properly, and leave a potential boost in profits on the table.

Many successful businesspeople rate financial intelligence as the key to their success, and yet relatively few people have a solid understanding of how money works – including the global financial system, currency, and more detailed concepts like taxes and cash flow. 

If you’re wondering what is accounts receivable, for example, then it is a good idea to conduct research in your free time to sharpen up your financial knowledge. It may transform the fortunes of your small business as a result. 

Have a clear chain of command

Often, a lack of efficiency within a particular business stems from a lack of effective communication between you and your employees. 

While your business may be small enough that you know every single employee personally, it should not negate a clear command structure that ensures everyone knows what they are doing. 

Without a chain of command, communication can break down completely, so that your staff have little idea of the targets they should be working towards, when certain projects are due in, or why they are doing their daily tasks at all.

This could even lead to a lack of discipline or positive behavior among your ranks. If no one thinks there is an authoritative leader, standards can quickly slip, there can be a rise in inappropriate behavior, and lead to reputational damage to your brand.

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To prevent these issues from creeping in, set a clear structure of management from the top down. This includes establishing departmental management positions, if necessary, to ensure everyone has a direct superior to report to.

Make sure your employees have all the resources they need to succeed

If you want to improve the efficiency of your small business, then you are going to want to focus a lot of your attention on your employees. 

They are the engine that drives every pillar of your business – from production to delivery – so if there is an inefficiency, then it might well be stemming from your workforce.

This is not to say that the individuals themselves are unqualified or failing to work hard enough (although you should ensure that you hire the best candidates possible). Instead, your members of staff may not have been given the right tools to complete tasks to the best of their ability. 

Perhaps you run a software company, but your programmers are using outdated computers, or you have a food business that uses blunt knives. Whatever the situation, it is imperative that you keep a channel of communication open between you and your staff.

By regularly checking in with each employee (or at least the manager of each team), you will ascertain whether they have everything they need to do the best possible job. A great additional benefit to doing this is that you will have a better idea of what is causing the inefficiency.

When you know your employees are excelling, you can rule them out of your assessment and focus on locating inefficiencies elsewhere.

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Automate your processes

By introducing automation, you can cut down significantly on time and resources wasted by laborious manual processes. 

For example, if you are regularly onboarding new employees, instead of pulling a fellow staff member away from their work, you could create a series of recorded videos that you can send them.

These videos can instruct the employee on internal processes, how to set themselves up for work and how to complete their daily tasks. This will massively increase the efficiency of your business when you introduce automation for multiple processes like this.

Learn to delegate effectively

Effective delegation can drastically improve the efficiency of your small business. The reason for this is simple. If you are hogging all the most important tasks, then you cannot possibly complete them as quickly or effectively as if you delegate them to several team members.

If you don’t trust your employees to carry out important tasks, then you need to ask yourself serious questions about the strength of your staff training and the type of people you are hiring to represent your company. 

Usually, all it will take to improve delegation is for you to instruct an employee on how to complete a task, then trust them to go away and do it themselves. By demonstrating this trust, not only do tasks get completed faster, but you will likely improve staff morale, too.