6 ways SMEs can boost productivity
Increasing productivity is a key challenge for any business – simply put, it determines how effective your inputs of time and money are, whether you can turn a profit, and grow. While larger businesses can invest huge sums of money into productivity – increasingly in technologies such as robotics – this is generally not feasible for SMEs. Rather, focus on getting the most out of what drives your business: your workforce.
1) Business management
SME owners are the primary drivers of the business, so it is vital that they invest their time strategically. Prioritisation is therefore of the utmost importance: what are the key performance indicators (KPIs) for your business? What is your core value proposition? By focusing on these areas intensely and cutting down time spent on peripheral matters, you will hugely improve your own productivity, and that of your business. While this differs from business to business, project management has been shown to significantly boost productivity, and is an excellent starting point.
2) Standardising processes
A lot of valuable time is wasted when processes are inefficient or ill-defined. Many processes within your workflow, from product delivery to collecting accounts, can and should be standardised. This involves first defining a process – each of the steps or tasks required to achieve the specified outcome – and then developing guidelines for how it should be completed, every time. Not only does this immediately boost productivity by ensuring that all labour output is necessary to complete a given process, but also to analyse your business processes holistically. Time-consuming processes can thus be targeted for further investment or outsourcing as necessary.
The workforce – both owner and employees – form the core of any business. If individuals within a business are not achieving their potential, then neither will the business. Even if employees are proficient in their roles, further training is often a worthwhile investment. This is especially true of key team members – training improves not only the productivity of workers who receive it, but also their co-workers. Training is therefore not a one-off investment in an employee, but your entire business.
Digital technology has increasingly become central to business in every industry. While technology such as robotics or the Internet of Things are all the rage, they are expensive, and even industry giants have yet to implement them to their productive potential. Such technology is therefore not a productivity solution for SMEs. On the other hand, there is an abundance of cheap technology – from messaging services to workflow management apps – that reliably enhance coordinating the core processes of your business. Minimal investment and smart implementation of these can drastically improve productivity.
Innovation is a common business buzzword, but how, where or why it should be achieved is less clear. While product innovation is important, process innovation is often underemphasised, and it is here that the greatest increase in productivity can be realised. Research and development (R&D) is vital in this regard; innovation is not about reinventing the wheel, but improving it. An effective method is identifying successful practices or processes in other businesses – from any industry – and adapting or combining them to make your own more effective.
6) Cashflow management
Even with internal business processes optimised, cashflow problems can become a massive hurdle for an SME’s productivity. Without a steady cashflow from customers, the business cannot pay for the supplies, equipment and staff needed to output their product or service, and so any other changes to increase productivity are made redundant. On the flipside, a SME that does have a steady cashflow can go above and beyond the status quo.
While managing cashflow is the essential groundwork for SME productivity, it can be challenging to achieve without limiting output. Credit terms of 30-120 days often mean that businesses must delay production while waiting for payments to finance it. Moreover, if owners or employees are spending much of their time chasing accounts, their productivity in other key areas is diminished.
Factoring offers a solution to this conundrum. Your business sells its accounts receivable to a third-party organisation, called a factor, who then collects these on your behalf when they are due. Further, when you partner with Merchant Factors, it handles all credit control and debtor administration processes. Not only does this solve the immediate cashflow-productivity problem, but also frees you and your team to drive productivity in the core, strategic elements of your business.
For fast, flexible business finance – contact Merchant Factors today
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