Business Efficiency: 5 Tactics To Improve Your Company
Business owners often ponder the question: What is the best way to increase my company’s profits? Since their success in doing so often comes down to their ability to do more with less, perhaps the better question is: How can I effectively improve my company’s business efficiency?
As a measure, business efficiency is used to gauge how well a company turns things like labor and materials into profitable products and services. Here are five best practices for business owners to consider.
#1 Streamline Processes & Procedures
Your business’s processes and procedures are the foundation for its operations. As such, their effectiveness directly correlates with your ability to improve your company’s business efficiency. Business owners should review their processes and procedures with an eye to eliminate things like production gaps, information silos, approval bottlenecks, and idle hands.
In terms of what matters most, the processes and procedures of focus often vary by industry, company, or department. For example, streamlining job costing procedures is essential in construction, and streamlining inventory management or the shipping process may take the lead for manufacturers. In an accounting department, the focus may shift to streamlining internal controls.
#2 Increase Cash Flow & Reduce Costs
As they say, cash is king. One of the primary ways businesses can increase cash flow is by staying on top of accounts receivable and accounts payable. Regularly review aging summary reports so that you can take corrective or preventive action when necessary. This is especially critical for contract-based businesses in industries like construction, where costs are paid in advance.
In addition, keep a close watch on your business’s expenses. Work to eliminate redundancies and unnecessary spending. Look for opportunities to save wherever you can. In your review, be sure to include expenses tied to contracts with suppliers and vendors. You may discover opportunities to reduce costs through new business relationships or by renegotiating existing contract terms.
#3 Boost Productivity
Communication is truly a key component in keeping your employees engaged and productive. This is especially true if any of your employees are working remotely. A 2021 study by Owl Labs found that 37% of remote workers were stressed about not feeling seen or heard by their bosses and colleagues. To be productive, your employees need clarity. Setting clear expectations during onboarding, maintaining proper training resources, and keeping employees abreast of operational and procedural updates can help you boost employee productivity.
Business owners may also be able to improve productivity with technology. Co-bots are an increasingly popular solution in manufacturing, as they work alongside humans to improve productivity, efficiency, and product uniformity and quality. More and more, contractors are abandoning physical paperwork in favor of cloud-based software so contract and change order approvals can occur in real time.
#4 Focus on Return on Investment
Investing in new software and technology can feel overwhelming or seem too expensive on the front end, but the return on strategic investments can be quite significant. Automated solutions can help you streamline processes and procedures, boost productivity and efficiency, and reduce financial risks and other vulnerabilities while saving you time and money.
For example, implementing time and attendance tracking software that integrates with your payroll system can free up your staff, reduce errors related to manual data entry, and help you maintain compliance with labor laws. Cloud-based accounting software can help you ensure your internal personnel and your accountant have what they need, no matter where they are. Many software programs also have features or add-ons that help business owners strengthen internal controls and access data analytics and other actionable insights.
#5 Know When To Outsource
Certain roles like IT, legal counsel, and accounting require specialized knowledge and experience. Particularly if their company is growing, business owners often find that outsourcing provides scalable solutions that allow them to focus on business growth rather than matters of compliance and administration.
L&H’s business services team provides accounting, tax, bookkeeping, and advisory services that help privately-held business owners improve business efficiency, manage financial risk, minimize tax consequences, and reach their personal and business goals. Contact me today to learn more.
by Steven J. Haynes, MBA
Steven Haynes, MBA, is an administrative partner at Livingston & Haynes. Steve’s firm, Emerging Business Partners (EBPI), became an affiliate of L&H in 2007. Steve specializes in bookkeeping, payroll, and business advisory services, including tax, M&A, and funding and equity transactions, for technology, entrepreneurial, and emerging growth firms.