5 Strategies To Improve Operational Efficiencies For A Small Business
In a few of my recent conversations with the CEOs of small businesses, the topic of scaling the business and operational efficiency invariably comes up. In the words of one of the business owner, “one of the best decisions I made was hiring so and so employee…”. But at the same time, I see many of them struggling because either they are often the bottleneck, or there are no documented processes or investment in people happens serendipitously rather than a thoughtful well outlined plan.
Running a successful small business involves many steps, and as a CEO, underestimating operational efficiency is essential. Time management and efficient use of resources and efforts are critical to business growth and sustenance. Although focusing on increasing sales is absolutely important, it doesn’t end there. I would like to reiterate some well known strategies/ tactics into improving your operational efficiency.
1. Effective delegation
As a CEO of a smaller company, you may be compelled to directly handle every aspect of your small business. Unfortunately, that usually does not augur well for the business, especially because it becomes fertile ground for work limitations. There’s only so much you can do alone, so delegation is vital. By delegating tasks to your trusted team members, you automatically increase leverage. You also free up time to turn your focus to higher-level and strategic decision-making processes.
2. Invest in people, processes, and technology
Your employees are your first internal customers and are vital to business growth. That is why encouraging personal development, providing appropriate business resources, and streamlining work processes are critical. More importantly, an investment in modern technology can boost operational efficiency by a whopping 50%. Research has shown that 70% of small businesses in the US have already embraced technology and are reaping benefits. By automating tasks, you simplify processes, reduce errors, take pressure off your workers, and improve the quality of your business offering in a repeatable manner.
3. Offer a positive workplace culture, incentives for employee development
The more dissatisfied your staff is, the higher turnovers you will record. Work culture, motivation, incentives, and employee skill sets all play a role in improving operational efficiency in your small business. As a CEO, bonuses, promotions, and knowledge, no matter how small, are relevant to the job. A highly motivated manager alone can double the value of your business - either bringing in more sales, or identifying a strategic gap in the market that your business can fill or working with a supplier with great contractual terms. All these are possible when the eyes and ears of your business look to grow the company simply because the like to work there.
4. Be transparent by documenting and sharing operating procedures
In my earlier years as an engineer, documenting was a necessary part of the job- whether it was during the semiconductor manufacturing process, or writing comments while programming. Honestly it was not enjoyable at individual level but certainly benefits the organization as a whole.
Documenting your operational efficiency processes is essential for future reference purposes. Discussing this with your broader team and employees is important to ensure your staff knows what is expected of them and how they fit into your small business. The documentation process must be clear and concise to avoid ambiguity. The more your employees grasp these processes, the better it enhances operational efficiency. Remember to provide regular updates and feedback and to give your employees adequate time and tools to do this!
5. Eliminate redundancy and simplify
The main idea is to eliminate complexities and shelve unnecessary business processes while optimizing your operations. Sometimes, during the day-to-day demands, it’s impossible to identify the areas where your business lacks operational efficiency. It would help to commit a day or two to identify these loopholes with your team. Redundant tasks can waste money, time, and resources. So, if you’ve been looking for ways to cut costs for your business, simplifying processes can be an excellent way to do so. In the past what has worked for me is holding an hour-long brainstorming session on a particular workflow and then getting the team input on ‘what is working and what is not’ Use the wisdom generated in large team settings, as invariably the team points us in the right direction.