Boosting Business Productivity: Top Strategies for 2024

Boosting Business Productivity: Top Strategies for 2024
Productivity is a term associated with strong economies, robust businesses and efficiency gains of clever staff. If businesses were efficient then fewer would fail, generate more employment and better incomes for owners and workers alike.

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Productivity is a term associated with strong economies, robust businesses, and the efficiency gains of clever staff. If only businesses were efficient, then we would have fewer of them failing, more employment, and better incomes for owners and workers alike.

In Australia, according to the Xero Small Business Insights special report, “Small Business Productivity: Industry and Regional Trends 2023,” the most productive Australian industry in 2023 was wholesale trade ($214.20/hour), while hospitality lagged at $40.20/hour. While a decline in productivity was experienced across all industries, 10 sectors, including manufacturing, agriculture, and construction, surpassed the national productivity average ($100.30). Western Australia emerged as the most productive state ($102.50/hour), with average productivity 15% higher than Tasmania ($89.00/hour), the least productive state.

Unfortunately, not all businesses get to the heady heights of maximum productivity. Not for lack of will, it’s hard to take a step back from the day-to-day pressures of running a business to look objectively at what can be done better. Or as the common saying goes, “When you are up to your ass in alligators it’s difficult to remember that your initial objective was to drain the swamp.”

What is Productivity?

Productivity measures how efficiently a business turns inputs into outputs. The more productive you are, the better you are at turning resources like labour, capital, or materials into products (or services) you can sell.

Three General Areas of Productivity:

People Productivity: How much work it takes to deliver products or services to customers. It’s commonly expressed as hours worked/dollars earned.

Financial Productivity: How good a business is at monetising its investments in assets such as machinery. It is often measured as the return on capital invested.

Materials Productivity: How much a business spends on materials to generate sales. Materials can include things like inventory or energy.

Why Productivity Matters in Business

Businesses with increased productivity get more from less. As a result, they have more potential to turn a profit, deal with inflation or slowdowns, and absorb price competition. After decades of continuous improvements, productivity gains are getting harder to come by. Small businesses have typically lagged behind big businesses in productivity, but with the advent of many digital tools, access to productivity insights, tools, and processes are now also available to smaller businesses.

Top Productivity Improvement Strategies for 2024

There are four commonly accepted ways to become more productive:

  1. Better Work Tools (Capital)
  2. Smarter Methods (Innovation)
  3. Skilled Workers (Capabilities)
  4. Entrepreneurship Mindset (Optimisation)

Better Work Tools (Capital)

Tools are made specifically to amplify the efforts of their users. So find the tools that’ll amplify your work. Sometimes it might be as simple as a piece of software that cuts down the double-handling of information, like a booking system that schedules a job straight into your calendar or software that integrates with payment systems or point of sale.

Why You Haven’t Got Better Work Tools Yet:

  • Prioritisation Issues: Small businesses have about six capital investment opportunities in mind at any one time but can’t back them all and don’t know how to choose.
  • Value Perception: Few small businesses run a financial analysis to estimate the return on investment, so they struggle to justify making moves.
  • Risk Aversion: Most small businesses will only consider a capital investment if they guesstimate it’ll pay for itself within a couple of years, leading them to shy away from bigger projects with bigger impacts.
  • Loan Denials: Roughly a quarter of businesses have been denied a loan application. After a knockback, it takes them up to four years to apply again.
  • Technology Concerns: Many business owners assume new equipment will be hard to learn, will chew up training budgets, and will clash with existing systems.

Smarter Methods (Innovation)

Many businesses develop a certain way of doing things then never really think about it again. In the meantime, plenty of other things change, and the original processes and procedures become less and less effective. It’s a good idea to review and revamp the way you work.

Here’s How:

  • Check Your Work Actually Matters: Focus on things that customers care about. Use surveys or conversations to gauge customer preferences.
  • Document Your Processes: Write down steps to complete jobs. Use templated documents to ensure consistency.
  • Identify Blockers: Look for bottlenecks and roadblocks in your processes. Map workflows visually for better understanding.
  • Redesign Your Workflow: Clear up roles and responsibilities, resequence jobs, and improve communication. Outsource tasks you’re not good at or excited by.

Consider Digital Adoption: Software can be a massive boost to business efficiency. Use it to request and track jobs, centralise information, speed up communication, and automate tasks. Despite a learning curve, the benefits of working smarter can be significant.

Recommended Software:

  • Asana: For tracking tasks and projects.
  • Zapier: Automates repetitive tasks.

Skilled Workers (Capabilities)

Big businesses can afford specialists, while small businesses hire generalists. However, you can still set them up to succeed.

Onboarding and Training: Proper training and resources are critical for increasing productivity. Ensure each employee has a clear job description, is properly trained on tools, and understands the business’s vision.

Giving and Receiving Feedback: Feedback is vital for productivity. Explain problems and solutions clearly and listen to employee suggestions to optimise workflows.

Entrepreneurship Mindset (Optimisation)

Entrepreneurship involves optimising the business by combining resources effectively. It often requires risk-taking but can yield significant rewards.

Harness Your Inner Entrepreneur:

  • Scale Up: Increase output to lower the marginal cost of each product or service.
  • Acquire Another Business: Merging can deliver efficiencies and complementary workflows.
  • Specialisation: Focus on a niche to drive speed, expertise, and quality.
  • Rethink Supply Chains: Switch to suppliers that provide superior goods or services.
  • Hire and Empower Entrepreneurial People: Foster a culture of innovation.

Increase Productivity Checklist

To recap, here are some productivity-boosting steps to take in your business:

Better Tools:

  • List investments to improve productivity.
  • Price each solution.
  • Calculate the expected return on investment.
  • Choose the best mix of affordability and impact.

Smarter Methods:

  • Document and map work processes.
  • Identify and resolve friction points.
  • Consider software for repetitive tasks and outsourcing.
  • Align processes with customer preferences.

Skilled Workers:

  • Ensure accurate job descriptions.
  • Provide comprehensive training.
  • Share the business vision regularly.
  • Give and receive feedback.

Entrepreneurship Mindset:

  • Look for scaling opportunities.
  • Stay alert to acquisition opportunities.
  • Specialise in niche markets.
  • Continuously evaluate your supply chain.
  • Surround yourself with entrepreneurial people.

Boosting Productivity is an Attitude

Small businesses have huge potential to improve productivity. Make it part of your mindset by continually examining and refining your processes, improving your work tools, and watching for inefficiencies. Invest in your team and technologies smartly, and the benefits will add up. Efficient businesses are less likely to suffer delays, confusion, communication breakdowns, distractions, and waste, leading to increased satisfaction and profit.

By incorporating these top productivity improvement strategies for 2024, businesses can enhance their efficiency and achieve sustainable growth. Remember, continuous improvement and working smarter are key to boosting productivity and staying competitive in today’s dynamic market.

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