Improving business efficiency is a tried and tested opportunity to boost company profits, beat the competition and create a great working environment for your people. In this guide, we will take you through 10 proven ways to achieve this.
What is business efficiency?
Business efficiency is a broad term relating to a wide range of strategies and activities that your business can employ in order to boost outputs without necessarily needing greater inputs. Business efficiency means cutting waste, making better use of time, introducing processes to remove friction and delays from project work, and introducing the right new elements to a business at the right time.
1. Make your management accounts digital with Xero
If you don’t already use Xero or another digital accounting platform to manage your business finance activity, you are missing a tremendous opportunity to improve business efficiency.
From bills and expenses to project management, payroll, management reporting and inventory management, the features of Xero are all built around improving efficiency and stimulating growth. For a lot of businesses, everything you need to run and grow your business can be found in the suite of over 1000 applications.
If you are considering a switch to Xero or are a current Xero user who wants to get more out of the platform, our team is happy to help. Genus is a Xero Platinum partner and is one of the top 2% of Xero partners in the UK for clients and certified advisors.
2. Improve your expenses and team purchase management
Expenses, invoicing, and reimbursements are essential financial admin for any business, but they can also be an unwelcome, time-consuming distraction. Your business may greatly improve its efficiency by implementing automated tools to assist with these processes.
A great example is Pleo, which is part of the Xero library of business finance applications. Pleo enables you to automate your team expense management, pay bills, and fully integrates with Xero.
Another example in our recommended apps is Dext, automatically capture the data on invoices and keep the scanned copy in Xero.
The result is less of your time spent processing invoices and expenses, and more time to focus on the goals of your business.
3. Streamline your project management
For a lot of businesses, project management is its bread and butter. Greater efficiency in project management will have a positive knock-on effect for the entire company. Improving project management efficiency means streamlining task and staff management, integrated time tracking, customer relationship management, performance reporting and invoicing.
A reputable project management platform, such as Workflow Max, allows you to do it all in one place, whether remote or in the office. If you are looking to improve your project management efficiency, we strongly recommend seeing how platforms such as this can help.
4. Set clear and appropriate business goals
Without realistic and clearly defined business goals, inefficiencies are inevitable. You can improve your business efficiency in a big way by making your business goals manageable, SMART (Specific, Measurable, Achievable, Realistic, Timely) and appropriately reported on.
Business goals ensure that the team are on the same page, with a shared vision of which direction the business is moving toward. They allow you to cut back on irrelevant or unimportant tasks that sap resources or money away from true priorities, and let you celebrate smaller wins along the way.
We recommend setting a small number of primary goals first and foremost, with clear KPIs in place, and then breaking these down into smaller sections. These sections can then be split into tasks which can be assigned to people within your team with clear accountability.
5. Get smart with management reporting
Business efficiency and reporting are fundamentally linked. Without regular and robust management reporting, a business is blind to its own financial information and performance. In order to drive efficiencies, you must understand where the inefficiencies are. This is why smart management reporting is essential for improving business efficiency.
Your management reports should be fresh, frequent, and directly linked to the KPIs and goals of the business. They must also be clear and insightful, providing all the necessary information in a way that is easy to understand and communicate with your team, shareholders, or other interested parties.
When a business has the right reporting in place, decision making is easier, forecasts are more accurate, and the financial impact of business changes can be more clearly understood.
6. Encourage regular internal communications
Regular and informed communication is essential to an efficient business team, whatever industry a business operates in. Some companies adopt the “stand-up” or “huddle”, which is a daily or weekly team conversation that helps people understand what everyone is doing. This can be face-to-face or remote via video call.
These catch ups are a great opportunity to raise concerns, request assistance in projects, ask questions and identify inefficiencies within a wider team dynamic.
7. Identify inefficiencies and cut waste
Is your business spending money in the right ways? When it comes to improving business efficiency, identifying, assessing, and ultimately cutting wasteful expenditure can go a long way.
We recommend conducting regular and detailed analyses of your business cashflow, where you can look out for expenditure, processes or projects that simply do not justify their current level of investment.
These redundancies can free up funds to invest in exciting new products or projects. Identifying these inefficiencies is made easy by fully integrated management reporting and robust cashflow forecasting.
8. Invest time and money into the right areas
Improving business efficiency is not just about cutting waste or spending less; it is also achieved by investing more time and money into areas that are going to make a positive impact on the business.
Some cutbacks may be necessary to fund new projects or ventures (such as diversification), but many long-term efficiencies can be gained through investment. Robust management information will allow you to see where these opportunities are and will help you predict the longer-term impact of them more accurately.
9. Prioritise staff happiness and wellbeing
Morale and wellbeing are essential for any team. By improving the overall experience of your staff, and making your business a great place to work, you will be rewarded by improved motivation and performance. This inevitably boosts business efficiency.
Culture sets a company apart from its competitors, and the best, most qualified individuals will be attracted to a workplace where they feel they will have a more positive career experience, in addition to work/life balance. This is especially important in industries where staff turnover is higher than average.
There are many ways to prioritise staff happiness and wellbeing, including competitive pay, flexible working conditions, empathetic management, and other perks.
10. Introduce a Finance Director
A Finance Director is a key role in the management team of your business, whose job is to lead the company’s finance function. This will ensure you get insightful business information, help you develop a long-term financial strategy, identify strategic spending/cutting, plug gaps in the accounts and raise capital if required.
All of these are essential areas of attention when it comes to improving business efficiency.
Unfortunately, while invaluable to a growing business, bringing an FD on board may not be feasible for all businesses, particularly SMEs.
Another option is to outsource this position to a management accountant, who can provide your business with tailored financial support, wide ranging industry experience, and a host of tools and methodologies, without demanding a Directors ‘salary or commitment.
We can bridge the gap until you are ready to have a permanent FD join your business.
Alicia Williams
Alicia is Director of the Genus team at Shorts, a chartered certified accountant and Xero specialist.
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