There are different definitions of efficiency in the schools of business, and economics, but it all boils down to this: make the most of your resources. In other words, are you getting the maximum productivity from your workers, assets and your liabilities? If your company wants to make profit (understandably not every business does), this should be a vital part of your operation. Your business should be running on a level whereby the only way to increase productivity is to increase input i.e. hiring more staff, or equipment etc. This is not to say you should push your staff to their limit in an aggressive manner, but rather to maximise their productivity by knowing their potential. If your business is facing financial difficulties this could be one of the reasons why. If your business has been doing well so far but you are beginning to feel the pressure of your competitors, you also need to look into how efficiently your business is being run. However, you don’t need to wait until your business is in crisis before you start making the right changes.
Your staff are the second most important part of your business (after yourself of course). How you use them therefore will determine how successful your business will be. First of you need to make sure you are using your employees for the right jobs. Using a university graduate as delivery personnel for example might not be the best use of their talents. The second thing you should incorporate is on-the-job training. No matter what field of business you are in, last year’s expertise isn’t good enough for this year’s environment. Your staff need to be up to date with changes in the market, and keep improving their productivity. If your competitors are taking the lead in areas you previously excelled in, learn from them and make the improvements you need.
Your property, vehicles, equipment and merchandise could be worth more than you estimated, so this would mean more finance for your company. Our Business Recovery team will show you how to make the most of your assets. By releasing the cash locked up in your assets, you can get the money you need to make improvements to your business. Unpaid sales invoices and patents are also assets. These changes will make your business more efficient and will enable it withstand tough economic times and strong competition.
As stated above, you are the most important part of your business. More often than not businesses fail because of bad management. Abuse of funds is not the only kind of bad management. A good manager should know how to make budget allocations efficiently, restructure finances appropriately, and use resources economically. When most people hear the term “economical” they automatically assume it involves being tight-fisted. Though it may often involve spending less that is not the central aim of it however. Economic use of resources means using them in the best way possible. For example using only one computer in a business requiring frequent computer usage by numerous employees at the same time will not be considered economical. Buying an extra computer could reduce backlogs and in turn increase delivery speed and revenue. A manager must therefore learn how to use the available materials, employees and income to maximise profit. A good manager must also know how to keep the company in-line to meet short term and long term targets. Running a business without a vision or plan for the future means you will be unprepared and vulnerable to all sorts of market forces. To learn more about these keys for effective management call us now and receive the information you need.
Just like every other component of business, liabilities also have their part to play. If you learn how to make the most of them you can fine-tune your business for increased success. This does not mean you should incur more debt. There are some debts you can easily do without, and there are some you cannot. The first thing you need to do is eliminate volatile debts i.e. debts with fluctuating interest rates or excessively high rates. You should also only borrow to fund investment, and not recurrent expenditure. The remaining liabilities would serve as added motivation for you and your staff. There is no motivator in life like desperation. Think of ways to cancel your debts and invent cost-cutting methods you can start applying immediately. Things like not renovating your office too often, not using the company car for any and every function to save fuel, switching the lights off at the end of the day to save electricity, will go a long way in making your business more efficient. When the crisis is over and the debts have been paid off, don’t fall back into old practices, but rather learn from the times of austerity, and keep pushing the creative capabilities of you and your team.
These are just some of the ways to make your business more efficient. For more information please call us or send an email and we will be happy to get back to you as soon as possible.
Mark Jefferson is a seasoned commercial finance professional with over 25 years’ experience in financial services, much of that spent providing funding to SMEs. Mark has worked with many other firms in a similar situation to yours. Call Mark on 0800 157 7355 and you can also follow him on Google+
Every month Business Recovery help businesses improve their cash flow. Request a quote to find out how much extra cash you could raise.