If you are a small business owner, the chances are that business performance and profitability will be at the top of your priority list. Inefficiency can cost a business 20-30 percent of its revenue each year, according to research by IDC. With over 82 percent of small businesses failing due to cash flow issues, reducing business costs, and improving business efficiency has been proven to be crucial to succeed as a small business. Creating a smarter business takes the pressure off you as a small business owner, helps to aid employee development, improve your business accounting practices, and aid overall profitability. However, greater business efficiency takes a lot of forethought and planning beforehand.
Capitalize On The Benefits Of Expertise By Outsourcing
On a financial front, outsourcing can save your business money by reducing the costs of retaining employees on your payroll for an unnecessary amount of time. It also improves business efficiency since you can outsource specific business functions when needed, helping you keep track of your financial and employee resources. If done right, outsourcing can also provide your business with the benefits of a more experienced worker without the full-time price tag. Many freelancers or contractors come without the need to splash out on overheads like employee protection insurance or disability insurance.
Finally, outsourcing can be great for accessing world-class skills for your small business development and leave your business to focus on what it does well. Before outsourcing business processes, take the time to clearly outline your business needs, and set suitable evaluation criteria for choosing a firm/freelancer.
Integrate Productivity And Management Software Into Your Operations
Streamlining business processes is one of the best ways of improving business efficiency. From encouraging employee productivity to boosting your multitasking abilities as a small business owner, there is a host of productivity software to suit any business need. For repetitive but time-consuming tasks such as invoicing and project management, resource management software can save you time and help you avoid resource scheduling or allocation conflicts. Integration into your business finance function can also further enhance the accuracy of your business budgeting and cash flow forecasting process. For meetings, appointments, and deadlines scheduling software like Appointy and Appointment ensures you or your employees do not miss an important meeting.
Improve Your Business’ Cash Flow Process
Since cash flow management is a notorious sore point for small businesses, improving your financial processes can be an excellent way to boost business efficiency and profitability. A poorly managed cash flow can not only lead to liquidity problems but also cost your business more in the form of late fees or higher interest rates. Start with making cash flow forecasting a regular feature in your business with the help of cash flow management tools for small businesses like Scoro, Float, and Quickbooks.
A key area that small businesses should address is the invoicing process. Approximately 64 percent of small businesses had invoices that were unpaid for over 60 days, according to a National Federation of Independent Business survey. It also meant that 25 percent of small businesses had at least $5,000 in revenue delayed due to invoicing errors. Improving the accuracy and timeline of sending out invoices can have a drastic knock-on effect on your other business operations like debt servicing and supplier relations. Small business owners can also keep their inventory to a minimum. Unnecessarily high levels of inventory mean more of your cash is tied up in stock until sold and paid for, delaying the cash flow process.
Optimal efficiency should be a goal for all business owners, large or small. Keep in mind that the efficiency improvement process should be an ongoing one. Constantly improving your business processes and implementing tools to boost efficiency means your business operations will run better- and smarter.