Is productivity the key to business success?
What is productivity?
In many ways, our businesses can survive regardless of inefficient use of our resources. However, if we can put our cash, our people, and our processes to good use, the likelihood of our businesses succeeding increases a whole lot. So are you looking at productivity?
So, to understand how this applies in our businesses, we will be looking at a variety of factors over the next few blog posts.
- Enhancing physical and financial resources (e.g. your assets)
- Managing human resources (e.g. your employees)
- Managing yourself
- Time vs energy management
- Using digital tools to improve productivity
We will also pay particular attention to managing remote workers, and how you can get the most out of your employees even when you can’t see them.
The link between productivity and profitability
Productivity in simple terms is merely a way to measure efficiency. It’s about getting the greatest output for the least amount of input. Or better put, getting the most bang for your buck!
So in a business environment, this could mean that employees should spend time on activities that grow the business. Tasks such as phone calls, emails or meetings should result in closing business, and thereby generate revenue.
Being productive looks different for every business. There’s no one-size fits all, but bear in mind what doesn’t get measured, doesn’t get done. So, it’s important to identify the key metrics that will allow you as the business owner to measure how productive your business is.
Profitability on the other hand is all about measuring the cost of your input against the value of your output. Or, differently stated, the difference between your income and expenses.
Not measuring your profitability often and consistently can have a major effect on the success of your business. In the same breath, measurement without analysis is not enough. Let’s get out of the habit of looking at the numbers without really understanding what they mean!
Closing the loop
So if productivity looks at how to get the most output for the least amount of input…
And profitability measures the cost of the input against the value of the output…
Then it is clear that these two concepts are intrinsically linked. Higher profitability is inevitably a product of higher productivity.
So, the question then remains… Are you tracking the productivity of your business? Do you know which factors to consider? And do you know how to identify the areas that can be improved?
Make sure to keep an eye out for the next few posts as we dive deeper into the various areas that your business can benefit from.