Tips for Working Towards a More Efficient Small Business

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Tips for Working Towards a More Efficient Small Business

Starting and running a small business is often a huge learning experience for many entrepreneurs. What typically starts as a one-person operation can quickly grow and expand into much more. Unfortunately with growing comes growing pains, which can often affect the efficiency of business operations. 

In order for businesses of any size to be successful they need to be efficient. This includes working as a team, spending wisely, and working to increase productivity. If you’re looking to make your small business more efficient start by taking a look at these five areas of your operations:

Look at your communication

Just like in a marriage, communication is key when it comes to running a business. When communication suffers it could lead to lost sales, an escalation of problems that could have been easily resolved, or other tensions within your company. 

This can be especially difficult for retailers where employees may be working different shifts at different times. That’s why it’s imperative to utilize a logbook where your team can share important notes and information from their day that needs to be passed on. This could include a list of items that are running low, customer inquirers that need to be followed up on, or any other incidents that may have occurred. 

Additionally, no matter what kind of business you run, it’s important to hold periodic meetings with your entire team. This is a great chance for everyone to discuss what’s happening with the company, share new ideas, and devise plans for the future. Even if you see all of your employees everyday, never discount the importance of holding a formal all-staff meeting.

Look at your organization

Just as keeping a messy desk can cause issues with your ability to do your job, having a disorganized assembly line, warehouse, stock room, or retail space could be seriously hurting the efficiency of your business. Disorganization can lead to wasted time and wasted time can mean wasted money.

Many times a company’s disorganized ways can be attributed to growing pains. For example, as demand for a product you manufacture increases, raw materials are often stored wherever they’ll fit in the interest of keeping up. That might work in the short-term but ultimately it’s a better idea to ensure that your materials are all easily labeled and arranged in a logical order for the assembling process. You should also reassess your process from time to time and ensure that it is working as intended. 

While retailers might not have to worry about assembly lines, maintaining organized stock rooms is equally as important. First, when stock rooms get overly cramped, it can be difficult to take a proper inventory and determine what products need reordering. Additionally having a stock room that’s in disarray could lead to damaged, spoiled, and even misplaced products which all directly affect your bottom line.

Look at your staffing

One of the largest single expenses small business face are labor costs. As a result you may come to find that you’re are spending too much in payroll and need to reassess your staffing.

If you think that you may be overstaffed there are also several potential solutions that may be possible depending on your type of business. This could mean a change in the way you stagger your employees’ shifts or a change to the responsibilities and tasks each team member has to complete during their shift. Another potential solution could be to take on a certain amount of the business’ day-to-day operations yourself. This will not only help you save money on payroll but also ensure that you’re aware of what’s going on within your company. 

Look at your equipment

Whether it’s a new machine for manufacturing your product or a faster computer/network system for your start-up or retail location, there are times when buying some new equipment makes a lot of sense. The decision to upgrade your equipment should be viewed as an investment and considered carefully. This includes calculating how much you may currently be wasting in extra maintenance costs or labor costs due to outdated machinery or technology. 

To calculate your potential return on investment (ROI) from purchasing new equipment you’ll want to first find out how long it will take you to earn the money back from the purchase. For example, if your current machine can make 100 products in an hour and a new machine that costs $50,000 can make 1,000 in an hour, when will those saved labor costs add up to $50,000? You’ll also want to take into consideration value that isn’t easily quantifiable such as customer satisfaction (will this upgrade allow you to serve guests better or more quickly?), employee moral (is this going to make your team’s jobs easier?), and, most importantly, safety (is your current equipment a hazard to your employees and guests?). 

Even if upgrading equipment may be in many small business owners’ best interest, the problem is that few have the cash on hand to make such an investment. The good news there is that there are a number of ways that entrepreneurs can finance these big-ticket purchases. From small business credit cards to online lenders like Lending Club, there are more options than ever secure a loan and start making your business more efficient.

Look at cutting other expenses

Part of having an efficient business means being efficient with your money. As your business continues to grow and evolve there will almost surely be some areas of your spending that are no longer as necessary or as effective as they once were. One example of this would be, if your business spends significantly on traditional media marketing, you may want to look into social media advertising and see if you can get similar results for less money.

Keep in mind that the needs and expenses of your business will continue to change. Thus a periodic review of your budget and revenue will help you to identify wasted spending and make adjustments. By eliminating these items your business will be able to invest more of its profits into areas that will help grow the company even more. 


Running an efficient business can mean a lot of different things but it all boils down to how well a company takes advantage of its assets and addresses its issues. For many businesses this means keeping their spending focused while evaluating new opportunities for growth. By assessing your organization, staffing, equipment, and spending you’ll be on your way to creating a more efficient and successful small business.

This article originally appeared on The Huffington Post. See all of my HuffPo articles here.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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