This article is an excerpt from the Shortform book guide to "The Personal MBA" by Josh Kaufman. Shortform has the world's best summaries and analyses of books you should be reading.
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Why is efficiency important in business success? How does operational efficiency help your bottom line?
Efficiency is integral to long-term business success. The more efficient your operations, the more time and money you save running your business. This leaves you in a better position to provide a high-quality service that outdoes your competitors—resulting in more sales, increased profits, and long-term success.
Keep reading to learn how to improve the efficiency of your operations, and ultimately drive more sales.
Optimize Systems and Procedures
To improve the efficiency of your operations, you first need to understand all of the tasks that your business relies on. Consider your product or service and write down all of the steps it takes to:
- Create it: This includes designing, manufacturing, and ensuring quality control.
- Market it: This includes your branding and media campaigns.
- Process orders: This varies depending on whether you deal directly with your customers or use intermediaries to handle your orders.
- Deliver it: This depends on the nature of your product or service and whether you’re reliant on distribution channels to fulfill your orders.
- Follow up on it: This includes providing customer support and troubleshooting problems.
(Shortform note: Business strategy experts suggest creating a more thorough outline in order to fully understand your operations. In addition to all of the steps each task involves, note down the people responsible for carrying out each step, what triggers them to take action, and what they specifically do. Interviewing the people involved in each task will help you to gather all of the necessary information.)
Once you’ve outlined all of the tasks involved in running your business, consider where you can make incremental improvements. Kaufman gives some tips on how to improve efficiency and save time, effort, and money:
- Streamline them: This might include automating some of the tasks or eliminating unnecessary tasks.
- Cut costs while maintaining quality: This might include cutting intermediaries out or changing suppliers.
- Improve them: This might include investing in resources such as equipment or more employees.
(Shortform note: Osterwalder and Pigneur (Business Model Generation) offer practical advice to help you streamline your processes, cut costs, and optimize your operations: Use the Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis to evaluate the effectiveness of each of your processes, as well as your overall business strategy. The SWOT analysis examines both internal and external factors—things you can control and things you can’t, provides a clear indication of your strengths and weaknesses, and reveals opportunities to improve your current operations.)
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Here's what you'll find in our full The Personal MBA summary :
- A comprehensive overview of how businesses work
- The five key processes that underpin every business
- How to identify profitable opportunities to ensure business success