Why Productivity Matters and What You Can Do About It. 

Understanding Business Productivity in Simple Terms.

Productivity is about how well businesses use resources to create products or services. High productivity means businesses are efficient, leading to fewer failures, more jobs, and better incomes.

Current Situation: According to Xero’s report, productivity in New Zealand’s small businesses dropped by 6.1% in 2023. Many businesses struggle to reach peak productivity due to daily pressures.

What is Productivity?

Productivity measures how efficiently a business converts inputs (like labor, money, and materials) into outputs (products or services).

Types of Productivity

  1. People Productivity: How many hours are worked for each dollar earned.
  2. Financial Productivity: The return on investments in assets like machinery.
  3. Materials Productivity: How much is spent on materials to generate sales.

Why It Matters

Higher productivity means businesses can do more with less, leading to higher profits and better resilience against economic challenges. Small businesses can improve productivity with digital tools now widely available.

Ways to Boost Productivity

  1. Better Tools: Invest in tools that simplify work. This might be software that reduces repetitive tasks or integrates systems.
  2. Smarter Methods: Regularly review and improve how work is done. This includes focusing on what customers value, documenting processes, identifying bottlenecks, and adopting helpful software.
  3. Skilled Workers: Properly train employees and provide clear job descriptions. Ensure they understand and can use the necessary tools.
  4. Entrepreneurial Mindset: Continuously optimise your business. This can mean scaling up, acquiring other businesses, specialising in a niche, or improving supply chains.

Steps to Increase Productivity

  1. Invest in Better Tools: List potential investments, price them, and choose the most cost-effective.
  2. Improve Methods: Document and map work processes, identify issues, and implement solutions.
  3. Train Workers: Ensure job descriptions are clear, provide comprehensive training, and share the business vision.
  4. Adopt an Entrepreneurial Mindset: Look for growth opportunities, consider acquisitions, and focus on efficient supply chains.

Summary

Boosting productivity requires an ongoing effort to refine processes, invest in tools and training, and maintain an entrepreneurial attitude. Efficient businesses are often more successful and profitable.

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