An efficient business employs time-saving processes that help its staff to work effectively, allowing them to meet customer demand and deliver overall profitability.
Maximising efficiency is important, because any unaddressed inefficiencies can compound to become far more serious issues that cost you money in the long run.
Here we look at some of those ways that you can achieve greater efficiency within your business, plus how transitioning to NetSuite ERP can help.
What is Efficiency?
What is it that makes your business efficient? The precise factors vary according to what your company does, but in general it means maximising your revenue while minimising your costs – so that ultimately you increase your profits.
Greater efficiency comes from achieving tasks with as little effort as possible. This means you accomplish business outputs quickly and smoothly, with little waste. To bring positive value for your business, it requires that you use your resources well – including staff, money and time.
Return on Investment
One of the best measures of efficiency is to look at your return on investment (ROI). This compares the revenue you generate with what that revenue generation cost you.
Your ROI can be measured at all levels of the business. At the top level, it is effectively a measure of your financial efficiency, by examining what percentage your costs are of your revenue. A low percentage means you have more money, therefore more power to make additional investments in your business that can help you to grow.
At a more micro level, every expense can be evaluated for its potential ROI. For example, investing in an online advertising or social media campaign can increase your brand visibility, attract new customers and boost your sales. The amount spent can be weighed against the projected returns.
Strong, streamlined business processes make you more efficient. Streamlining your processes involves analysing the constituent steps of a task and identifying any redundancies as well as to redesign them to improve their speed and efficacy.
Efficiency is greatly improved by automating manual and repetitive tasks. You complete your tasks far more quickly when they are automated – and there is also less chance of human errors affecting the outcomes.
Using NetSuite ERP, you can streamline your operations by automating all manner of workflows. For example, NetSuite simplifies your year-end close by guiding you through a checklist of actions, then automatically closing your accounts receivable and accounts payable and adding your net profit or loss to your retained earnings account.
You can also speed up other financial processes. You can automate your invoicing, for example, which facilitates faster debt collection and improves your cash flow.
Aside from process improvements, you can also increase the efficiency of your core business operations by improving productivity.
The way productivity is measured depends on what type of business you operate. For example, if you manufacture or assemble products, you might measure your performance by the number of units produced in a day or a month. For distributors, this could be the number of daily orders you fulfil. Professional services companies can track billable revenue by consultant and SaaS companies might measure annual recurring revenue per employee.
Improving your productivity metrics comes down to helping staff undertake their work more quickly and effectively. Relieving staff of mundane or repetitive tasks through automation of course plays a part. But you can also improve employee productivity by giving staff ready access to the information they need. When they can quickly find the answers to the questions they have, they can make faster and better-informed decisions.
An ERP system like NetSuite that runs a single database ensures that your staff don’t operate in siloes. Instead, they all have access to the same information, which is updated in real time. This promotes interdepartmental communication and provides your management team with a holistic understanding of business performance.
Operationally, you can boost productivity using NetSuite, too. Professional services companies can maximise billability, distributors can improve stock turn rates and software companies can increase customer lifetime value.
Driving Business Success Through Efficiency
Inefficiency in business means wasted resources and lower profits. As you grow, each small inefficiency adds up and will ultimately cause a negative impact for your business. Your costs go up, meaning you need to increase your prices, which will turn customers away. As you continue to deplete your bottom line and waste time, service or product quality suffers, staff morale is impacted and you will suffer financial loss.
Your company’s success depends on maximising your efficiency. NetSuite ERP is a comprehensive business management tool that can help you improve efficiency. It provides automation capabilities that streamline your processes – including financial management, stock control, order fulfilment, project management and customer relationship management.
This enables you to increase your productivity, reduce manual tasks and make data-driven decisions for greater operational efficiency.
For more information on NetSuite ERP for your business, contact us today.