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  • Mark Wong

3 Common Misconceptions of Productivity Improvement for Small Businesses


Start-ups and small businesses are lean in resources and have many priorities to balance. Most often, sales take the top priority leaving production, operations and back-office administration to play the catch-up game. The small team often puts in long hours to meet business obligations to customers. Inefficiencies can cost 20 to 30% of revenue each year.

However, many small businesses are apprehensive about taking the bold step towards improving productivity.

Why is this so?

We spoke to many small business owners and here are the top 3 reasons:

1. This is for big companies, we are only a small local business

Many people imagine embarking on a productivity improvement initiative as a large-scale project involving large automation, software implementation, process change etc. Hence, most small business owners shrug it off as something irrelevant for now until the day they become a very large company.

In reality, productivity improvement can range from a small tactical process change to save costs to large transformation projects.

The key point to take away is “Productivity Improvement is a Continuous Effort”.

The advantage of starting at an early stage of the company journey is to ensure that consistent small steps are taken towards better productivity. Like the common saying, “Don’t wait until its broken to fix it!”. Make small effort to improve before it comes too big to manage!

In addition, you get to build the culture of continuous improvement in your team.

2. It’s going to be costly! I don’t have the budget to do this.

Let’s take a step back and understand why we need to improve productivity? Quite ironically, one of the most important reason is to reduce costs!

If this is the case, how did the idea of “productivity projects are costly” creep into the mind of people? We asked our small business owners, the reasons are not far from what we thought. It has to do with the investment costs of investing in automation, software, consultants etc.

No doubt productivity improvement leverages a lot on machinery, software to make processes more efficient with lesser mistakes. As to how much to invest? It would be worth doing a cost-benefit analysis to find out. With the analysis, the projected benefits can be quantified making the decision on productivity improvement an informed choice. In fact, successful productivity improvement projects are not about purchasing the most expensive state-of-art automation or buying very sophisticated machines. The best outcome are from re-looking at Process, Process and Technology with a holistic approach.

3. My team is too small to do standard processes

It is common for team members in small business to wear multiple hats and do multiple roles. This arrangement might seem “cost effective” at the start of the business where funds are limited.

As the business grow, the team just can’t function in this unstructured state. There would problems with long lead time for customers, inconsistent level of service etc. As a business owner, you would do anything to avoid landing in this situation and upsetting your customers!

Productivity improvement does include standardisation of processes but this is not everything! A good productivity improvement program takes a holistic approach to improve capabilities, duties segregation, efficiency of processes etc.

With the 3 common misconceptions demystified, are you feeling more upbeat about improving your business productivity? The strategy as always is to take small practical steps. Do continuous improvement!

#SMEBusinessManagement #SMEProductivity