Efficiency Vs Effectiveness - A Small Business Dilemma

Capitalism in Action: Efficiency

In business schools around the world, M.B.A. candidates are prepared to return to the corporate workplace, armed with tools to make business more efficient. Finance makes the most efficient use of funds. Marketing aims to bring the most efficient return of capital invested. Management attempts to make the most efficient use of human and technological capital of a firm. Efficiency is good. It ensures that profits are maximized and that waste is minimized. It is a foundational principle of modern enterprise analysis. We analyze operations to make them more efficient, thus making the operation more profitable. Profits keep a business growing and growing businesses need workers. The business is now a job-creating machine. Profits are re-invested into capital equipment that enables the business to reach additional possibilities of production. The business now lowers production cost which makes the enterprise even more efficient. Profits swell and are returned to the shareholders as dividends. This is capitalism in action. This is efficiency. This is the mantra of most business school programs and the desire of most entrepreneurs.

The Harmony of Effectiveness and Efficiency

Small enterprise owners have a dilemma: How do I balance efficiency and effectiveness in my business. Entrepreneurs need to question the purpose of the business. Why does the business exist? Is my business doing the right things? Am I strategically working in the right areas? Efficiency needs to be tempered with effectiveness to organically grow the business. When a small business owner loses sight of the purpose of the organization, efficiency takes over as the predominant theme. Efficiency alone produces less than with effectiveness combined. Efficiency needs work in harmony with effectiveness - form and function, Yin and Yang, left-brain and right-brain, etc. The balance of these two ideals for a small business creates a robust, growing business with a vibrant business culture: A business that is profitable as well as conscious of its stakeholder community. People become a focus of the small business. Without effective and efficient people, a small business will fail to produce the best results.

Ideas for Creating a Business Environment of Effectiveness and Efficiency

Review Your Business Strategy - Set aside some time every month to review your business strategy. Ask yourself: Am I working in the right business areas? Review your personal business goals. What is your exit strategy for the business?

Evaluate Profitability - Make sure that your business is making a profit. Business owners need to make sure their product and service offerings have sufficient profit margins to ensure growth. Make sure you know which activities generate the highest profit margin.

Check Your Production Capacity - How many units of a product can you make in a day? What is your maximum throughput? How many service based clients can you handle at one time? If you don't know your production capacity, then you won't know when it is appropriate to scale your business.

Plan for Growth - What happens if your business doubles in the next 90 days? Are employees trained to handle the additional workload, or do you need begin training now? How ready are you ready to scale your operation to capture the opportunity? Do you have a written set of procedure for your business? Make a written growth action plan that addresses these issues.

Startup Business Guide for Starting a New Business

It is not a surprise that we are witnessing ongoing dwindling economic situation coupled with increasing prices of commodities - groceries, petrol, and diesel that tend to make life hard and miserable for people and businesses.

We are in a period when many startup businesses and entrepreneurs are quick to give up their startup business ideas on the pretense that "time is hard," or simply put, "there is no money in the economy."

From my experience as a business coach, this as one of those good times when anyone that is serious about starting a new business should venture in. Many businesses started in economic recession have higher propensity of survival for many reasons ranging from less competition, cheap labour, and more support available for startup businesses.

Although the emphasis is not on why you should be starting a new business in bad economy, nevertheless, it might interest you to remember that in every ten or fifteen years, economies go through phases of growth, recession, Trough, and recovery. With careful preparation, planning, and execution; great businesses, entrepreneurs and organizations are made at such times.

To succeed with your startup business ideas you need these 3 key ingredients...

1. Be clear about your vision

True vision is the realistic inspiring picture of what you are trying to create, the difference you want to make and be remembered by. Having a vivid vision of the type of business you want to start will make a great difference to how inspired you will be when communicating it to others. I am not talking about crafting the best vision/mission/value statements on paper; no. When you clarify your vision for starting a new business, a clearly defined vision answers the following questions about:

• Who is are you service... your ideal customer?

• What benefit do you give to your stakeholders, community and the world?

• Why does your organization exist?

At any time when your vision is not clear enough to provide answers to the above questions either through the products or services you're offering, it might be worth going back to the drawing board to gain deeper clarity of what you're trying to do.

Assuming you want to start a food business for example; what type of food do you see yourself offering? Who are the people buying from you? What will make them to continue to buy from you? Who else is selling the type of food you want to sell (your major competitors), and how do you want to distinguish yourself from them? What type of impact is your food and business going to make to your community...?

Your vision is at the foundation of the business you want to build; and it is what you want your organization to become even many years after. However clearly you paint the vision will set the path to how successful your business will be because, you cannot build a business beyond the vision you have about it. Keeping your vision simple and exciting will keep you constantly energized and inspired to communicate it to the world both in good market and in bad market.

2. Strategize Your Actions

No matter how vivid your vision may be, if you don't have a plan of simple actions that you will be executing daily or weekly towards manifesting your startup business ideas, your whole exercise would be mere waste of time.

What you need to start a business is usually not a bunch of complicated tips for starting a business, rather a disciplined culture of commitment to take simple steps each day over a long period of time before you can see the results you desire. To strategize your actions therefore means to identify the most important part of the activities you must do regularly, day after day until you see your business come alive in reality.

This is one of the very important steps in startup business guide where most startup entrepreneurs quit their dreams for lack of discipline and commitment.

3. Hire a Coach or Mentor

Your business coach is someone that helps you to see the things you couldn't see your business. One of the challenges of starting a new business is lack of direction and execution. Many startup businesses and entrepreneurs often lose focus of the direction their business is heading. This can result in loss of enthusiasm, waste of time, money and resources. Paraphrasing Anthony Robbins, your energy flows to wherever, and on whatever you give focus. Your coach will make sure that you are constantly focused to on your highest priority objectives, and that every action you are taking is in sync with your startup business ideas.

When starting a new business, you could be overwhelmed too quickly by the multiplicity of data and information you received. Working with startup business experts at Cognition Global Concepts will not only give you the simple tips for starting a business, you will also be supported to build your startup business from concept to reality.

The Eight Skills You Need to Run Your Own Business

Being your own boss, pursuing your passion and even making a name for yourself can be a hard dream to achieve, but it's one that many share. According to the Australian Bureau of Statistics (ABS), 96 per cent of the 2.1 million businesses operating in Australia are small businesses, run by people just like you.

There are many benefits of owning your own business such as independence, flexibility and financial rewards, and these have tempted many Australians to jump whatever ship they're on to become entrepreneurs.

Successful small business owners have - alongside passion and goals - great products and services, tenacity and several core skills that pave the way to long-lasting success. Here are the secrets to their success:

1. Communication skills

In all businesses, big or small, interacting with other people is key, whether it is with staff, suppliers, partners, customers or prospective clients. Strong communication and interpersonal skills are integral to providing quality customer service and ensuring you have a happy and united team.

You need to be able to listen and understand others and have the tools to express your ideas and needs. Without these skills your business could be floundering in a sea of confusion and unmet expectations. If you feel like your communication skills are leaving your business in the dust then seek out books, blogs and courses for communication strategies. While communicating may come more naturally for some people, it is not impossible to learn the gift of the gab.

2. Marketing and sales skills

Getting people to notice your business requires strong sales and marketing skills. You need to be able to attract the right customers and clients in order to be successful.

Marketing skills will enable you to conduct and understand market research and implement marketing strategies, based on this research, in order to connect with your key markets. Understanding the market as well as your target audience will allow you to apply your resources more specifically and efficiently. And in this digital age, e-marketing expertise is also essential. Online marketing strategies are proving more relevant and commonplace in today's society, and businesses that fail to utilise online channels risk being left behind.

3. Personal management skills

Procrastinators and daydreamers need to be wary of letting their workloads get the better of them. Acting as your own boss means self-discipline is key to keeping your business on track. You alone are accountable and responsible for your own actions and time, so managing these efficiently and keeping to schedule are imperative.

Developing your management and organisational skills can be a challenging task requiring a fair amount of discipline and determination. Acknowledging your bad habits and finding out what works for you are the first step and will help you put in place the necessary practices to stop your brain from straying. Prioritising and planning your workdays, and sticking to a schedule will help you keep your eye on the prize.

4. Financial skills

Understanding how to manage money is crucial to any business. Effectively managing your cash flow means having the right systems and processes in place to protect your business against loss and mismanagement. Business owners must also stay on top of their bookkeeping and accounting requirements.

Taking a MYOB or bookkeeping course is a great way to keep on top of things such as sales recording, reconciliation, inventory management, BAS transactions and payroll.

5. Writing skills

Being able to communicate well through the written form will be a great asset to your business. Website content, social media, marketing material and business proposals all require some writing skill. While some of these activities can be outsourced to professionals, the better you can write, the more professional you and your business will appear.

Basic grammar and spelling will get you by and maintain your credibility with your clients and partners. But if you really want to get noticed, you will need writing that portrays your voice and personality. More importantly, you will need to know how to keep your audience engaged while maintaining the branding and integrity of your business. If you want to learn how to do this, taking a communications course could be helpful.

6. Adaptability

For the small business owner, the ability to accept and deal with uncertainty will make you an excellent business owner. Markets, technology and customer wants and needs are ever-changing, so small business owners need to be adaptable to keep up with changing conditions.

Businesses need to remain relevant and up-to-date, and small businesses have the upper hand in this because of their size and the speed with which they can institute change. In order to adapt, businesses need to keep their finger on the pulse and understand how trends can affect their business model. The rise of social media as a business platform is a great example of how businesses need to keep on their toes with new technologies to change the way they connect with their market.

7. Problem-solving skills

Small businesses can often feel the effect of market changes more strongly than larger companies. This means that small business owners need to be able to think on their feet and find solutions without the resources larger companies can afford. Entrepreneurs need to think outside the box to find the right solution for their business.

Identifying issues and understanding where they originated from, brainstorming with others and conducting swift implementation can help small businesses overcome challenges and manage problems.

8. Networking skills

If you're preaching to an empty room, it can be hard to get your message across. Networking and finding people who can help your business grow and expand is a crucial skill for any business owner to have. Developing industry contacts will help you build up a pool of valuable talent and resources.

Entrepreneurs can network the old-fashioned way through industry conferences and events, or online through social media avenues such as LinkedIn, Facebook and Twitter. But remember, networking is a 'you scratch my back, I scratch your back' type of arrangement, so be sure to give as good as you receive.