As much as we count them, the hours in a day never add up to more than 24. Anyone involved in running a small business has known times when it’s felt as though there simply aren’t enough of them at our disposal. Yet, for the sake of our personal wellbeing, we don’t want to be burning the midnight oil on a regular basis. A good work/life balance is vital for our mental health.
While long hours may occasionally be unavoidable, the smart and sustainable way to improve the performance of a business, and the individuals in it, is by boosting efficiency and productivity. Two main ways to go about this are by investing in training that upskills your people and implementing software solutions that make processes run
better and smoother.
“Improving productivity is a major focus for the UK at the moment and there are a lot of local and national programmes available for small businesses,” says Mark Hart, Professor of Small Business and Entrepreneurship at Aston Business School and also Deputy Director of the Enterprise Research Centre, which addresses small business growth issues. “My view is that local business schools are a great source of support but small business owners are unaware of it.
Much of it is actually free, supported by EU funds, which will continue for a few more years yet.”
At Lord Young’s request, in 2013 Professor Hart designed the Small Business Charter, managed by the Chartered Association of Business Schools. It provides accreditation for business schools giving expert advice to companies that are looking to boost capacity and improve productivity, to take their business to the next level.
Worryingly, many SMEs have turned a blind eye to upskilling. FSB’s Learning the Ropes report on skills training in small businesses found that 24 per cent have not provided any training for staff during the past year, while the main barrier to firms becoming more digital was lack of staff with digital skills.
Local Enterprise Partnerships across England can help small firms identify the right pathway but Professor Hart concedes the “experience is mixed across the 38 English growth hubs”, although many do point to programmes run by business schools and national initiatives.
In terms of productivity, there are several options. The Small Business Charter Leading to Grow programme aims to help micro-businesses raise productivity through digital and new technology, funded by BEIS under the Business Basics initiative.
Then there’s the Be the Business – Productivity through People programme and other initiatives from the Be the Business stable, including a mentoring scheme. In addition, Knowledge Transfer Partnership schemes, hundreds of which are funded across the university landscape, engage businesses on long-term support for both technical
and management-related challenges.
“Schemes abound, so it is important we raise awareness of them,” says Professor Hart. “The issue is ensuring learning has outcomes. My view is that the nature of the programme matters and we – business schools – deliver in a peer-learning environment so we build networks of the businesses we support. It is through businesses engaging with these networks that the shared learning gets embedded. Business schools do have Entrepreneurs in Residence, which ensures that the learning is practical and translates into real solutions and impacts.”
But what about making the right decisions on technology? KPMG Partner Bina Mehta, who chairs the firm’s Emerging Giants team, which works with fast-growing private businesses, says technology and innovation investment can boost productivity and enable better decision-making. The key, she says, is to choose technology that is relevant for the size and complexity of the business, and can be scaled as it grows. It’s vital to integrate technology wisely, and properly assess the risks, as well as the benefits, before proceeding.
“Significant investment in technology and new systems must address a business objective, such as a new finance system which removes the need for a mountain of spreadsheets,” says Ms Mehta. “It’s important business owners are aligned on the implementation scope. Businesses will often implement new technology that is then improperly used because they haven’t considered the full extent of the processes that the system supports.”
In Professor Hart’s opinion, small businesses striving to increase productivity should focus on software that can address: data analytics, to allow analysis of vast amounts of data in real time; and enterprise resource planning (ERP) software, which integrates aspects of the business that are usually held in separate databases, such as finance, HR and customer relationship management.
For small firms, simply moving to an automated accounting or expense management system can boost productivity; for slightly larger firms, ERP systems provide a wide range of functions including procurement, finance, production, sales and credit management. “They can also be used to manage suppliers, enabling you to have productive conversations about how to keep costs down and strike better deals,” says Ms Mehta.
“These systems vary in complexity, from those suitable for an owner-managed small business, to a global multinational. There is no simple threshold at which point a growing business needs an ERP rather than
an accounting system. This decision is more driven by business complexity than size, and often it’s events like an acquisition or international growth that provide the catalyst.”
These days, introducing new technology requires spending relatively small proportions of revenue, as many of today’s service models are based on a subscription rather than the traditional licensing model. This means technology and IT are no longer capital expenses that can be depreciated over time, but, instead, ongoing operating expenses. It also means firms have access to the latest software, rather than risking a package becoming obsolete in a couple of years.
“If you’re looking to ensure your business has longevity in this economy, you need to consider moving to cloud services,” says Ms Mehta. “These enable a business to benefit from the process efficiencies and reliability of service
that new technology brings, and help protect your business from online fraud and cyber-attacks.”
It can also make a significant difference to the experience you can offer both customers and employees, including increased accessibility, enhanced personalisation and a consistent brand experience. The Enterprise Research Centre’s State of Small Business Britain Report 2018 showed that micro-businesses had a 13 per cent productivity boost three years after the adoption of certain digital and new technologies, often cloud-based.
More recent research, in the form of OGL Computer’s 2020 survey The State of Technology at UK SMEs, found that
57 per cent of respondents (technology decision-makers in SMEs with 50-500 employees) said they were planning to increase use of cloud computing, in order to drive business efficiencies and profitability. If you feel there’s more you can do to boost productivity – and surely that’s true of nearly every business – then it’s time to grasp the nettle.