Improved Productivity Reduces Economic Challenges: Report
Economic challenges affect small and medium-sized businesses (SMBs) less when they put productivity at the forefront, according to a new study by the Business Development Bank of Canada (BDC).
Of businesses that focus on productivity, 28 per cent are facing supply chain problems, compared to 42 per cent of all Canadian businesses; more than one-third consider inflation a challenge, compared to nearly two-thirds; and 40 per cent are experiencing labour shortages, compared to 58 per cent.
To become more productive, the report suggests entrepreneurs measure company performance against peers; optimize processes to eliminate tasks that are a waste of time and money; digitize processes to gain efficiency and automate certain processes, regardless of the sector or industry; and continuously improve products, services and processes, including staff training.
“Not only do entrepreneurs who put an emphasis on making their businesses more productive do much better than others, but they have higher valuations,” says Pierre Cléroux, vice-president of research and chief economist at BDC. “Our study shows that the most productive Canadian SMEs in their industry generate six times more sales by employee and five times more profits by employee.”
BDC has developed a free online business performance benchmarking tool to help business owners rank their company’s sales and profits per employee. This helps entrepreneurs know where they stand against industry peers, find out if they are maximizing revenue and profit, get a detailed report to share with their teams, as well as tailored advice based on their results.