Businesses rely on the efficiency of the factors of production to achieve prosperity. These factors of production include: land, labour, entrepreneur and capital. Land, also known as dry land, ground, or earth, is the solid terrestrial surface of the earth not submerged by the ocean or another body of water. It is the medium for doing business. Labour is the productive work, especially the physical work done for wages and the people, class, or workers involved in these activities of toiling. Entrepreneur is the person who sets up a business, taking on financial risks in expectation of profit, while capital is the wealth in the form of money, debt or other assets owned by a person or organisation or amount available for the purpose of starting a business or investing. Capital can be either the savings of the owner or owners of a company known as equity or loan from another party either individual or bank or a combination of the two.
The term efficiency can be defined as the ability to achieve an end or goal with little to no waste, effort, or energy. Being efficient means you can achieve your results by putting the resources you have in the best way possible. Put simply, processes are efficient if nothing is wasted and all processes are optimised. The Cambridge English Dictionary defines efficiency as the quality of working well in an organised way, without wasting time or exerting unnecessary energy. It is achieving the maximum capacity of a factor of production as much as possible. Business efficiency describes how effectively a company generates products and services related to the amount of time and money needed to produce them. They make the most of their resources, transforming labour, materials and capital into products and services that create profit for the company. The core aim of management in a dynamic business environment is the improvement of business efficiency.
Capacity is the maximum amount that something can contain or produce. It is the ability of a medium to do a particular task. When a resource is working to install or achieve expected capacity, the resource is said to be efficient. When all the resources of a company are working to capacity, the company is believed to be efficient. A company does not have to work to full capacity before it is described as efficient. Some resources of a company are referred to as efficient because of their reliability or high rate of contribution to the production process. Businesses that are consistently more efficient earn an increasing share of available industry profits and can begin to trade in securities to make money – and in time, industries become consolidated around a single dominant business model except its competitors improve their efficiency too! Business is like a game of football in that it depends on teamwork and the efficiency of the team members to achieve results.
A business must strive to build both its profit as cost of capital and its goodwill, which is benevolence. Goodwill is an intangible asset of a company that accounts for the excess purchase price over the assets and liabilities. The value of a company’s name, for example, Facebook, Drugfield, Shoprite and Chopsticks; brand reputation including logo impact; loyal customer base; solid customer service; good employee relations; and proprietary technology are all aspects of goodwill. This virtual asset is why one company or investor will pay a premium to acquire another. The difference between successful companies and the unsuccessful ones are characterised by how the companies can effectively push efficiency to prosperity, that is, how the companies can derive maximum benefits from their assets’ capacities.
Successful businesses have capitalised on the efficiency of their assets to get to where they are. The ways to increase business’s efficiency include: (1) Know the maximum capacities of all the factors of production in your company. The capacities of your workers, machineries and materials must be known. Determine how you can achieve between seventy to ninety percent efficiency rates. (2) Automate Operations: One of the best ways to boost efficiency is to automate as many tasks as possible in the business process. (3) Delegate and consolidate tasks as much as possible: Allow teamwork and delegate as many tasks as possible to workers. Combine similar works within the business for efficiency. (4) Improve time management: Improve your practice of time management. Time management is the coordination of tasks and activities in a business process to maximise the effectiveness of an individual’s efforts.
Other ways to increase business efficiency are: (5) Look for outsourcing opportunities: A company cannot engage in all the activities in its production process. A food manufacturing and packaging company may not find it expedient and profitable to produce its own packaging medium. A company may not find it convenient to distribute its own products. Fruit juice manufacturing companies depend on suppliers for their raw materials. This is to benefit from ‘division of labour’. (6) Listen to your team members: For feedback and improvement mechanism, it is good for a team leader to listen to his or her team members for feedback and ways of improving the products or services of the company. (7) Focus on employee training and skills development: Employees’ performance depends on what they know and what they know depends on their training and skills acquisition. (8) Never stop improving: Change is a constant phenomenon in life. Businesses should never cease improving their processes and output.
Prosperous businesses do not emerge by accident; they are nurtured into prosperity by good managers. What men who dress mostly in suits and in C-suites do, is to first identify the capacities of all the assets of their company, establish the efficiency index (output divided by input) and motivate their team of workers to achieve prosperity. Effective managers are able to identify workers who are after activity and those who are after productivity. While the workers after productivity are getting results, those after activity are only running around the business premises without contributing to the objectives of the business. They are office-attendees, but bench-warmers. Their efficiency index is close to zero and they cannot contribute to the prosperity of the business. Until they are booted out of the business, they will continue to paddle the business canoe against the efforts of the productive workers.