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Four Parameters of Performance: Productivity

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The keys to SME Scale-Up

Productivity

Scale-up is a distinct phase of an SME’s growth journey, where the business experiences, or can stimulate through its own positive action, a period of high growth, with a strategy focusing on the more effective use, allocation and tracking of its resources.  SMEs can hit a period of scale-up at any time when the intent and vision of its ownership match positive market conditions or opportunities. The scale-up phase is typically the quickest and most significant stage of growth and one that can bring the most challenges for an SME. SME Growth Expert, Julie Strahan shares her insights on productivity, the final Parameter of Performance that enables SMEs to scale-up.

At its simplest Productivity means a business being able to achieve the maximum outputs per ‘unit’ of resource input. Linked to, but not to be confused with, Efficiency – these two terms are not interchangeable – Productivity is concerned with volume and generating the highest rates of activity.

Driving productivity is related to all areas of an SMEs operations. For example, maximising volumes of sales enquiries, of components machined, of client visits completed, of pallets filled, or of orders shipped. The inputs are people, equipment, raw materials, and time. SMEs that can understand their levels of productivity performance, in all areas of their business, will have a greater capacity to make measurable improvements which will enable them to secure and service more customers, fulfil more orders, increase the ROI on their equipment, and secure more favourable deals with suppliers.

It also will enable them to scale up. Productivity touches on all areas of an SME’s business operations, so this article will focus on one area of business practice that many SMEs can re-evaluate to achieve meaningful results: monitoring the productivity of their sales pipeline. In this productivity analogy, the inputs are your sales teams (and sales support resources) and the output is the conversion from prospect to client. In order for an SME to maximise the productivity of their sales pipeline they will need to start by documenting what the steps are in that pipeline and establish the current base line performance across: prospecting to qualification; qualification to presenting (i.e. quotation); and presenting to closing.

If you’ve already established the monthly or quarterly sales target, understanding these conversion rates is crucial to determining how much time and resource needs to go in at the start of the ‘funnel’.

Furthermore, the advantage of ensuring the process is explicit is that it makes it a) repeatable and b) able to be automated by technology. Any business process that is too reliant on tacit know-how and unwritten ‘rules’ will never be repeatable enough to achieve genuine scale. If it’s explicit it’s repeatable by others and it can be mapped against digital technologies to reduce labour intensive manual tasks – for sales, this could mean automating email campaigns, prospecting reports, and pipeline visibility. So how can SMEs recognise they are compromising productivity through ineffective sales? They can ask themselves:

  • How consistently do we generate enough good quality leads, with the right type of customers?
  • What is our current conversion performance rate from prospect to deal?
  • And do all our sales staff perform to the same level?
  • How much time do we spend on sales and marketing activities that don’t convert well into good quality leads?

If the answer to any of these is less than comfortable, then reflecting critically on your productivity of sales could carry real profitable benefits. Our supported SMEs grow on average by 29%. Over 170 SMEs have been supported since 2018 and the Centre has created over 230 jobs across the region. See also previous articles:

Edge Hill Julie Strahan You can also read our case studies from SMEs in manufacturing, professional services, IT and more on our website – Productivity & Innovation Centre

Would you like to see your business grow? So would we. To speak to someone from the Growth Hub about business support, contact Boost online or call 0800 488 0057.

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