Running a small business can be a whirlwind. It can feel like you’re juggling a million tasks and wearing countless hats, all while striving to keep everything running smoothly. Creeping inefficiencies are never welcome, but they can feel inevitable.

They also lead to more than just longer working hours and even-longer email chains. According to leading research firm International Data Corporation (IDC), inefficiency can cost businesses a staggering 20-30% of their revenue each year.¹ That’s a significant blow to your bottom line, caused by processes that are slow, outdated, or simply not optimised for success.

The good news? Finding and fixing many of these inefficiencies is possible. Here are three ways to identify them, implement effective solutions, and ultimately equip your business for more efficient ways of working.

The first step to tackling inefficiency is recognising it. While every business operates differently, there are some common red flags to watch out for.

Watch for low customer satisfaction: In the UK alone, poor customer service is costing businesses £11.4bn a month in lost productivity.² Scrutinise the most common complaints you hear to understand which of your internal processes aren’t meeting your customers’ needs – is it slow delivery times, order errors, or a lack of communication, for example?

Be wary of escalating costs: If your costs are rising while your output stays the same, it could be a warning sign that inefficiencies have crept into your business. It may also be down to the fact that many business costs – from energy and raw materials to packaging and shipping – are rising³, but either way it’s more important than ever to identify wasteful spending and implement effective cost-control measures, such as changing your purchasing and inventory strategy to align more closely with demand.⁴

Pay attention to employee morale: Take complaints about repetitive tasks, unclear communication, and a lack of training seriously. Investing in a positive workplace culture is not just a “nice-to-have” – when workers are happy they’re 13% more productive; when they’re disengaged they can lower company profitability by 15%.⁵

Investing in identifying and optimising your business processes – whether that’s through time, effort, or money – can deliver valuable returns as inefficiencies are reduced.

Invest in the right technologies and embrace automation: Technology evolves rapidly, and clinging to outdated software or equipment can hinder productivity – almost a third of employees in Europe say they don’t have the necessary technologies to do their jobs well.⁶ It can be easy to grit your teeth and persist when you’ve invested a lot in a legacy system, even when it’s no longer meeting the demands of the world you’re operating in. But diverting your spending to new software, equipment, or cloud-based solutions can streamline your processes, enhance communication, and improve data analysis capabilities.

There are lots of technology and automation solutions out there that have been designed to help small businesses specifically. For example, software as a service (SaaS) and “no-code” tools can help make the transition from legacy systems much easier for companies that don’t necessarily have lots of capital to invest upfront, or that are perhaps lacking in in-house technical expertise.⁷

Harness the power of data: The latest technologies and the most effective automations thrive on data: the more of it you have – and, crucially, the more accurately you understand it – the better placed you are to drive new efficiencies. If you haven’t already, implement data analytics tools that help you track performance, identify trends, and make data-driven decisions to optimise your business processes.

Simplify workflows and empower your employees: Streamlining your workflows will make your business more agile and responsive, so take a critical look at your current workflows. Are there unnecessary steps that can be eliminated? Can tasks be combined or consolidated? Even small businesses can unearth vast complexities in the way they work, so identify the end goal, break down the process, and keep testing and refining until you find your workflow sweetspot.⁸

Encourage regular feedback: Create an environment where employees feel comfortable providing feedback on existing processes. Hold regular meetings and workshops to brainstorm new ideas for improvement.⁹

Embrace a changing world: The business landscape is constantly evolving – yes, that creates challenges, but in those challenges lie opportunities to get ahead of your competitors. Encourage your team to stay up to date on industry trends and new technologies^.10

Celebrate Successes: If your people do bring new, efficiency-saving ideas to the table, recognise and reward them. People like to know they’re making a difference, and when they do they’re more likely to want to keep making a difference – and keep finding new efficiency savings.¹¹