Productivity is important for all small businesses — but it doesn’t quite mean what most people think it does. Rather than just doing more, the puzzle of productivity is essentially how to increase the output per hour of all the pieces of your business.
Whether that’s people, places or assets, productivity is being able to produce more from the same amount of effort, or remove costs from your business while keeping quality and outputs high.
No sector has to grapple with this quite like Northern Ireland’s agri-businesses, with its unique exposure to global trends in commodity prices, ever-changing customer demand for different food products as well as the impacts of our weather!
The benefits are clear — a business that improves productivity will not only be able to improve their margins and profitability, but they can also build a more sustainable business that has a more resilient supply chain.
It can also free up resources to look at new markets or products that you could develop. And in the agri-sector, there are also real benefits for the environment from this approach — lower levels of inputs can improve water quality and other emissions.
So how can those in other sectors learn from the way agriculture tackles the productivity challenge? Well, first and foremost, a good control of costs is essential.
You can change two things to improve productivity — either the amount or quality being produced, or the amount needed to produce it. And while the former might require some planning or research to achieve, controlling the latter should be your bread and butter.
As such, measurement is vital. Agri-business is very suited to this — after all, it’s easy to count sheep, or how many eggs you are producing, but in the services sector it’s important to try and put a value on your time, and the time of your staff, to make sure that it’s being spent wisely.
It’s also about considering investment carefully. One of the most important drivers of agri-productivity isn’t machinery or equipment — it’s the quality of the soil and grass that’s produced.
Yet this is sometimes overlooked. Big showpiece investments might impress staff or clients in the short-term, but smaller, marginal investments could have an outsized impact.
Northern Ireland does have a productivity problem — more people are in work than before, but the amount that they are producing for businesses is flat.
Solving this problem, particularly at an SME level, could help increase competitiveness that creates jobs and opportunities right across the board.