In times of economic uncertainty, faced with problems such as rising cost of borrowing, increasing inflation and shrinking staff supply, SMEs face extreme challenges. Contributors to rising inflation include energy supply, raw goods, material supply chain problems and labour costs. This inevitably weighs heavily on customer demand and reduces revenue and free cash flow. SME’s face tough decisions on where to invest to drive growth with less capital available.
The shift towards wider acceptance of remote working poses further challenges to SME’s to ensure staff engagement and productivity remain high. There are some clear benefits with reduced transport costs for staff and reduced office costs for the firm which should be maximised. However, without proper operational reporting and control it is possible for SME’s to suffer from a severe lack of productive output.
How can SMEs respond and grow EBITDA faced with these severe challenges?
It is more essential than ever for executives and managers to create a culture of Operational Excellence supported by systems and methodologies to deliver it. For this, the executive team must establish clear guidelines and systems at all work activity levels. Key aspects to focus on include:
- Map your organisation’s key departments and work activities to help focus on areas for improvement and to measure productive outputs
- Review staff skills and experience for the work they perform and encourage staff to take initiative to drive operational improvements with aligned incentives
- Identify entry level work which can be performed by junior staff at lower cost
- Identify areas of the organisation which create waste – queues, quality issues, needless rework – and eliminate them
- Track labour productivity improvements in a uniform way across departments up to firm level to connect improvements to their impact on EBITDA
SME’s can deliver significant improvements, crucial in tough times, with the help of Opagio’s Operational Excellence platform. One of Opagio’s clients has delivered productivity gains of 30% with EBITDA gains of 80% when comparing Q1 results after 12 months of adoption. Opagio’s unique and powerful approach can deliver exceptional results for your firm.
