The importance of productivity and how to improve it
Binghay Co • June 12, 2024
Productivity drives strong economies, robust businesses, and efficient workforces. Higher productivity can reduce business failures, boost employment, and increase incomes for both owners and workers.
Industry Insights:
- According to the Xero Small Business Insights special report, the most productive Australian industry in 2023 was wholesale trade ($214.20/hour), while hospitality lagged at $40.20/hour.
- Despite a general decline, 10 sectors, including manufacturing, agriculture, and construction, exceeded the national average productivity of $100.30/hour.
- Western Australia was the most productive state ($102.50/hour), 15% higher than Tasmania ($89.00/hour).
Understanding Productivity:
Productivity measures how efficiently a business converts inputs into outputs. Key areas include:
- People Productivity: Work efficiency, often measured as hours worked/dollars earned.
- Financial Productivity: Return on investment in assets like machinery.
- Materials Productivity: Cost efficiency in generating sales.
Importance of Productivity:
Higher productivity enables businesses to do more with less, improving profitability, resilience to economic fluctuations, and competitive pricing. Digital tools now allow small businesses to enhance productivity akin to larger enterprises.
Increasing Productivity:
Four common strategies include:
1. Better Tools:
- Tools amplify work efforts (e.g., software that integrates payment systems or booking systems).
- Challenges include prioritizing investments, justifying ROI, risk aversion, loan access, and perceived technological difficulties.
2. Smarter Methods:
- Regularly review and optimize work processes.
- Ensure efforts align with customer needs through surveys and feedback.
- Document processes, identify bottlenecks, and redesign workflows.
- Consider digital tools like Asana for task tracking and Zapier for automating tasks.
3. Skilled Workers:
- Provide clear job descriptions, thorough training, and continuous feedback.
- Encourage employee feedback to identify optimization opportunities.
4. Entrepreneurial Mindset:
- Focus on scaling, acquiring businesses, specializing, rethinking supply chains, and fostering a culture of innovation.
Boosting Productivity Attitude:
Continuously refine processes, improve tools, and eliminate inefficiencies. Invest in your team and technology to enjoy benefits like reduced delays, better communication, and increased satisfaction and profit.
The new financial year is already in full swing, meaning most of you are still finalising your general ledger accounts in order to get the necessary information to us to prepare your final 2024 accounts and tax returns. Others have already got us your information and are looking ahead. Either way, it can be a time when we forget our current tax obligations, due in relation to the beginning of the 2025 financial year. In order for you to be across your tax obligations, below are the key compliance dates that are coming up. Make sure these lodgments are up to date to avoid any interest or penalties. KEY TAX DATES – SEPTEMBER/OCTOBER 2024 21 September 2024 – GST – Monthly Activity Statement and payment for August 2024 21 September 2024 – PAYG withheld – Monthly activity statement and payment for August 2024 21 September 2024 – PAYG instalment – Activity Statement and payment for monthly reporters for August 2024 30 September 2024 – TFN withholding report – Annual TFN withholding report for closely held trusts where a trustee has been required to withhold amounts from payments to beneficiaries during the 2024 income year 30 September 2024 – PAYG withholding payment summary – 2024 income year annual report due if lodged by us 21 October 2024 – GST – Monthly Activity Statement and payment for September 2024 21 October 2024 – PAYG withheld – Monthly activity statement and payment for September 2024 21 October 2024 – PAYG instalment – Activity Statement and payment for monthly reporters for September 2024 21 October 2024 – Annual PAYG instalment – Payment of annual PAYG instalment for 2023–24. Lodge only if instalment amount varied or the rate method to calculate the instalment is used 28 October 2024 – GST – Quarterly Activity Statement and payment for the July to September 2024 quarter if you do not lodge with us 28 October 2024 – PAYG withheld, FBT instalment and PAYG instalment – Quarterly Activity Statement and payment for the July to September 2024 quarter if you do not lodge with us 28 October 2024 – Superannuation guarantee – Due date for superannuation guarantee contributions for July to September 2024 31 October 2024 – Income tax – Due date for lodgment of 2023–24 income tax return for individuals, trusts and partnerships if you do not lodge with us 31 October 2024 – GST – Lodgment of annual 2023–24 GST return for instalment payers who are required to lodge tax returns by 31 October 2024 31 October 2024 – Companies – To provide distribution statements to shareholders for 2023–24 for most companies 31 October 2024 – Income tax – Due date for lodgment of 2023–24 income tax return for an entity that has one or more prior year tax returns outstanding as at 30 June 2024 31 October 2024 – SMSFs – Annual return for new registrant SMSF if the ATO has provided this due date We’re here to help if you’re facing operational issues, tackling people challenges, or have health and safety questions, give us a call or email us.
Should you buy or lease your new equipment? Here are some pros and cons of each. We can also review your financial position, cashflow and cost base to decide whether buying or leasing is the right thing for the business.
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For centuries, accounting focused on reviewing historical data, which only tells you about the past. This backward-looking approach limits your ability to plan for the future, explore scenarios, and understand your business's trajectory. The Advantage of Forecasting Forecasting changes the game by allowing you to project future sales, cash flow, revenue, and profits. This proactive approach helps you take control of your business and navigate its journey more effectively. How Forecasting Adds Value Spotting Patterns : Forecasting tools analyse historical data to reveal patterns, trends, and opportunities. For instance, it might predict a seasonal downturn, enabling you to plan and mitigate potential impacts. Future Insight : Instead of only reviewing past performance, forecasting offers a forward-looking view. It’s like using a GPS to navigate the road ahead, rather than just checking the rear-view mirror. Scenario Planning : With accurate forecasting, you can explore various "What if?" scenarios and assess different strategies. This helps in making informed decisions about your next steps. Evidence-Based Decisions : Combining historical data with forecasts provides a comprehensive view, aiding in strategic planning and identifying potential threats. Enhanced Accountant Collaboration : Forecasting gives us a detailed understanding of your business, allowing for better strategic advice and performance improvement recommendations. Discover the Benefits of Forecasting Ready to take control of your company's future? Contact us to learn how forecasting can highlight potential threats and opportunities, and help you develop a proactive strategy to enhance your business performance.
