How to raise productivity in your small business today

Published Saturday 21 March 2026

Table of contents

• What is productivity?
• Why productivity matters
• Types of productivity
• Setting clear goals and objectives
• Prioritizing tasks and activities
• How to increase productivity
• Better work tools (capital)
• Smarter methods (innovation)
• Skilled workers (capabilities)
• Entrepreneurship
• Increase productivity checklist
• Boosting productivity is a mindset
• FAQs on increasing productivity
• References

Key takeaways

• Set SMART productivity goals that are specific, measurable, achievable, relevant, and time-bound rather than vague intentions like "be more productive" to give your team clear targets to work toward.
• Document your current work processes and identify common inefficiencies like double handling, momentum loss, and sequence problems, then redesign workflows to eliminate these bottlenecks.
• Prioritize tasks using the urgent versus important matrix, focusing more time on important but not urgent work like planning and process improvement rather than just responding to urgent requests.
• Invest in better work tools and software that automate repetitive tasks, but first calculate the expected return on investment and rank opportunities by their potential impact on your business.

What is productivity?

Productivity measures how efficiently your business turns inputs into outputs. The more productive you are, the better you convert resources like labour, capital, or materials into products and services you can sell. Higher productivity means more profit from the same effort.

Why productivity matters

Productive businesses get more from less, and with total factor productivity expected to grow by 0.5% on average in the 2020s, that extra efficiency gives you crucial room to turn a profit, stay competitive, and handle inflation or slowdowns.

According to Organization for Economic Co-operation and Development (OECD) data, productivity gains are getting harder to achieve after decades of continuous improvement. Small businesses have typically lagged behind larger companies, although a recent Xero report is challenging some of these notions.

Types of productivity

Small businesses typically focus on three types of productivity:

• Labour productivity: measures how much work it takes to deliver products or services to customers, commonly expressed as hours worked per dollar earned
• Capital productivity: measures how well your business monetizes investments in assets like machinery, often tracked as return on capital invested
• Materials productivity: measures how much you spend on materials like inventory or energy to generate sales

Setting clear goals and objectives

Clear productivity goals help you focus your effort where it matters most. Without specific targets, it's hard to know if you're improving or where to direct your energy.

Here's how to set objectives that drive real improvement.

Define what productivity means for your business

Productivity looks different for every business. A retailer might focus on sales per labour hour. A tradesperson might track jobs completed per day. A consultant might measure billable hours versus admin time.

Ask yourself: what output matters most to your customers and your bottom line? That's where to focus your productivity efforts.

Set SMART productivity goals

Specific, measurable, achievable, relevant, and time-bound (SMART) goals give you clear targets to work toward. Vague intentions like "be more productive" don't give you anything to work toward.

Instead, try goals like:

• Reduce time spent on invoicing by 50% within three months
• Complete 20% more jobs per week by the end of the quarter
• Cut admin time from 10 hours to five hours weekly

Align your team around shared objectives

Your team needs to understand what you're working toward. Share your productivity goals openly and explain why they matter for the business.

When everyone knows the target, they can spot opportunities to improve and make better decisions day to day.

Prioritizing tasks and activities

Prioritization ensures you're working on high-impact activities, not just urgent ones. Once you know your goals, you need to decide what to tackle first.

Identify your highest-impact tasks

Not all tasks contribute equally to your productivity goals. Some activities directly generate revenue or move projects forward. Others feel busy but don't shift the dial.

Ask yourself: which tasks, if completed, would make the biggest difference to your business this week? Start there.

Use the urgent vs important matrix

The urgent vs important matrix helps you sort tasks into four categories:

• Urgent and important: do these first (customer emergencies, deadlines)
• Important but not urgent: schedule time for these (planning, training, process improvement)
• Urgent but not important: delegate or batch these (most emails, some meetings)
• Neither urgent nor important: eliminate or minimize these (busywork, distractions)

Most productivity gains come from spending more time on important but not urgent work.

Learn to say no to low-value work

Every yes to low-value work is a no to something more important. Small businesses often struggle to turn down requests, but protecting your time is essential.

Before taking on a new task or commitment, ask: does this move us toward our productivity goals? If not, consider saying no or finding a simpler solution.

How to increase productivity

There are four proven ways to boost productivity in your business. Each approach targets a different lever you can pull:

• Better work tools: invest in equipment and software that amplify your efforts
• Smarter methods: streamline processes to eliminate waste and friction
• Skilled workers: train and empower your team to perform at their best
• Entrepreneurship: think strategically about scaling and innovation

Better work tools (capital)

Tools amplify your efforts. A carpenter can do far more with an electric drill than a hand drill. The same principle applies to your business.

Sometimes the right tool is simple software that cuts down double-handling. A booking system that schedules jobs straight into your calendar, or accounting software that integrates with payments or point of sale, can save hours every week.

Why you haven't got better work tools yet

Upgrading work tools costs money. Professor Marc Cowling of Oxford Brookes University investigated why small business owners don't make that investment. Here are his top five reasons:

• Unclear priorities: small businesses typically have about six capital investment opportunities in mind but struggle to choose which to pursue
• Difficulty seeing value: few small businesses run financial analysis to estimate return on investment, making it hard to justify spending
• Risk aversion: most owners only consider investments they estimate will pay for themselves within two years, causing them to shy away from bigger projects; this caution is understandable given external risks, such as a recent global IT outage that had an estimated financial loss
• Loan rejections: roughly a quarter of businesses have been denied a loan, and after a knockback, it takes up to four years before they apply again
• Technology intimidation: many owners assume new equipment will be hard to learn, consume training budgets, and clash with existing systems

How to make a move

1. List your top capital investment ideas
2. Calculate what each would actually cost to implement
3. Work out the expected return on each investment
4. Rank them by return on investment (ROI)
5. Work with your accountant or bookkeeper to find the opportunity that makes the most sense

Smarter methods (innovation)

Smarter methods eliminate wasted effort. Many businesses develop a way of doing things, then never revisit it. Over time, those processes become less effective as everything else changes around them.

Regularly reviewing and revamping how you work can unlock significant productivity gains. Here's how to do it:

Write down your processes

Record the steps you follow to complete jobs. Put a little time aside each week and get staff to help as their perspective will be hugely valuable.

Use templated documents to ensure you're capturing the same information for all the jobs. This will help everyone understand what to do, when to do it, and how. Plus the simple act of writing it down will begin to highlight inefficiencies and missing information.

Look for blockers

Run through your freshly documented process looking for bottlenecks and roadblocks. Again, your employees will have great insights on this so empower them to be honest with you. It may help to map your workflows visually as that can be a more intuitive way to see it.

You might find these common inefficiencies in your audit:

• Double handling: jobs get handed back and forth repeatedly or duplicated unnecessarily
• Momentum loss: work stalls at the same point every time
• Sequence problems: tasks get completed in an illogical order
• Quality control gaps: the same mistakes or customer complaints keep recurring
• Distraction: skilled workers spend time on low-value tasks instead of their core work

Redesign your workflow

Step through your list of inefficiencies and address each one. You can often make big improvements by:

• clarifying roles and responsibilities so everyone knows who does what
• resequencing jobs to create a more logical flow
• improving communication between functions that depend on each other

Make sure people know where to find the information they need to perform tasks or deal with customers.

Consider outsourcing jobs you're not good at or don't enjoy. External providers charge fees, but it may be money well spent if it makes your business more focused and efficient.

Consider digital adoption

Software can massively boost business efficiency. Research from the Bank of Canada shows that digitalisation is expected to continue supporting productivity growth, accounting for one-quarter of total factor productivity growth in the 2020s. It helps you request and track jobs, centralize information, speed up communication, and automate repetitive tasks.

Yes, there's a learning curve. But on the other side, you're free to focus on what you do best. There's software for:

• invoicing and paying bills
• managing inventory and staff
• bookkeeping and reporting

Check your work actually matters

Are you focusing on what customers actually care about? You don't want to invest time and energy into things that don't move the dial for your business.

Try surveys or good old-fashioned conversations with your customers. If aspects of your offerings aren't resonating, consider investing less into them.

Skilled workers (capabilities)

Skilled, well-trained workers get more done with less supervision. Big businesses can afford specialists who excel at specific jobs. In contrast, small businesses, which account for more than three out of four Canadian businesses, typically hire generalists who wear multiple hats.

You can still set your team up to succeed.

Onboarding and training

Proper training and resourcing is critical to productivity. Make sure each employee has a job description with clear roles and responsibilities. Explain how the job should be done and provide supporting documents that reinforce in-person instruction.

Train employees on every tool they need, including software, especially as the International Monetary Fund (IMF) estimates that 60% of jobs in advanced economies will be affected by artificial intelligence (AI) automation. If they can't use the tools, your capital investment is wasted.

Share your business values and priorities regularly. When people understand the big picture, they make better decisions for the business.

Giving and receiving feedback

Feedback is vital to productivity, and it's a two-way street. When something's not done right, take time to explain the problem and the solution. Otherwise you'll get stuck redoing work instead of delegating with confidence.

Listen to what your employees say. Their perspective and expertise can help you optimize how work gets done.

Follow these steps for effective feedback:

1. Ask employees what they did well, how, and why
2. Add to the positives by telling them what went well, with examples
3. Ask for their ideas on how to speed up or refine the work
4. Workshop those ideas together and set new goals if appropriate

Entrepreneurship

Entrepreneurship is the process of optimizing your business, not just launching it. Entrepreneurs unlock productivity by finding better ways to combine the resources they have, and their collective impact is significant — in 2022, small and medium-sized enterprises (SMEs) accounted for nearly half of the gross domestic product (GDP) generated by Canada's private sector.

This involves taking some risks, but the rewards can be significant.

Harness your inner entrepreneur to boost productivity

Here are ways to apply entrepreneurial thinking to your productivity efforts:

• Scale up: increase output to lower the marginal cost of each product or service you produce
• Acquire strategically: buy or merge with another business to gain scale, complementary workflows, or consolidated operations
• Specialize: double down on a narrower niche to drive speed, expertise, and quality; consider cutting services that don't earn much
• Rethink supply chains: switch to suppliers that provide superior goods or complementary services
• Empower entrepreneurial people: foster a culture of innovation by hiring and supporting people who think like owners

Increase productivity checklist

Use this checklist to boost productivity in your business:

Better work tools

1. List investments that would improve productivity
2. Price each solution
3. Calculate the expected return on each investment
4. Make the move that offers the best mix of affordability and impact (consult with your accountant or bookkeeper for greater certainty)

Smarter methods

• Write down (and map out) your work processes
• Circle all the friction points (for example, double handling, stall-outs, do-overs)
• Brainstorm solutions and focus on clarifying roles and responsibilities, resequencing workflow, fixing communication breakdowns
• Consider software for small, annoying admin tasks that distract you and your people from high-value work (consider outsourcing, too)
• Audit your process against customer preferences to ensure you're investing time and effort wisely

Skilled workers

• Ensure there's an accurate job description for each role
• Explain how each part of the job gets done (in person and writing)
• Provide comprehensive training on the tools
• Give them the big vision of what the business stands for
• Meet regularly to give and receive feedback

Entrepreneurship

• Look for opportunities to scale up aspects of your work
• Stay alert to acquisition opportunities
• Consider going harder on a niche opportunity
• Keep interrogating your supply chain
• Surround yourself with entrepreneurial people

Boosting productivity is a mindset

Small businesses have huge potential to improve productivity. Make it part of your mindset by continually examining and refining your processes, improving your work tools, and watching for inefficiencies that creep in.

You'll need to invest in your team and technologies, but when done smartly, the benefits add up. Efficient businesses suffer fewer delays, less confusion, and less waste. That means increased productivity often goes hand in hand with increased satisfaction.

Ready to boost your productivity with smart automation? Get one month free and see how Xero saves you hours every week.

FAQs on increasing productivity

Here are answers to common questions about improving productivity in your small business.

How long does it take to see productivity improvements?

Small changes like automating invoicing can show results within days. Larger improvements like process redesigns typically take two to four weeks to implement and another month to see measurable gains.

What's the first step to increase productivity in my business?

Start by tracking where your time actually goes for one week. Most business owners are surprised by how much time disappears into admin, interruptions, and low-value tasks. That data shows you where to focus first.

Do I need expensive software to improve productivity?

No. Many productivity gains come from better processes, not expensive tools. When you do invest in software, cloud-based solutions like Xero often cost less than the time they save. Start with one tool that addresses your biggest pain point.

How do I convince my team to adopt new productivity methods?

Involve your team in identifying problems and solutions. People support changes they help create. Start with one small improvement, demonstrate the benefit, then build from there.

What if I've tried productivity improvements before and they didn't work?

Failed attempts usually mean the change was too big, too vague, or didn't address the real problem. Start smaller, set specific measurable goals, and make sure you're solving an actual bottleneck, not just implementing a trendy technique.

References

OECD. (2023). Compendium of Productivity Indicators.

Professor Marc Cowling. (2024). Understanding small firms investment appraisal.

Professors Marc Cowling & Nick Wilson. (2024). The puzzle of underinvestment.