How to increase productivity in your small business

Published Monday 30 March 2026

Table of contents

• What is productivity?
• Types of productivity
• Why productivity matters
• How to set productivity goals and priorities
• How to increase productivity
• Streamline your business processes
• Invest in better work tools
• Build a skilled and productive team
• Embrace entrepreneurship and innovation
• Measure your productivity improvements
• Your productivity action plan
• Make productivity a daily habit
• FAQs on increasing productivity in small business

Key takeaways

• Establish a productivity baseline by documenting your current processes and identifying the biggest time drains like manual data entry, approval delays, and error correction before making any changes.
• Focus on one high-impact improvement area at a time rather than trying to fix everything simultaneously, starting with the task that frustrates you or your team most to build momentum for bigger changes.
• Invest in tools and software that automate repetitive tasks like invoicing, bill payments, and bookkeeping, as these can reduce errors by up to 70% and free up time for higher-value work.
• Provide comprehensive training and clear job descriptions for your team, including tool skills and the bigger business picture, since effective onboarding directly impacts how quickly employees become productive.

What is productivity?

Productivity measures how efficiently your business turns inputs into outputs. The more productive you are, the better you convert resources into products or services. These resources include labour, capital, and materials.

Higher productivity means you can absorb rising costs and stay competitive.

Types of productivity

Understanding the different types of productivity helps you identify where to focus your improvement efforts. Small businesses can measure productivity in three main ways:

• Labour productivity: shows how much work it takes to deliver products or services, commonly expressed as hours worked per dollar earned.
• Capital productivity: shows how well you monetise investments in assets like machinery. It's often measured as return on capital invested (which is also a profitability ratio).
• Materials productivity: shows how much you spend on materials to generate sales. Materials include inventory, energy, and supplies.

Why productivity matters

Productivity gains translate directly to your bottom line. They help you handle inflation and compete on price.

According to OECD data, productivity gains are getting harder to achieve across all industries. After a drop in 2022, labour productivity across member countries rebounded modestly to 0.6% in 2023. Small businesses have typically lagged behind larger competitors, although a recent Xero report is challenging some of these notions.

How to set productivity goals and priorities

Setting clear goals helps you focus on improvements that actually move the needle. Without priorities, you risk spreading effort across too many initiatives and seeing little progress.

Start by understanding where you are now and what's holding you back.

Assess your current productivity baseline

Before making changes, measure how things work today. Track how long key tasks take, note where delays happen, and identify which activities consume the most time.

This baseline gives you something to measure against later.

Identify your biggest time drains

Look for tasks that take longer than they should or happen more often than necessary. Common time drains include:

• Manual data entry: typing information that could be imported automatically
• Chasing approvals: waiting for sign-offs that delay progress
• Fixing errors: correcting mistakes that better processes could prevent
• Searching for information: looking for files, emails, or details that should be easy to find

Choose one area to improve first

Don't try to fix everything at once. Pick one high-impact area where improvement will be noticeable and achievable.

A good starting point is often the task that frustrates you or your team the most. Small wins build momentum for bigger changes.

How to increase productivity

You can increase productivity by improving how you work, what you work with, and who does the work. Here are four proven approaches:

• Better work tools: Invest in equipment and software that amplify your efforts
• Smarter methods: Streamline processes to reduce waste and delays
• Skilled workers: Train your team to work efficiently and confidently
• Entrepreneurship: Combine resources in new ways to unlock growth

Streamline your business processes

Streamlining your processes removes waste and speeds up how work gets done. Many businesses develop routines and never revisit them, even as circumstances change.

Over time, outdated processes slow you down. Regular reviews help you spot inefficiencies and fix them before they cost you money. Follow these steps to get started:

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 is 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.

Common inefficiencies to look for include:

• Double handling: tasks get passed back and forth or repeated unnecessarily
• Momentum loss: work stalls at the same point every time
• Poor sequencing: tasks happen in an illogical order that creates delays
• Quality issues: the same mistakes or customer complaints keep recurring. Adopting automated workflows can address this, as research shows they can reduce errors by up to 70%.
• Distraction: skilled workers spend time on low-value admin instead of high-value work

Redesign your workflow

Once you've identified inefficiencies, work through your list and fix them. Many improvements are simpler than you think.

Quick wins that often deliver results:

• Clarify roles: make sure everyone knows who's responsible for what
• Resequence tasks: arrange work in a logical order to reduce delays
• Improve handoffs: fix communication gaps between team members or functions
• Centralise information: ensure people can quickly find what they need to do their jobs

Consider outsourcing tasks you're not good at or don't enjoy. External providers charge fees, but the investment often pays off through sharper focus and better efficiency.

Consider digital adoption

Software can significantly boost efficiency by automating repetitive tasks and centralising information. There's a learning curve, but once you're set up, you're free to focus on higher-value work.

Many routine business tasks can be automated or streamlined with the right software. Software can help with tasks like:

• Invoicing customers
• Paying bills
• Managing inventory
• Managing staff
• Bookkeeping and reporting

Check your work actually matters

Check you're focusing effort on things that customers actually care about. You don't want to invest heaps of time and energy into things that don't matter to your business. Try out some surveys or even just some good old fashioned conversations with your customers. If aspects of your offerings aren't resonating, consider investing less into them.

Invest in better work tools

Tools are made specifically to amplify the efforts of their users. A carpenter can do a lot more with an electric drill than they can with a hand drill. Find the tools that'll amplify your work.

Sometimes it might be as simple as software that cuts down the double-handling of information. A booking system that schedules jobs straight into your calendar is one example. Accounting software that integrates with important business systems like payments or point of sale is another.

Why you haven't got better work tools yet

Upgrading work tools costs money, and many small business owners hesitate to invest. Research by Professor Marc Cowling of Oxford Brookes University identifies five common barriers:

• Unclear priorities: small businesses juggle multiple investment opportunities and struggle to choose which to pursue first
• Difficulty seeing value: few businesses run financial analysis to estimate return on investment (ROI), making it hard to justify spending
• Risk aversion: most owners only consider investments that pay for themselves quickly, avoiding larger projects with bigger potential. Research confirms this, finding that nearly 59% of firms choose a payback period of three years or less.
• Limited access to finance: about a quarter of businesses have been denied loans, and many wait years before applying again
• Technology overwhelm: owners assume new tools will be hard to learn, costly to train on, and difficult to integrate with existing systems

How to make a move

Follow these steps to choose the right investment for your business:

1. List your top capital investment ideas
2. Calculate the actual cost to implement each one
3. Estimate the expected return on each investment
4. Rank them by ROI from highest to lowest
5. Review the list with your accountant or bookkeeper to find the best fit for your budget and goals

Build a skilled and productive team

Building a skilled team helps you get more done without adding headcount. While big businesses hire specialists, small businesses often rely on generalists who wear multiple hats.

You can still set your team up to succeed with the right training and support.

Onboarding and training

Training and onboarding directly affects how quickly new team members become productive. Studies show the advantages of on-the-job training, with 59% reporting improved job performance as a result.

Set your team up for success by:

• Providing clear job descriptions: define roles, responsibilities, and expectations upfront (use a job description template to get started)
• Documenting processes: create guides that reinforce in-person training
• Teaching tool skills: ensure employees can confidently use the software and equipment they need
• Sharing the big picture: help your team understand business priorities so they can make good decisions

If employees can't use your tools effectively, your investment in those tools is wasted.

Giving and receiving feedback

Regular feedback prevents repeated mistakes and helps you delegate with confidence. It works both ways: share what's working and what isn't, and listen to your team's ideas for improvement.

Follow these steps for effective feedback conversations:

1. Ask employees what they did well, how, and why
2. Add your own observations about what went well, with specific examples
3. Ask for their ideas on how to speed up or refine the work
4. Discuss those ideas together and set new goals if appropriate

Your employees often have insights that can help you optimise how work gets done, and research confirms that supervisor support positively impacts employee performance.

Embrace entrepreneurship and innovation

Entrepreneurship isn't just about launching a business. It's about continuously optimising how you combine resources to get better results.

This often involves calculated risk-taking, but the rewards can be significant.

Harness your inner entrepreneur to boost productivity

Look for opportunities to combine your resources in new ways:

• Scale up production: increasing output often lowers the cost per unit you produce
• Acquire or merge: buying another business can deliver efficiencies through complementary workflows or consolidated operations, as half of productivity growth in some sectors comes from the re-allocation of outputs and inputs to more productive businesses.
• Specialise in a niche: focusing on fewer services can drive speed, expertise, and quality
• Rethink your supply chain: switch to suppliers that offer superior goods or complementary services
• Hire entrepreneurial people: build a team that looks for better ways to work

Measure your productivity improvements

Tracking results shows whether your changes are working and helps you justify further investment. Without measurement, you're guessing.

Focus on metrics that connect directly to time saved, errors reduced, or revenue gained.

Track time saved on key tasks

Compare how long tasks take before and after you make changes. Even rough estimates help you see progress.

For example, if invoicing used to take 2 hours a week and now takes 30 minutes, that's 1.5 hours you can redirect to higher-value work.

Monitor error rates and rework

Count how often mistakes happen and how much time you spend fixing them. Fewer errors mean less wasted effort.

Keeping records of common errors helps you identify patterns and fix root causes. Track things like:

• Invoices sent with incorrect details
• Orders processed wrong
• Customer complaints related to mistakes

Calculate revenue per employee

Divide your total revenue by the number of employees to get a simple productivity ratio. Track this over time to see if output is improving.

This metric works best when compared against your own history rather than industry benchmarks.

Survey team satisfaction

Ask your team how they feel about their workload and tools. Frustrated employees often signal process problems.

Short, regular check-ins can surface issues before they become bigger problems.

Your productivity action plan

Use this checklist to identify your next productivity improvement:

Better work tools

Start by evaluating your current tools and identifying gaps.

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

Smarter methods

Review and improve how work gets done.

• 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 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

Invest in your team's development and clarity.

• 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

Think creatively about growth opportunities.

• 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

Make productivity a daily habit

Productivity improvement is an ongoing process, not a one-time fix. Keep examining your workflows, upgrading your tools, and watching for inefficiencies that creep in over time.

The investment pays off. Efficient businesses experience fewer delays, less confusion, and less waste. That often means happier customers and a more satisfied team.

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FAQs on increasing productivity in small business

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

What's the fastest way to increase productivity?

Start by eliminating one repetitive task through automation or delegation. Quick wins like automating invoicing or streamlining approvals often deliver immediate time savings.

How much should I budget for productivity tools?

Most small businesses spend between 1%–3% of revenue on software and tools. Start with free trials to test value before committing to paid plans.

What is the 3-3-3 rule for productivity?

The 3-3-3 rule breaks your workday into three parts: three hours of focused work on your most important task, three shorter tasks, and three maintenance activities. It helps you balance deep work with daily admin.

How long does it take to see productivity improvements?

Small process changes can show results within days. Larger investments in tools or training typically take 4–8 weeks before you see measurable gains.

What if my team resists productivity changes?

Involve your team early by asking for their input on what slows them down. People support changes they help create. Start with improvements that make their work easier, not just faster.