Too often in business is used terms as efficiency and effectiveness. Sometimes when we say efficiency we think on both efficiency and effectiveness. Words efficiency and effectiveness are mutually dependent. It’s not enough to be effective, without efficient or efficient without effective. This two elements of the business life can increase business potential energy into your business. You as an entrepreneur and your business must to be in same time efficient and effective.
What means to be efficient and effective?
- To be effective in the most simplest words is to do right things. If you are effective you will choose the right activities for your business.
- To be efficient in the most simplest words is to do things in right way. As you can see efficiency is about way of doing right things.
Below is given efficiency and effectiveness matrix that can be used for personal life and also for business life.
The matrix has four quadrants:
- Low effectiveness and low efficiency. This means that wrong things are doing on wrong way. What a catastrophe! You are loosing the time on wrong business activities and additionally that activities are doing on wrong way. You must stop all that activities into your business. For example, you choose wrong products that you don’t know how to sell it.
- High effectiveness and low efficiency. This means that you are doing the right activities in your business. Activities that will increase business potential energy, but you don’t do that activities on right way. You are effective but not efficient. All of that activities you must analyze and find the right way for their realization because they will increase potential of your business.For example, you choose the right products that you want to sell, but you don’t know how to sell them, or you sell them in wrong way.
- Low effectiveness and high efficiency. This means that you’re doing the wrong things in your business, but on right way. You lose your time on doing the wrong activities in your business. Analyze all business activities that are in this quadrant and stop them. For example, you choose wrong products that you sell them on right way. The customers will make buying but will don’t come for more.
- High effectiveness and high efficiency. This is something that is needed for each business to have big business potential energy. Your business doing things that increase business potential energy, and that things are doing on a right way that converts business potential energy into kinetic. All of these activities give results that increase profitability of your business. For example, you choose the right products that you sell on right way. In this way, you assure long-term success of you as entrepreneurs and your business.
You must be effective and efficient in the same time if you want to have great business potential energy into your business.
What can we do about this?
As a conclusion here is some recommendation how you can be effective and efficient:
- List all of your business activities.
- Assign all activities in quadrants as in a picture above.
- Analyze all the activities with sign STOP with ABC analysis or 80/20 rule.
- Exclude all activities that are not important for your business.
- Choose ways how to carry out all crucial business activities on right ways.
- From time to time, repeat the process.
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