Words efficiency and effectiveness are mutually dependent. It’s not enough to be only effective, without being efficient, or to be efficient without effective in the same time.
This two elements of the business life can drastically increase your business potential energy. In the same time you as an entrepreneur and your business must to be efficient and effective.
What really means to be efficient and effective entrepreneur or company?
Because of the similarity of the terms, many entrepreneurs are confused about the meaning and real practicing to incorporate these terms into their entrepreneurial life.
- To be effective in the simplest words is to do the right things. If you are effective, you will choose the right activities for your business that will need to be done in order to create and manage really great company.
- To be efficient in the simplest words is to do things in right way. As you can see efficiency is about the way of doing things, not every kind of things but only the right things .
Here is this presented in an efficiency and effectiveness matrix that you can use it for personal and business life.
As you can see, the matrix is composed of four quadrants:
- Low effectiveness and low efficiency. If you find yourself or your company in this quadrant it means that you are doing wrong things on a wrong way. What a catastrophe! You are loosing your time on wrong business activities and in addition of that you are doing that activities on a wrong way. You must immediately stop doing everything that you are doing and reconsider what you really need to do. For example, this is the case when you choose wrong products that you don’t know how to sell them to the customers.
- High effectiveness and low efficiency. This quadrant means that you are doing the right activities in your business. These activities will increase your business potential energy, but you are not doing them on the right way of doing things. So, you are effective but not efficient in the same time. You need to analyze all that activities if you want to find the right way for their accomplishment, because they are something that will increase potential of your business. For example, this is the case when you choose the right products that you want to sell, but you don’t know how to sell them, or you sell them on a wrong way.
- Low effectiveness and high efficiency. This quadrant means that you’re doing the wrong things in your business, but on right way. Do you need to lose your time on doing the wrong activities in your business? Analyse immediately all your business activities that are in this quadrant and stop them. For example, this is the case when you choose wrong products that you are selling to them in a right way. The customers will probably buy for the first time, but it is sure that they will not come for more.
- High effectiveness and high efficiency. This is something that each business will need if they want big business potential energy. Your business is doing things that increase business potential energy, and that things are done on a right way so the business potential energy is converted into kinetic energy. These type of activities will give you the results that will increase your profitability. For example, this is the case when you choose the right products that you sell on right way. In such a way, you will assure a long-term success of you as an entrepreneur and your business.
You must be effective and efficient in the same time if you want to have larger business potential energy into your company.
In order to achieve the desired level of success you need to find the best options so that you are efficient and still effective. This is an ongoing process that usually takes years to find the right formula. These decisions can range form finding the best, most affordable options at banks, buildings, and VoIP providers, to securing employees, insurance packages, and other operating costs.
What can we do about this?
As a conclusion, here I want to share 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 different ways about how to carry out all crucial business activities on the right way.
- Repeat the process from time to time.