Efficiency or Effectiveness - Don't confuse them in Your business !

I agree, these two terms might often lead to some confusion but they are truly pivotal in how you should apply them in your business. First let's define them:

Efficiency is: ”the Ratio of number of units necessary to produce a given output" Brrr... Here is an easier definition: if worker A needs only 3 hours to produce a certain widget, rather than 4 hours for his/her colleague worker B, you would reckon that Worker A is more 'efficient' than worker B.

Effectiveness is: ”the capacity to produce a result consistent with your goals"

Now given the limited resources of Your SMB, to be an "Effective" entrepreneur is clearly much more important than being "Efficient".

First, concentrate your time and energy in evaluating very carefully the pro's and con's of any decision that might affect significantly the future of your SMB. Such "Effective" work might/will definitely change Your future Bottom-Line. Then when your decision is taken, proceed to fine-tune it with "Efficient" moves to reduce the associated costs and maximize the returns expected.

If you wish to explore further this managerial topic, you might read the following roadmap: "Small Business Advice: Management theory for entrepreneurs" by Robert Heller.

You probably wonder now, does this blog helped me to manage better my SMB? Not sure as the key turning point lies where You have to make the Effective decision. There are several very useful managerial techniques to help You when you find yourself at such crossroads and I shall progressively unveil them in future blogs.