When you hear words such as “efficiency” and “productivity,” you probably think of large manufacturing businesses. These terms are often associated with corporations looking to maximize every ounce of profits and minimize all costs. What may surprise you is that being productive can make a big difference as a small business owner, too. What is productivity, why is it important and how can you build a more productive work environment?

The Definition of Productivity

According to one dictionary, the word productive means to deliver results, profits or benefits. It’s closely connected with the concept of effectiveness. In other words, when you’re productive, you’re getting things done — important things. You’re not wasting your time or paying employees for sitting around.

To measure how productive your business is, you need to compare how much you’re investing compared to how you’re receiving in return. The better the ratio, the better your productivity.

Types of Productivity

Sometimes, being productive is related to how you use your time. After all, time is money for small business owners. Being productive can also involve effort and money.


Imagine that you need to spend two hours performing a small repair on your work equipment. Assuming that you make at least $20 an hour as a business owner, doing it yourself is actually costing you $40 an hour in labor.

If you get someone to do the job for $12 an hour, you may actually be improving your productivity. Of course, this assumes you use your newfound free time to generate revenue.


You need to weigh how much effort certain tasks require compared to how much of an effect they produce. Sometimes, you can accomplish 80% of the work with 20% of the effort. In that case, it’s smart to focus most of your attention on tasks that provide considerable results.


How you spend your money relates to productivity and a good return on investment. By prioritizing purchases and investments that provide ample rewards, you get the most bang for your buck. This can lower your overall costs relative to the amount of revenue you’re bringing in.

The Importance for Being Productive for Small Businesses

When you have a small team or run a business along, you need to manage your time and money effectively. You need to prioritize the right tasks and projects. That way, you bring in more money, which you can use to take care of your business. This money also helps you cover less urgent but important needs.