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Better business tip of the week – Business efficiency


Research from Aviva recently showed that costs, revenues and profit dominate advisers’ concerns. Part of the route to effective cost management is business efficiency, where there are no reliable market-wide benchmarks. 

Many firms have concentrated on operational efficiency with the application of more effective software and professional development for staff. To help measure the effect of this, a calculation of productivity per head across the business is useful.

The latter typically ranges from £70,000 to £100,000 per head per year and is attained by dividing the gross turnover by the total number of full-time equivalent staff, including the advisers. For most businesses you can work this out very quickly. It is clearly a crude measure but if you are developing a business plan with projected turnover and staff numbers, it helps you to consider how the plan influences productivity.

There will be variations. Firms with a lot of corporate work tend to have more staff and this may reduce productivity whereas those with well-defined services in the personal market tend to perform better. 

If the measure is less than you expect, streamlining service and processes and defining jobs carefully is the first route to securing improvement.

David Shelton is the author of The Business of Advice book and website  



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