The dangers of running your business at capacity
Interesting article from Jacqui Jones, CEO, Way We Do. Australia. (First published on Kochie's Business Builders).
Many business owners take on new goals, without considering what their personal time or team’s capacity is or the likelihood of being able to implement what needs to be done. We often start the year with good intentions and a slew of new goals only to find by February we either are working harder than ever before in an attempt to reach those desired outcomes, or we give up on objectives because it has simply become too hard to fit anything more in.The culprit is being at capacity, either personally or in the business itself.
Many business owners take on new goals, without considering what their personal time or team’s capacity is or the likelihood of being able to implement what needs to be done. Already dealing with the day to day whirlwind of the business, it is hard to contemplate adding more to the to-do pile.
Being at capacity impacts business owners in ways such as:
Halted Growth – it is challenging to increase sales and grow it.
Being unable to spot new opportunities – due to blinkers being on and developing tunnel vision, the business may become out-dated or obsolete.
Being unable to implement upon new opportunities – because there isn’t the time or resources to commit to anything new, goals may fall by the way side.
Increased chaos – since the team is already stretched, any out of the norm circumstances, such as a person being away, throws everything into a spin.
Increased stress – causes personal and business relationships to break down and may lead to health issues.
When is the right time to expand the team when facing capacity issues?
Your business model should be viable without booking yourself or your team to full capacity.
There needs to be room to move to allow for issues that are thrown at the business. To head off capacity problems, the best time to hire a new person is generally around when the team is at 80 per cent capacity.
Of course, the optimal capacity rate will be dependent upon your business model. This provides the space for new team members to be trained and become productive within the required time frame.
However, many business owners tend to make fear based decisions and bring on new team members when the business is bursting at the seams which is one of the most chaotic times to do so.
They are afraid to hire new people without the revenue being present to cover the costs of the new recruit during the period they are unprofitable. Here we have a chicken and egg situation.
Do you ensure revenue is in place first to cover the costs of new employees or do you build revenue once the team member is on board? Ideally, it is better to have revenues that can support new team members, however some businesses find that they require the employee on board in order to generate new revenues.
In either case, it is important that the business owner considers the level of funds needed to support new team members until they are productive and covering their cost of seat. What should you do to create more capacity?
Ensure your business model is viable without your team being at full capacity.
Review your annual objectives daily and plan what you and the team need to do next to be one step closer to achieving goals.
Schedule important work at the time of the day where you are the most efficient.
Delegate and assign work that you shouldn’t be doing to another person on your team or outsource.
Say no to projects that are not congruent to your annual objectives.
Systematise the business to make it more efficient and free up your time.
Create roles and employ people onto your team before you are at 100 per cent capacity.
'Way We Do'... cloud-based SOP Software, that enables business owners to create and actively use a business operations manual, including policies, procedures, work instructions and training materials that teams can access from any location, on any device. For more information in New Zealand, Call Dean Ruscoe. 021 277 8346 www.businessexit.co.nz