What’s your capacity? And why you need to know
Knowing your business capacity helps you plan your workload and your marketing activity. That, in turn, will help relieve the small business feast and famine roller coaster of too much work one month and too little the following month.
Do you know what your business capacity is? And what to do about it if you’re not at capacity?
According to Investopedia.com, ‘capacity’ is the maximum level of output that a company can sustain to make a product or provide a service. As an example, a car manufacturing plant could have a capacity of 1000 cars a month. This capacity would not be running the machines at full speed all day, every day. To make a meaningful capacity calculation you need to take account of machine maintenance time, and possible retooling/recalibration time in an industrial setting. You also need to consider the human resources that are needed and allow for sickness and holidays. Capacity is how much work you can get done in a specific time period, with the resources you have available.
With service industries, it is more difficult to determine your capacity as there are no physical quantities to be counted. However, you can get an idea of your capacity through experience. Can you handle 5 client projects a month, or 15 client projects a month? You’ll know how much time an ‘average’ client takes to service and you can estimate how many hours of productive time you have each week or month.
There are overheads in any business; admin tasks that need doing, marketing your business, social media relationship building, prospecting for new clients, and spending time in meetings to land new customers. All these tasks eat in to the time available to do the work and must be considered when calculating your capacity. You also need to take account of the ‘idle’ time when your staff are chatting amongst themselves, catching up after the weekend, going to the bathroom and making cups of tea.
How many productive hours are available each week or each month? And how many ‘average’ client projects will fit into that amount of time? This will give you a rough idea of your business capacity.
Once you have that figure, you will know whether you are working at, or below, capacity. Are your staff finding ‘busy’ work to do because there is not enough client work? Or are you overloaded and trying to run above capacity?
Trying to do too much in too little time is very stressful for everyone. It tends to lead to errors and mistakes which then need correcting. The correcting takes even more time and overloads your capacity even further.
Both under and over capacity situations need to be addressed to ensure your staff are happy and productive, and your business profitable.
What can be done?
If you’re constantly working below capacity, you need to look at your marketing and new business development processes. You need to bring in more business to increase the workload to ‘comfortably busy’.
If you’re working over capacity then you need to consider whether you need to increase staffing levels, or possibly outsource some of your work if that’s possible.
Every situation is different.
And even if you are comfortably working at capacity, are you working with your ideal clients?
There are many different reasons why clients might be less than ideal, and this will be unique to you and your business. Some people work well with detail-oriented clients who want to check every dot and comma, others prefer clients who virtually abdicate responsibility for the end result, and leave it up to you. When you are servicing clients who are less than ideal, they take longer than average to service and cause additional stress to your staff.
If you are working with less than ideal clients, you may want to consider finding more ideal clients and finishing your relationships with those who cause stress and disruption.
Ultimately, you are looking for a happy, productive working environment where everyone is comfortably busy.
Let us help you.
If you’re running over capacity, we may be able to take on some of your surplus marketing-specific work. If you are working below capacity, we can assist with your marketing to bring in new customers. We can do market research to help you identify your ideal clients and find more of the same.
Contact us today to find out more.