If you can increase output, invoicing or sales without needing to bring in new resources immediately, it sets you up for future growth.
What is capacity?
Capacity building is about working on your company's ability to do more internally – such as speeding up production or improving your systems and processes.
For example, a chair manufacturer may be able to produce 1,000 chairs each month. However, due to delays because of equipment maintenance and workers being away from work, only about 700 chairs can actually be produced per month. Over the long run, they can increase their capacity and output by working smarter before you buy more equipment and hire more workers.
Boost capacity quickly
Here are some areas that could contribute to growing capacity in your business depending on your circumstances:
Improve your skills
We all learn by experience in our businesses, but you can accelerate your learning by tapping into the expertise of others. You’re probably already aware of the biggest areas where you need to boost your knowledge. For many small business owners, that area is often the financial side of the business. Could you find a mentor or experienced business person who is willing to catch up with you for a couple of hours each month?
Smooth out inefficiencies and systems
Is your business running as smoothly as it could be? Ironing out small inefficiencies can add up to big gains.
Here are some common areas to increase performance:
- Eliminate unnecessary and time consuming jobs to improve efficiency.
- Delegate work to those that are best qualified for, or suited to, the task.
- Develop templates for everyday documents like invoices.
- Encourage staff to evaluate their work quality and make improvements.
- Checking that progress is really matching your business goals.
Small business owners complete a variety of daily tasks and can be notorious for being unsystematic. If that’s the case in your business, it can take a lot of time to show someone how to work with you because none of it is documented. If each important or daily process in your business is documented any new employees could start being productive for you on their very first day.
Sorting out staff requirements
Having the right employees on your side is critical for the growth of your business. If things are only just ticking along, it’s worth considering how your business will fare if you suddenly entered a growth phase.
Start by auditing your needs and then identify which vital skills are missing. This will form the basis of new job descriptions
Here are some quick questions to consider:
- Do you currently have the right mix of employees in your business?
- Which employees are directly contributing to output, and which are overheads?
- Are there any unnecessary employees that you might need to make redundant, or change their role to contribute to output
- Can you retrain existing employees so you don’t make them redundant?
- Are there new skills that you need to have to in-house?
Identify third party contractors or other companies that could take up extra slack to increase your capacity at any time.
Having a number of other people or businesses that you can contract parts of what you do can ease temporary capacity issues, before you decide to employ full timers.
Do you have spare capital that could be better employed in the business? Many businesses build up cash reserves and there’s little point having it sitting being under used. Could you redirect that capital to improve improve your capacity?
Review your equipment
If some of your equipment is outdated or obsolete, would an upgrade help improve your overall capacity?
Here are some of our suggestions:
- To reduce costs, you could consider leasing key equipment or machinery.
- Investigate new technology that removes redundant processes or replaces manual tasks.
- Talk to a similar business in your industry and find out their equipment needs.
Purchasing new equipment can be expensive, but remember that competitive advantage is gained from getting products to market quicker than your competition.