What is your capacity? Planning & Growth

What is your capacity to handle new clients without reducing what you deliver? The focus of small business owners everywhere tends to be the same: Making money, paying bills–not building systems and people, not planning capacity.

As entrepreneurs, we usually believe we can handle an increase in sales volume. It’s what we seek, it’s the holy grail of growth—right? Unfortunately, unplanned rapid growth can send any business to an early grave. Often, only after the fact of rapid growth do we discover we didn’t have systems and people to meet our growing needs.  Customers have little patience for trial and error. Waiting until necessity drives development of systems and people, we miss the opportunity to proactively increase capacity.  Ultimately, we damage profitability, and our reputation. So, how do we dodge the bullet?

Hire the Right People. Hiring the best can be a slow process. We must answer three questions:”Can they do the job?” (capacity); “How will they do the job?” (behavior); and, “Will they do the job?” (occupational interest—is this what they want to do?) All three questions must also be context-specific: “Can they do this job here?” If the questions are asked properly and answered clearly, the probability of hiring someone who fits the job increases. Research confirms it: people who fit their jobs produce more, stay longer, and create happier, more profitable workplaces!

Clarify strengths and weaknesses. When your capacity doesn’t change much, employees stagnate!  Those who might have handled new challenges have left for new opportunities, usually with your competition.  Current employees may have effectively departed while still on your payroll—a problem Harvard Business School calls “presenteeism.” A clear view of each of each employee’s “true” interests is critical. Remember, it’s an ongoing process: A wise entrepreneur once said, “When you think you have it all handled, you’ve set yourself up for failure.” Our working systems are often created by employees for their own convenience, not necessarily for your customers. Worse, we rarely know what our systems really are, and employees modify them continuously.

Customers have their own, private opinions about your business. Ask them questions, directly and indirectly:  What works for you, our customer? What do we do that does not work?  Allow them to clarify. What do they need from you? What else would they like from you?

Develop accountability and responsibility in your employees, managers and yourself.   Simply having feedback is one thing, acting productively on it is another—and acting is harder!  Measure skills in your managers, and plan to improve them. Make sure everyone realizes it’s an ongoing process: “Perfection is a direction, not a place.” Handle problem employees now! If you have an employee unable to do the job, be fair and let them go.  Hire slowly, fire quickly.

One manager put it very well: “The most expensive employee time I have is the interval between when I realize they have to go, and when I actually make it happen.” An effective manager must concentrate on, and measure, results.  ”Working hard” is a valuable part of the systems producing your total results, but is rarely sufficient. Focus on these fundamentals of business, and you will soon see new opportunities for growth in your business, based on planned increases in your capacity!

Copyright © Jeannette L. Seibly and John W. Howard, 2004-2010

Jeannette Seibly, Principal of SeibCo, LLC takes your company to the next level by creating leaders, success and results. Whether it be generating your next million, making a strategic difference or resolving people issues, SeibCo, LLC is your partner in causing unprecedented results and impacting your bottomline.

John W. Howard, Ph.D., owner of Performance Resources, Inc. helps businesses of all sizes increase their profits by reducing their people costs. His clients hire better, fire less, manage better, and keep their top performers. 

About Jeannette Seibly

Jeannette Seibly delivers “straight talk with immediate results” to business owners and executives of $1MM to $30MM enterprises, creating dynamic results. You may contact her at JLSeibly@SeibCo.com for an initial free consultation.

Comments

  1. Most business owners equate an increase in business/sales as sure to result in an increase in profitability. They often don’t realize to what extent it might impact cash flow if it means an increase in inventory and/or accounts receivable.

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