Real capacity test

Are you always flat out, never enough time to do consistent promotions?

Are your people always flat out and sometimes running behind?

Is there an exhausting part of your work that involves fixing problems with customers and orders?

If your answers were yes, it's most likely that your business is not ready for new customers.

It does not have current spare capacity that it can apply to servicing new customers properly.

For some enterprises – family businesses not very interested in growth, for example – this is fine.

But if you want your business to grow, you need additional capacity, over and above what it takes to service your current clients.

Without this, your delivery times will slip, you problem rates will increase, and you will service all your customers, new and old, poorly. Keep at it, and they could all leave you to drown in the problems.

Customers sense lack of capacity

Perhaps surprisingly, customers – business customers especially – are very highly attuned to supplier capacity. They can sense overload and they avoid it.

What customers want is for you to have the time to pay exclusive attention to them, to focus on them. If you are already busy, they know that won't happen.

So when someone says to you, How's business? and you reply enthusiastically, Flat out! you may have just missed out on a sale you didn't even know was available.

(A better answer is, Great! We're looking for new work... A supplier who wants you is a better supplier.)

Simply, no business can grow without spare capacity.

Capacity often costs money that has to be spent in advance of earning an income. But often there is another way...

Bad customers

Some customers are plain bad for business. Maybe they are nice people, talk with you all day. Give you piddly, low-margin jobs that something always goes wrong with.

These customers take up capacity without earning you a profit. If you sack them, you will have capacity to take on better customers, who cause fewer problems and earn you more money.

Sacking bad customers is a cost-free way of creating capacity for new customers.

A business is its customers. If you have 15% problem customers, you have a 15% problem business. Aim for 2%.

 

See my article 7 myths about customers for more on bad customers and the harm they can do to a business.