Load test the business model

Let's ask:

What if we improved the sales conversion rate?

What if we got more people through the door?

What if we had a new product?

The business model is largely conceptual, but it is anchored to reality by observation points where real measurements can be taken. (Just like any good scientific model.)

For example, if we ask, What happens if we increase sales? the data inputs might include:

  • How much spare production capacity was there in the last six months?
  • Did people in sales and accounting and despatch have time on their hands that could be used to service new sales?
  • What is the rate per 100 sales of complaints, warranty claims and of transaction losses?
  • So the answer to What happens if we increase sales? might include increased income, but it might also include, for example, inability to deliver on time and accounts running months behind.

The business model load test could tell us that the business has no spare capacity to properly service increased sales.

It might warn that bogged down accounting and increased customer complaints could turn sales growth into a death sentence for the business.

Working this out from the business model, rather than experience, is one way in which theory is sometimes better than reality!

It can enable you to repair the shortfalls so that when you spend the money to increase demand, you can service it effectively and profitably.

How detailed a load test has to be and how much research must go into it varies from situation to situation.

Call Michael Woodhouse on 0417 928 904 for an initial discussion.