A while back I wrote a post about how you’re a good philosophical approach to business is to think of it as building an asset, and I used a neighborhood building under construction as my inspiration (which you can read here). Well, I haven’t seen any construction activity for a while, the building appears to be completed, but it’s empty! There’s available capacity, but the owner isn’t making any money from it.
Of course it got me thinking again. One of the things that I look for in my business is how much space I have in my time and my staff’s time to bring on more business. Or put another way, how much unused capacity do we have?
This really is an important bit of information we business owners need to be monitoring, because the underutilization leads to a loss, as shows in this calculation:
So I want to give two things to think on here:
1) What is the total potential capacity you have in your business? Is it measured in service hours, square footage that can be leased, or manufacturing output?
2) Once knowing what the total potential capacity is, how does your output measure against it? How hard would it be to measure on a weekly or monthly basis?
I’m asking myself these questions as I build my business and find it a valuable exercise, and recommend the same for you.