Building capability and capacity

To meet the demands of increased growth, it’s likely that you’ll need to increase your capacity and capability by either doing more with what you have, or adding in new skills, expertise and equipment. 

Tips for building external capacity

Consider contractors

Identify third-party contractors or other companies that could take up extra slack to increase your capacity at any time. It will free you or employees up to work on the more important parts of the business (such as marketing or delivery/production).

Review your equipment

If some of your equipment is outdated or obsolete, would an upgrade help improve your overall capacity?

Purchasing new equipment can be expensive but remember a competitive advantage is gained from getting products to market quicker than your competition. Conduct a cash-flow forecast to see the impact loan repayments have compared to the extra efficiencies or production you’ll gain.

Raising capital

Do you have spare capital that could be better used within your business? Many businesses build up cash reserves which could be redirected to improve capacity.

Borrowing from the bank

Your growth plans may mean you need to increase your capacity by such a degree that, even after reviewing all your internal resources, you’re still going to have to borrow cash. Convenient and flexible terms, payment schedules and credit access can give you access to funds that can be used to grow your business.

Strategic alliances

Forming a business relationship with a partner, or partners may provide you with a number of advantages. You may be able to access technologies or patented processes owned by the other partner. Additionally, you may be able to access their distribution network.

If you are thinking of forming a partnership, consider your strengths and weaknesses compared with your potential partners. The ideal partnership takes advantage of your core competencies while strengthening weaker areas of your business.

Well-chosen partnerships can provide advantages:

• Share the risks – working in partnership allows you to share the work and commitment.
• They often deliver complementary skills.
• Opportunities for growth – access to your partner’s distribution networks may help you gain market share faster than if you go it alone.
• Access resources – your partner may be able to help you by giving you access to resources such as specialized staff, finance and technology.
• Access the target market – working with a local partner may be the only way you can access your target market.
• They can provide support and motivation.

Improve internal productivity

If there were an inspection (like an annual car inspection) of what needs to happen to improve productivity in the workplace, how would your business rate?

From effectual systems and procedures to creature comforts and progressive workplace practices, there are ways your business can improve the productivity of your staff.

Improve employee capability

If you need to increase output, before you add to your workforce, conduct a time/efficiency study and identify any employees that have the capacity to take on more work or cut processes or tasks that are not required.

Start by auditing your needs and then identify which vital skills are missing. This will form the basis of new job descriptions. Questions to ask yourself are;

• Do you currently have the right mix of skills within your business?
• Which employees are directly contributing to output, and which are overhead?
• You may need to consider any employees that no longer align with your future objectives, that you might need to make redundant, or change their role to contribute to the output. Could you consider restructuring your organizational structure, adapting job roles or reducing your workforce to optimize output?

How good systems will help

Streamlined business systems will make your business stronger, more efficient and easier to run leaving you time to do more.

Here are steps to optimizing your systems:

• Automate everything that a customer expects to be automated. This could include PayPal to receive funds, Shopify to run an online store, Vend to manage retail POS, Google Analytics to track web traffic, Mailchimp to send e-newsletters and of course Facebook, LinkedIn, and Twitter to run your social media campaigns. Find out which apps apply to your industry the most by talking to your industry association or other business owners.
• Good cashflow forecasting will enable you to anticipate a possible cashflow problem (something all growing businesses experience from time to time) and take steps before the problem becomes a crisis.
• Good creditor and debtor control will improve your cash flow. Invoicing promptly and collecting debts on time gives you the cash to pay suppliers on time and get more favorable credit terms from them. Apps send automatic reminders so you don’t have to.

Having poor systems is the road to stress and burnout. On the other hand, good business systems will enable you to work smarter, not harder. They free you up to work on your business rather than in it.

Remember

Don’t be afraid to expand your operations if there’s enough demand to justify it. You’ve heard the old saying – you have to spend money to make money – and this is especially true of spending to improve your business capacity if you’re getting the kind of on-going orders that require a larger operation. Consider all your options to build your capability and capacity internally before you seek external help or funding.

• Audit your business to see what you can do to build capacity (work faster, produce more)
• Identify where your business can improve capability (adding expertise, better qualified)
• Find an outside adviser or mentor to help improve your business operation