Increase in growth = increase in capacity
Watching your business grow is exciting. But to meet the demands of increased growth, it’s likely that you’ll need to boost its capacity as well.
This basically means ensuring that you have what you need to do the job properly and to meet customer demands. So it might mean that you need to take on more staff, update your equipment or expand your facilities. Most of the time, increasing your business capacity will mean an outlay of cash, but if the boost is required because of increased demand, then the investment will pay off.
From speeding up production or improving systems and processes, a boost in capacity is almost always going to see an increase in your profit margins.
Key tips for boosting capacity
In many cases, you’ll need to borrow what you need to increase capacity. But before you do that, review your business and identify what you can do internally first, such as:
- Improve your skills by tapping into the expertise of others. For many small business owners, that area is often the financial side of the business. If you feel you’re not as up-to-date with this as you could be, arrange to sit down with your accountant for a tutorial. They’ll often have advice on how you can improve your cash flow management.
- Streamlining systems and processes by ironing out small inefficiencies can lead to larger gains, such as properly delegating work, using technology, ditching un-necessary tasks and making sure staff are working efficiently.
- Review your equipment needs. Do you own a lot of equipment that you hardly use? Consider selling it and investing the cash into boosting capacity, and then leasing the equipment only when you need it. Or on the flip side of that coin, would you benefit from purchasing the equipment you need, if demand justifies it? It can be expensive, but you’ll gain a competitive advantage from getting your products to market quicker than your competition.
- It’s always a good idea to look at fixed costs and see where savings could be made, such as re-negotiating deals with suppliers, and looking around for other energy and internet options.
- Review staff – the right employees are critical for business growth. It could be that hiring staff with specialized knowledge and experience is justified, especially if it boosts their competitive advantage.
Finally, consider what capital you have that’s already available. There’s not much point in having it sitting there doing nothing – it’s much better to invest it back into the business so that it’s working to boost your capacity.
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 boost your business capacity if you’re getting the kind of orders that require a larger operation.
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Talk to one of our Small Business Advisors. They’ll take the time to get to know you and your business, and can help tailor financial solutions that fit your needs.