Finding the limiting factors in the busines and doing something about them….
Author: Russell SmithApril 16, 2012
Most businesses will be held back from growing in one way or another. There could be a million and one reasons for this but the one I am interested in is lack of understanding of the limiting factors.
Let’s say you run a business and you turnover £100k a month. It appears to make sense that if you concentrated on sales and grew the business to £150k a month, this would be a good thing. This is how most people would grow, by focussing on the sales and marketing. But would the business owner know what the capacity was in terms of man hours in the business, could the extra £50k be delivered and serviced? Is there enough time to process the finance and admin around the extra £50k? Is there enough time for the business owner to deal with 50% more problems?
Most business owners are concerned with growth but often the focus is on sales growth and not growth of financial control, people development, cost management, profitability review.
The result of all of this is that you can end up with higher sales and either your profitability overall decreases or you (meaning you, the business owner or the business) crack up from the pressure of having to deliver a business 50% bigger and either the new customers leave, the team leave or you, the business owner, leaves.
The ‘something to do about it’ is to plan. What does a business that turns over £150k a month look like? What team do we need? What management do we need? How many hours do I need to work in the business? All of these are potentially limiting factors from growth which are less obvious than ‘we don’t have enough sales’. In some senses, for a business owner, getting more sales is the easy bit, it is these other areas which require a bit more work.