The chicken or the egg? The dangers of running your business at capacity

- March 4, 2022 3 MIN READ

Many business owners wait until they desperately need help to bring on more staff or resources, but this may be stifling your business’ ability to scale effectively and avoid chaos, writes Jacqui Jones, founder of Way We Do.

We often start the year with good intentions and a slew of new goals, only to find by February we are either working harder than ever before in an attempt to reach those desired outcomes, or we give up on objectives because it has simply become too hard to fit anything more in.

The culprit is being at capacity, either personally or in the business itself.

Many business owners take on new goals, without considering what their personal time or team’s capacity is, or the likelihood of being able to implement what needs to be done.

Already dealing with the day to day whirlwind of the business, it is hard to contemplate adding more to the to-do pile.

How being at capacity impacts business

Being at capacity impacts business owners in ways such as:

  • Halted growth – it’s challenging to increase sales and grow when you’re already working all day, every day.
  • Being unable to spot new opportunities – due to blinkers being on and developing tunnel vision, the business may become out-dated or obsolete.
  • Inability to implement upon new opportunities – because there isn’t the time or resources to commit to anything new, goals may fall by the wayside.
  • Increased chaos – since the team is already stretched, any out of the norm circumstances, such as a person being away, throws everything into a spin.
  • Increased stress – causes personal and business relationships to break down and may lead to health issues.

Stressed looking woman surrounded by colourful post-it notes

When is the right time to expand the team when facing capacity issues?

Your business model should be viable without booking yourself or your team to full capacity. There needs to be room to move to allow for issues that are thrown at the business.

To head off capacity problems, the best time to hire a new person is generally around when the team is at 80 per cent capacity. Of course, the optimal capacity rate will be dependent upon your business model. This provides the space for new team members to be trained and become productive within the required time frame.

However, many business owners tend to make fear-based decisions and bring on new team members when the business is bursting at the seams, which is one of the most chaotic times to do so. They are afraid to hire new people without the revenue being present to cover the costs of the new recruit during the period they are unprofitable.

Here we have a chicken and egg situation

Do you ensure revenue is in place first to cover the costs of new employees, or do you build revenue once the team member is on board?

Ideally, it is better to have revenues that can support new team members, however some businesses find that they require the employee on board in order to generate new revenues.

In either case, it is important that the business owner considers the level of funds needed to support new team members, until they are productive and covering their cost of seat.

What should you do to create more capacity?

Here are seven steps all business should take to reduce business overwhelm and staff stress:

  1. Ensure your business model is viable without your team being at full capacity.
  2. Review your annual objectives regularly, and plan what you and the team need to do next to be one step closer to achieving goals.
  3. Schedule important work at the time of the day when you are the most efficient.
  4. Delegate and assign work that you shouldn’t be doing to another person on your team, or outsource.
  5. Say no to projects that are not congruent to your annual objectives.
  6. Automate the business to make it more efficient and free up your time.
  7. Create roles and employ people onto your team before you are at 100 per cent capacity.

This post was originally published in 2016 and has been updated for 2022.

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