Know your Work Schedule Capacity & Generate More Profit
One of the things that I find fascinating when working with business owners for the first time is their inability to answer the following question:
“How many jobs or projects, based on your average job value, do you need in the next 12 months to meet your profit requirements?”
There's usually a silence where you can hear a pin drop.
Is it essential to know your capacity? The answer is no. However, I suggest that knowing your capacity will actually give you a higher probability of reaching your profit goals than if you didn't.
Take this scenario - You call a company to enquire about using their services. During the call the person handling your enquiry mentions the following statement:
"It's great that you called today, because we are nearly at capacity for this month/seasons intake of jobs."
When you hear that statement, what subliminal message does it send?
The message, without directly stating it, is as we are nearing capacity we are great at what we do, (similar to a restaurant that only has a few vacancies remaining). The message also conveys a sense of urgency, I believe I need to make a decision quickly if I would like to take advantage of their services. This in turn also shortens the buying cycle. These are the first two benefits of knowing and also stating you are close to capacity.
Let's explore a few more.
1. Knowing your capacity relieves the scarcity mentality of many business owners whom believe ‘more is better’, and that you need to say ‘yes’ to every job that comes along. When you say ‘yes’ to every job that comes along, you are also saying ‘yes’ to smaller profits. Have you ever accepted a job just for the sake of filling the calendar versus making a profit?
2. When you say ‘yes’ to every job that comes along, especially at a busy time of year (leading up to Christmas), you may face several consequences. Your inability to say ‘no’ means that you are now possibly cramming the schedule, creating further pressure on you and your team to deliver. The quality of work may often suffer, which can then flow onto rework/faults, adding extra time and costs to your profit. The customer usually ends up unhappy because the job has now taken longer and you have overpromised the ability to deliver. No one wins. Sound familiar?
3. The final benefit to knowing your capacity is that it takes the pressure off you, to have to continually sell, sell, sell. If you come from a place of abundance versus scarcity, as well as confidence, particularly if you know your numbers and the exact number of projects required to meet your targets, you and your team are clear on the goals for the business.
Written by Jon Mailer
CEO Of PROTRADE United