How to Calculate Your Business Capacity (And Why Every Small Business Should)

Why do you need to calculate the capacity of your business?

Why spend time on it? 

Identifying your business capacity is a lot more than a mere calculation. 

Firstly, what do I mean by business capacity? 

It is:

• The number of clients your business can serve, as a service-based business

• The number of products your business can produce, as a product-based business

  
  

How do you start identifying your business capacity?

Key factor

Key factor is that resource in your business which is essential in providing the service/producing the product, but is limited in nature. 

Some examples of key factor could be:

• Time you are a therapist and you need to spend time with each client to provide your service.

• capacity of a machinery as a bottle printing business your machine can only print on a 100 bottles a day 

• space as a personal trainer you are able to coach only 12 clients at a time because of space constraints

• volume of raw materials available you are manufacturing shirts and you have access to only 10 metres of a special thread for your shirt per month. 

• Regulations as a childminder you can serve only 5 kids a time

  
  

This key factor will now help you arrive a number which be your business capacity.

Using your key factor put a number to:

• What are the number of clients you can serve in a month

• What is the number of products you can produce in a month

  
  

Some additional points for service based businesses while putting a number to your business capacity:

• Bear in mind that the amount of time you have in your business is not only to serve clients. You need to allocate time towards admin, marketing, networking tasks too

• Time you allocate per client should also include all the background work you do for the client

  
  

What next? 

• If you are not working at a 100% capacity, time to promote yourself accordingly. That is now the only thing to start making sales. 

• You can avoid a perceived sense of seasonality in your business. A wedding photographer mentioned to me how fluctuating her business is. “Some weeks there are no bookings and some weeks are so full with last minute bookings!” Well, if only she identifies her business capacity in advance and promotes herself well, she will have all her weeks full with the kind of clients she wants to work with rather than relying on last minute bookings!

• You can avoid overwhelming yourself by over committing beyond what your business capacity. 

• You have identified the limited resource (Key factor) in your business. When you are ready to grow, you can look at expanding that resource. If time is your key factor, see how you can increase the time you can give to your clients by outsourcing other tasks or hiring people to provide the services. If it is space see if you can expand your space. 

  
  

Capacity is about setting realistic financial goals, it is about promoting appropriately, it is about avoiding overwhelm, it is about growth. 

It is the first step to understanding your business finances and leading with clarity. 

If you are ready to take the step towards financial clarity, it is time to book a call with me https://calendly.com/founder-gh46/milliongoals

Written by

Mrudula Muralidharan

Founder and Finance Coach

Million Goals