Skill or Capacity?

Doug Dwyer Contributing Editor

Many business owners find themselves stuck at sales levels of $300,000 — $500,000; $800,000 — $1 million; $1.6 million — $2.2 million, or $3 million — $4 million. Why? One of the major issues is capacity. One person, no matter how skilled, efficient and motivated, can only carry a certain load and for only so long. Then, things start to slip, mistakes happen and a lower standard of performance becomes the norm.

Typically, you either accept this as status quo or back the volume down to gain control on quality, profitability and work/life balance. Everyone in business experiences this at some level, some in greater degrees than others.

Back in 1995, I attended a two-week training course with a large and highly successful small business consulting company. I participated in an exercise that they diagnosed a challenge to see if it was a people problem or a system problem.

It was a very confronting exercise, because I was the one being analyzed by the group. I thought, "Great, they will get to see all my weaknesses. Oh yeah, this will be fun." Well, it was challenging and I was pleasantly surprised by the outcome.

The challenge I was facing was that I was not able to get to everything done that needed to be done, or at the quality level I wanted. They asked, "What are all your responsibilities?" As I described them they listed them on a board for all to see. They quickly diagnosed the problem and said I have a capacity issue. "One person can't do all these things, much less do them well." And I thought that I just needed to be more skilled and work smarter because that was the expectation I felt from others, as well as from myself.

I was thrilled to find out that I was not only doing a good job, but given the circumstances, doing a great job.

Many lessons came out of this experience. First is that we can be far too hard on and unrealistic with ourselves. Secondly, the solution might not be what we think. And third, coaching from someone outside your own company can give you a quantum leap in your growth and understanding.

What was the solution for my problem? I needed to hire more people and get the job done. Sometimes that is the only way to solve the problem.

You might say that you can't afford to hire anyone and that the work still all has to be done, even if it's not at the optimum level you'd like. For most remodelers, the solution here is to charge more for what you're doing. For others, it may be to focus on a niche that streamlines the business to free time up. And if you are already doing both of these things, you probably need to grow sales volume to get through this awkward growth phase so you can afford that next hire.

If you don't confront the reality of capacity, you will most likely be looking at the wrong solution to grow to the next level of business.