Leaving Room for Capacity: Why Overextension Is the K-Mart of Business Operations
Imagine walking into a store where every aisle is overflowing with products, the shelves are jam-packed, and there’s no space to move. You’re overwhelmed and unable to navigate efficiently. This is a business operating at full capacity. Much like how a landlord strategically raises rents to anticipate vacancies, businesses must price their services wisely and allow room for excess capacity.
Understanding Opportunity Cost
The opportunity cost is defined as the difference between the returns on the best forgone option and the returns on the chosen option. In simpler terms, when a business operates at full capacity, it’s leaving significant opportunities on the table.
The Risks of Operating at Full Capacity
When you’re constantly pushing to the limit, it’s not just about getting more hands on deck. Overextension can be harmful to a business in many ways:
- Employee Burnout: Staff members become so focused on completing tasks that they overlook potential revenue avenues. They are often stressed, under-compensated, and possibly, even disgruntled.
- Client Dissatisfaction: A business operating at capacity is akin to K-Mart’s “Blue Light Special.” Clients feel they are getting more than what they paid for but at the cost of quality.
- Commoditizing Your Business: Treating every interaction as a mere “transaction” demeans both your clients and your employees. When you regard them as replaceable, the sentiment often gets reciprocated. No one likes to be treated as a mere commodity.
The Power of Excess Capacity
Allowing for excess capacity is not about wasting resources. It’s about investing in ‘Admin’ time, which can be incredibly beneficial:
- Revenue Generation: Employees can brainstorm and identify new avenues for revenue, particularly with existing clients.
- Skill Enhancement: Admin time can be utilized for training, which can lead to the introduction of new service lines.
- Operational Efficiency: It’s an opportunity for teams to streamline operations and rectify internal bottlenecks.
- Relationship Building: Beyond just transactions, relationships form the foundation of a business. Admin time fosters stronger internal team relations and deeper client engagements.
What’s more, clients value this approach. They appreciate businesses that prioritize their needs, find proactive solutions, and apply professional expertise for their benefit.
From K-Mart to Tailored Service
Running your business with an allowance for excess capacity transforms it. Instead of being a generic store with a “one-size-fits-all” approach, you become a tailor, providing solutions crafted to perfection for each client.
In conclusion, for businesses to truly cater to their clients and ensure longevity, they must price their services in a way that the market not only accepts but also sees value in. Do not undervalue your offerings or overextend your capacity. Be strategic. Do not be the K-Mart in a world that values bespoke services.
If you need any help regarding these issues Corridor Consulting would love to help, please schedule a discovery session here, and we’ll be able to address these issues and much more! We’re looking forward to opening many more doors for you!
