By Bob Dodge
Things seem to happen to me in threes.
First, I had a conversation with a young female entrepreneur a few days ago who told me that she is trying to grow her business. She is at the point where she could use another head count but was unsure what to do next and when.
Later that day, I had a discussion with a very senior consultant who shared with me the results from the work he had done with a firm; he had showed them how stopping doing one thing would enable them to do something else, which in turn would allow them to grow.
Shortly thereafter, I had a meeting with one of my board members who told me that he is considering hiring a salesperson but needs to add capacity - and how he was concerned because all of this will cost money.
In light of these three conversations, I started thinking. When wanting to expand one’s business, which should come first: More revenues, more capacity or more money?
If you think about it, it’s a great question. Let’s look at the typical challenges:
Growing revenues. Often, the solution to growing revenues requires a change in marketing, selling effectiveness, efficiencies, new products and services or simply dedicating more time to sales and less time to some other function. That time could come from adding sales resources, removing the responsibility to make up for poor service or by ceasing to do what produces less value.
More capacity. This may mean investing in more production capabilities (equipment, space, raw materials or more headcount.) It may be as simple as reallocating resources from one offering to another; one that provides more value to the company.
More money. Many of the above options require more money to invest; in equipment, space, raw materials, people, marketing and training. Many of us look at this list essentially as cost, but we should consider costs like these as investments which will produce a return.
It boils down to value. Each of the above should be weighed as they relate to prerequisites, interdependencies and unintended consequences and value-add. Truly, value should outweigh all other aspects when considering big (or even little) changes within your company.
Consider these questions:
What is your personal vision – Where do you want to be, outside of your job, in a specified timeframe (2 years, 5 years, 10 years)?
How will you measure progress towards that set of objectives?
How would your potential investments of time, people and money, help you achieve that vision? How would it add value, as compared with the other alternatives?
If you pursued this investment, how would you manage without making the other investments?
If you add sales volume, what could you do to increase your supply without making major investments? (Could you make adjustments to the people doing fulfillment/delivery on a temporary basis?)
If you add capacity, how would you increase demand without the major investment in sales? (Could you free yourself up to do more selling?)
I know I have covered a lot and I hope it has got you thinking! Have any questions on what any of this would look like in your business? Leave a comment and I promise to get back to you.