When Demand Exceeds Your Business Capacity

Let’s look at a time in your business development when you have established yourself as a powerhouse business, well marketed and running like a well-oiled machine. Can you just sit back and let the machine do its job? Not normally. Why? Well, depending on your business type, you may find that demand for your business fluctuates throughout the year or on a year-by-year basis. So what happens when demand exceeds what you can supply? Turning down business is throwing away opportunity in addition to income and possible future business with the same customer. So, what can you do instead of losing out on this business? In this article, we will discuss various other options you can do so you are not losing business opportunities due to limitations of capacity.

Delayed fulfillment

Whether a product or service based business, you should explore the option for delayed fulfillment of the order. Can the customer wait until you can fulfill their requirements? As an established reputable business, you may have the upper hand by offering your service but with a delay. The advantage is that the customer can clearly see you are in high demand which speaks volumes for your reputation by other businesses. This scenario is comparable to a restaurant that is always full, you can reliably determine that the food is good! If there is rarely anyone at the restaurant, it could indicate it may be lacking in some factor. 

If delayed fulfillment is not an option for this customer but for another, you can try and prioritize your provision of services/products but at additional cost. In many cases, the customer will be happy to pay a premium for priority service. The premium you charge that customer could be used to offset the cost to a customer who can afford a delay and they should be happy to get a discounted price. If delayed fulfillment is becoming a common issue, establish the ‘rush order’ premium into your pricing. 

If the customer accepts a delay, write up a contract and get a deposit to ensure they are committed. 

If the customer cannot wait and you cannot prioritize them over other customers, then explore some of the other options discussed below.

Grow Your Business

Every business owner should be keeping records of their business trends. Is the demand on your business consistently increasing? If increased demand is not an anomaly, you should begin the process of scaling your business to meet demand. This could mean buying additional equipment, upgrading equipment, increasing staff, adding shifts (evening/night/weekend), or subcontracting part of your business process (particularly the time consuming aspects). 

Increased staffing can simply be a virtual assistant to handle some mundane activities to free up your time or that of your staff who can concentrate on more important work.

If you don’t expand your business to meet continued demand, you will find yourself eventually losing out to businesses that can handle the demand. 

Increase Prices

This may seem like a strange option but with a well established and reputable business, increasing your prices will trim off the lowest level of demand. You get to a stage where you can almost choose your customers and the increased fees means you are not losing out on earnings. Customers who appreciate your quality of service will be happy to pay extra for quality instead of risking lesser quality for lower prices elsewhere. 

Reevaluate Your Process

Is the method you use the most efficient use of time? Could you automate part or more of the process? As an example, if every client receives an identical part of your service, try and create a standard process or template for this which you can deliver to every client automatically. Can you provide recorded audio/visual tuition instead of in-person or live? Can you have another staff member trained on something you usually do and thus two clients can be served at the same time? 

If you are not sure about what or how to automate your business, you could consult a specialist such as a business coach or productivity consultant and see if you can make your business more efficient. In doing so, you may be able to handle increased demand in addition to keeping a good work-life ratio. 

Plan For The Future

Every business should plan for the future, for both increases and decreases in demand. Markets change, economies fluctuate and you are almost guaranteed to have times with high and low demand. Having solid plans in place for these contingencies will help you avoid being overwhelmed by demand and losing out on business. 

If you need help with any of the options above, contact business coach David D’Silva to get prepared for the future.