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Getting more orders? Congrats! Learn how to build capacityDon’t be afraid to expand your operations if there’s enough demand to justify it. These ideas can help you build capacity.

Trying to meet the demands of growth? You likely need to build capacity.

You can either do more with what you have or add new skills, expertise and equipment.

These ideas can help you build capacity both internally and externally.

Build capacity in-house

Enhancing your in-house resources is the first step. You might not need to dramatically change your business.

If your business needs additional skills, consider retraining your existing employees instead of hiring new ones.

Start by auditing your needs. Then identify which vital skills are missing. This will help you identify and create new job descriptions.

Optimize your systems

Good record-keeping and bookkeeping help you know how your business is doing. It’s easy to track your expenses and revenue with accounting software.

And cash-flow forecasting will enable you to anticipate a possible cash-flow problem. Some solutions include:

  • Tight creditor and debtor control (invoicing promptly and collecting debts on time).
  • Realistic pricing and costing to ensure every sale is profitable.

As a small business owner, you probably handle a variety of similar daily tasks. Document each important or daily process. Then you can develop templates or standard forms for everyday work to help complete those tasks more quickly.

Build external capacity

Once you’ve streamlined your business, the next step is to increase your overall capacity. (You’ll want to make sure that the increased demand is sustainable.)

Consider contractors

Identify third-party contractors or other companies that could free staff to work on more important parts of the business.

Contracting with other people or businesses can ease temporary capacity issues before you:

  • Create new full-time positions
  • Buy additional equipment or inventory space

Review your equipment

Do you have outdated equipment? An upgrade might help improve your overall capacity.

You have a few options:

  • Lease equipment or machinery until the capacity issue is solved.
  • Investigate technology solutions that remove redundant processes or replace manual tasks.
  • Buy new equipment.
  • Purchasing new equipment can be expensive. But remember: You gain a competitive advantage by getting products to market quicker than your competition.

You’ll want to conduct a cash-flow forecast before purchasing new equipment. This will help you see the impact of loan repayments compared to the extra efficiencies or production you’ll gain.

Strategic alliances

Forming a business relationship with a partner might be beneficial.

You might gain access to technologies or patented processes owned by the partner. Or, you might gain access to their distribution network.

If you’re considering a partnership, weigh your strengths and weaknesses with those of your potential partner. The ideal collaboration takes advantage of your core competencies while strengthening your weaker areas.

Well-chosen partnerships can provide:

  • Shared work and commitment
  • Complementary skills
  • Growth opportunities
  • Access to specialized staff, finances and technology
  • Access to your target market
  • Support and motivation

Raising capital

If there’s merit in expanding your capacity or improving your capability, it can be worthwhile to invest in making it happen. Some options include:

  • Accessing funds from friends and family
  • Borrowing from your financial institution
  • Angel investors (often other business owners) who believe in your business and are willing to buy into it
  • Venture capitalists
  • Government and state assistance
  • Corporate investors
  • Crowdfunding

Final thought

Don’t be afraid to expand your operations if demand justifies it.

You’ve heard the old saying, “You have to spend money to make money.” This is especially true if your ongoing orders require a larger operation.

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