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Building and improving capacity

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To meet the demands of increased growth, it’s likely that you’ll need to increase your capacity by either doing more with what you have, or adding in new skills, expertise and equipment.

First, build in-house capacity

Enhancing your resources in-house is the first step to take. This will allow you understand if you need to build your capacity without having to dramatically change your business. If you need additional skills in your business without hiring a new employee, consider re-training existing employees. Start by auditing your needs and then identify which vital skills are missing. This will form the basis of new job descriptions.

Optimize your systems

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

Automate everything that a customer expects to be automated. Some vendors to check out are:

Cashflow forecasting will enable you to anticipate a possible cashflow 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

Small business owners often complete a variety of daily tasks. Document each important or daily process in your business, then identify and develop standard forms.

Tips for building external capacity

Once you’ve streamlined your business, the next step is to take the plunge and increase your overall capacity (checking that any increase in demand is sustainable).

Consider contractors

Identify third-party contractors or other companies that could take up extra slack to increase your capacity at any time. It will free you and your employees up to work on the more important parts of the business, such as marketing or delivery/production. Having other people or businesses that you can contract parts of what you do can ease temporary capacity issues.

Review your equipment

If some of your equipment is outdated or obsolete, would an upgrade help improve your overall capacity? You could:

  • lease key equipment or machinery until the capacity issue is solved
  • investigate new technology that removes redundant processes or replaces manual tasks
  • buy new equipment

Purchasing new equipment can be expensive, but remember that competitive advantage is gained from getting products to market quicker than your competition. Conduct a cash-flow forecast to see the impact loan repayments have compared to the extra efficiencies or production you’ll gain.

Strategic alliances

Forming a business relationship with a partner(s) may provide you with a number of advantages. You may be able to access technologies or patented processes owned by the other partner. Additionally, you may be able to access their distribution network.

If you are thinking of forming a partnership, consider your strengths and weaknesses compared with your potential partners. The ideal partnership takes advantage of your core competencies, while strengthening weaker areas of your business.

Well-chosen partnerships can provide advantages including:

  • working in partnership allows you to share the work and commitment
  • complementary skills
  • opportunities for growth
  • access to resources such as specialized staff, finance and technology
  • access to your target market
  • they can provide support and motivation

Raising capital

If you decide there is merit in expanding your capacity or improving your capability, it could be worthwhile to invest in making it happen. Some options include:

  • accessing funds from friends and family
  • borrowing from the bank
  • angel investors (often other business owners) who think your business is promising and are willing to buy into your business
  • venture capitalists
  • government and state assistance
  • corporate investors
  • crowdfunding


Don’t be afraid to expand your operations if there’s enough demand to justify it. You’ve heard the old saying – you must spend money to make money – and this is especially true when spending to improve your business capacity.