How to Figure Out the Capacity of Your Business

by | Business Skills

How many customers can your business handle per day?

If your business is a blog, then you can probably handle pretty much anyone that comes to your site.

But what if you have a product that requires time to deliver to your customer?  For example, what if you have a training course that people on your site can pay to be a part of?  What if, as part of that course, you promise them direct feedback?  Well then each customer would require some of your time.   So then how many customers can you handle?

What if your business isn’t online at all?  What if you run a doctor’s office?  How many patients can you see in a day?  Or if you have a lawn care company, how many lawns can you care for in a week?  Or if you run a retail store, how many customers can make it through the store in a day?

The number of customers you can help, or the number of products you can ship, or the number of widgets you can make is called your capacity.

Every business is made up of one or more processes, and every process has a limited capacity.  Some processes, like going to your website, have such high capacity that it appears to be unlimited.  For the most part, nobody has to wait their turn to access your site because the capacity is so big compared to the number of people using it.  But for most other business processes, capacity sets a limit on how many people we can help, or how much of something we can produce.

So how do you determine your capacity?

Well, you can watch over time, and see how much you can get through your business process on a really busy day, or you can break the process down, step by step, and figure out how much you should be able to get through.

It sounds a little complicated, but it really isn’t.

Let’s use the doctor’s office as an example.  One business process that they have at doctors’ offices is the process of getting patients in to see the doctor each day.  When you arrive at the doctor’s office, the first thing you usually have to do is check in.  How long does that take on average?  If the office tracks that, then they can figure out the capacity of this step.  Let’s say that there is 1 receptionist who does the checking in, and that they can only help one person at a time.  If it take them an average of 5 minutes to check someone in, then the capacity of that step is 12 people per hour.  If they work an eight hour day, then they can help 96 people per day.

The next step that you have to go through after checking in, is to see the nurse to take your vitals, talk about your symptoms, and give a general update.  Let’s say that on average it takes 20 minutes to do all of that.  So each nurse can help 3 people per hour, or 24 people per day.  But let’s assume that there are 2 nurses so the office can actually help 48 people per day.

Next, the doctor has to review the notes that the nurse took, come into the room and visit you, and then write detailed notes about the visit for your medical record.  Let’s say this takes 30 minutes.  So the doctor can help only 2 people per hour, or 16 per day.

So how many patients can this doctor’s office see in a day?

Is it the 96 that they can get checked in, or the 48 that the nurses can see?  Of course not, it’s the 16 that the doctor has time to see.  And that’s because the process is constrained by the step with the lowest capacity.  If the office checks 96 people in, but the doctor can only get to 16 of them, then 80 people are going to have to go home without ever seeing the doctor.

Now, this is a fairly simple example and the answer is somewhat obvious, but this same principle applies in pretty much every business.  How much capacity that any of your business processes can handle is constrained by the step with the lowest capacity.  That step is called the bottleneck.  And it determines the capacity of the whole process.  But companies spend tons of money every year working on improving the capacity of steps that aren’t the bottleneck.

It would be like the doctor hiring a second receptionist or another nurse so that more patients can get through each day.  It obviously won’t work, but companies do it all the time.  And they do it because they don’t understand their processes.  They don’t know where the bottlenecks are.

So take a step back.  Look at your business.  Where is your bottleneck?  What keeps you from being able to serve more customers each day?

If you understand that, then you know exactly where you need to focus to be able to grow your business.

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