How operating at 80 percent of maximum capacity is crucial to business success

There is a business formula taught in MBA programs that is proven in real world experience. The principle states that for optimum balance, business should only grow to 80 percent of its maximum capacity.

At first glance, it may seem a business would be under-achieving at 80 percent of maximum capacity. If you do not understand or know this principle, you may see the additional 20 percent as missed opportunity and spend precious marketing and advertising dollars, gaining exposure to generate transactions and fill the gap. In doing so, you would be setting yourself up for a stressful roller-coaster ride, desperately hanging on through the highs and lows of productivity and fulfillment issues while the wheels of your business were falling off.

The hazard of too much exposure

When you are focused on exposure and cannot facilitate the capacity of the exposure, you frustrate the consumer to the point of no return. Many great customers sense they are not important to you. They leave, never come back, and will tell others of their terrible experience with your company. While investing in infrastructure, consider the customer journey. Take a walk in their shoes. Do you give them an acceptable customer journey?

If you build it, they won’t magically come

Spending too much on infrastructure and too little on marketing is certain death. Gone are the days of “build it and they will come.” There are many great companies that have failed because no one knew about them. Don’t let this be said about your company. Let the professionals do their work. Marketing agencies have a purpose in the business landscape. Your growing company should be engaged with marketing professionals who understand our complex digital world today. If you can hire a professional full time, you should. If you can’t hire someone, consider an agency. With regard to marketing, always choose the most effective means, not the cheapest means.

Feel the pulse of your business and adjust

Do you know your capacity? Have you reached 80 percent of your true capacity? This is the time you focus on expanding, not exposure. Your infrastructure should be a greater expense when you have reached capacity. As a leader, you should have your hand on the pulse to determine the greater need. You would be best served if you charted monthly where you are in this process. It is a giant pendulum. One side is extreme exposure, the other is extreme expansion. Your nimble, active business will adjust based on its capacity.

When testing this formula, you will see that the 80 percent maximum capacity rule bears out. It is crucial to live by this balance for optimum business success.