Tag Archives: Constrained

How Do You Take on Additional Business When You Are Capacity Limited? Seven Suggestions

Situation: A Company has been growing rapidly over the past year. This has strained resources in some departments, including manufacturing. New customer demand just keeps coming in. What can the CEO do to meet customer demand without busting at the seams? How do you take on additional business when you are capacity limited?

Advice from the CEOs:

  • There are three questions to be asked before taking other steps:
    • Is it possible to expand manufacturing by outsourcing?
    • Can the company just hire more people?
    • Is the business that the company is getting good profitable business?
  • First, what a great problem to have – not to belittle the challenge that the company faces.
  • If there is concern about the company’s vulnerability to future downturns and the company is holding off adding staff because of this, look for a filler product that can help the company to smooth business cycles.
  • Farm out constrained work to other departments of the company – for example engineering. Are there independent entities that the company could partner with to add temporary capacity?
  • If there are financial constraints, then look at adjusting the pricing for new business.
  • If there are conflicts between capacity in manufacturing and engineering, consider becoming more of an engineering-focused firm and invest in this area. Look at outsourcing manufacturing capacity.
  • Look for sources of temporary capital to fund the company through the adjustment. Use an existing bank line of credit or a loan to finance short-term capital needs.

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Better to Focus on Cash or IP Protection? Three Suggestions

Situation: A company is resource constrained and faced with a serious trade-off: do they focus on short term cash needs – immediate product improvements that will speed new product iterations to boost sales; or longer term strategic concerns – assuring that they have good IP protection on their technology before they launch new versions? When you are resource constrained, does it make more sense to focus on initiatives that will quickly produce cash or strategic concerns that will protect your future?

Advice from the CEOs:

  • Build two timelines – one for shoring up the patent portfolio so that you can safely build and launch new IP-protected versions of your technology and one for quickly completing product improvements to speed development of new product iterations which will generate cash. Assess both the energy requirements and the dollar risks and implications of each timeline. If you do not have the resources to do both in parallel, this analysis will help you to determine your best course of action. The risk analysis of each timeline should take into account what would happen if another company were to duplicate your technology and get to market with improvements before you do.
  • As a compliment to the above exercise, ask what happens if I don’t do either A or B? Do a SWOT and investment analysis on both. Which is the greater risk – launching with insufficiently protected IP or risking not being first to market?
  • These analyses will help you assess whether it may be feasible to accomplish part or all of either task with dollars in lieu of your own resources.

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