There’s a source of amazing opportunity in your business that you might not recognize.
It’s the excess capacity you have to do more of what you do.
There is a current capacity and a potential capacity.
If you have a hotel with 100 rooms and you’re running at 80% occupancy, you have an excess capacity of 20%, or 20 rooms per night.
If you have a restaurant with 100 seats, any seat unfilled is an excess capacity opportunity.
I have a client who owns four restaurants in the same town.
He calculated they were running at 70% capacity.
By thinking of your excess capacity as a loss, it helps you see what an opportunity you have.
With an average ticket of $40 per diner, this unfilled capacity was costing him over $1,200 per night.
The key thing to calculate is your true incremental cost of filling that capacity.
The key thing to calculate is your true incremental cost of filling that capacity.
In the restaurant example, the incremental cost of serving additional diners was just the food cost.
The overhead is already paid.
The kitchen and service staff are already there.
The only variable is the actual cost of the additional food (in this case about 20%).
Knowing that made it clear we could give someone a $25 gift card that would actually cost only $5 to fulfill.
He also owned another local business with 3,000+ customers who received a monthly statement by mail.
He was mailing one sheet of paper in an envelope.
Since you can mail five sheets of paper in an envelope for the same postage, he had an excess capacity of four sheets of paper, with only the cost of the paper, printing, and stuffing.
We combined the excess capacity asset of the available seats in his restaurants with the excess capacity space in his monthly statement to send a $25 gift card to his clients as a surprise and delight.
As a couple or family, they were spending much more than the $5 it cost to give them the $25 gift card.
There are excess capacity opportunities like this all around us.
The win is to identify them and use them as currency to attract new clients, or in collaboration with other business owners who have excess capacity of their own.
Once you see this, it’s like having 3-D glasses — the opportunities will pop out.