You can’t eliminate all constraints on your business and growth.
If you find the limiting factor and elevate or eliminate it, you’ll end up with a new limiting factor somewhere else.
This is an essential insight from Eliyahu Goldratt perennial best-selling business book The Goal as well as Goldratt’s associated Theory of Constraints.
For a growing home service businesses, this is often experienced when a demand constraint (not enough calls) is elevated, only to reveal a staffing constraint.
You get more demand calls than you can handle, and then it’s time to hire more people, and you find that you can’t hire enough of the right people fast enough.
And if you solve that constraint, on-boarding those great people to embrace your culture will become the new constraint.
So, you can endlessly play constraint Whack-a-Mole…
Or you can consciously choose your constraint.
Of course, the hard thing about choosing your constraint is that everything that ISN’T the constrain will be over-supplied to some degree or another.
There’s no such thing as a perfectly balanced company where every function is staffed and supplied at the exact right amount.
Take the airlines as an example.
Why Most Flights Are Rarely 100% Sold Out
If you need a next day flight, it’ll likely cost you an arm and a leg, but you can generally book that flight.
And on most of your flights, there will usually be at least a few seats open. The flight will be almost fully booked but not 100%
Both of these things are by design.
The airlines make a lot more money when they CAN sell you that extortionately expensive last minute seat than when they are fully booked.
But they obviously want the flight almost fully booked to make as much money on the flight as possible.
So the airlines intentionally (and slightly) over-supply flights, seats, staff, etc.
And they choose their constraint as the market-for and cost of tickets.
The Pitfall Too Many Growing Businesses Fall Into
If your short-term goal was to maximize revenue for the home-service company assets you have now, you’d want your constraint to be your techs.
In other words, you’d want your board 100% full every day. Maybe even over-booked, starting from the night before.
You’d never want your money-making employees idle.
You’d want them constantly going out on high-quality demand calls.
Not to mention that a consistently full demand board for today and tomorrow would make your operations manager ecstatic.
But that full demand board would have some disastrous consequences.
Because you’ll be over-supplied on demand calls.
Meaning customers will call you up, wanting you to come solve their problem, and you won’t be able to help them.
At least not today and not tomorrow either.
Naturally, those customers will call someone else and become their customer.
Or even worse, they’ll ask to be put on your board for the next available appointment and then call someone else.
Now when you call to confirm the appointment that day, it’ll be declined.
Eventually, word will get out not to call your company because you can never come and help people when they call.
And on the flip side, all those people who went with someone else will be telling people about how your competitor was able to come help them right away.
So you went from revenue maximizing to revenue destroying.
Overcoming the Psychological Pain of “Overstaffing”
The real challenge of consciously choosing the right constraint for your home service business is that it requires you to be (slightly) overstaffed.
And that’s psychologically painful.
You’ll be paying what will feel like a-few-too-many phone staff, in order to ensure that no calls go unanswered or put into a phone tree.
You’ll have to watch as some techs routinely sit idle (or better, sit in training) on the off-chance that a last minute call will come in.
It’ll feel like you’re wasting money.
But in reality, you’ll be optimizing long-term profits.
Because you’ll live up to your billing as the company to call — the guys who can come right away.
And that’ll help your advertising.
Moreover, your booked calls will confirm rather than cancel, which will help operational efficiency too.
Choose The Right Constraint
So, are you going to choose your constraint?
One designed to optimize growth?
Or will you settle for playing erratic growth Whack-A-Mole, or making the common-sense mistake that’ll set you up for eventual failure?
- 7 Modern Marketing Myths & Why They’re Dangerous Even When You’re Not Falling for Them - November 18, 2021
- The Most Bizarre Brand Mascot (That Worked) In the Last Twenty Years — And Why You Should Care! - November 8, 2021
- Learning From the Legends: The Ronseal Phrase - October 22, 2021