Part 1 Capacity and Limitations

Part 1 Capacity and Limitations from Blumer CPAs on Vimeo.

Transcript:

This video is a series of a couple of videos on capacity for professional service and creative companies, and I think it’s really important. This video is part one. It’s going to be on limitations and exchanges. And so what do those mean? Well, anytime you’re selling things, what you’re doing is you’re selling something that’s limited, which is your capacity. And service based companies struggle to recognize that. And I’ve written about it and teach about that a lot, but it’s really important concept which means your capacity, the thing you sell, is limited, and it’s really important to know that. So you can’t pump all the revenue into a service based company that you’re scaling just because you want to, because there is a limitation to what you’re selling. And so anytime you sell something, what you’re doing is you’re exchanging revenue from a client for capacity that you have either for yourself or for your team. And it’s important.

So what is capacity? Well, it’s really the untapped time that your team has in the future, capacities defined in the future, that you have to exchange for revenue. And you’ve got to make sure that exchange works, and if you get it lopsided, it’s going to blow you up, or you’re going to have a bored team that are going to leave. Those are the different sides of it. So you got to exchange things appropriately, and not every team’s capacity is as valuable as another team’s capacity. So you got to know which capacity you’re giving up. That is which future capacity you’re giving up for the revenue that you’re expecting to bring in from your company. And those are really important that you get those balances right.

One other thing is that, what is capacity? Well, it is the future time that you have to tap into that your team has committed to you or that you’ve committed to your company, but it’s also your mental capacity. So it’s not just raw blocks of time because we know that our time blocks are not all as effective or efficient. And so there’s also a mental capacity you’re always dealing with. So just recognize if you’re in the middle of some personal trauma, you have a limited mental capacity. Though you may have the time available, you’re going to get more distracted. You’re going to struggle more. So when you go through hard things, you need to recognize that. So your mental capacity is limited, and those are important when you think about exchanging revenue for the future capacity of blocks of time and mental thought that you have to give to that client. Just keep that in mind and this’ll keep you healthier as an entrepreneur when you go into it.