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Unlocking the Power of Trade: How to Identify and Monetize Your Excess Capacity

July 24, 2018 | Written by Bob Bagga Logo

Article by BizX co-founder and CEO Bob Bagga was originally contributed to  Read the full article here.

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If a small business owner wants to experience growth, they must learn to identify and monetize their excess capacity. Find out how you can implement this unique growth-hacking tactic to expand your business!

When a small business opens their doors for the first time, they dream of operating at maximum efficiency. But after the excitement surrounding the launch dies down, a small business owner will notice the occasional empty table, idle employee or merchandise that's still on the shelf. This is the world of excess capacity.

According to Trading Economics, businesses in the U.S. operate at about  79 percent of their potential capacity, meaning there is about 20 percent of their goods or services that are wasted.

Statista reports that this number is even lower for the hotel industry, with the occupancy rate  dropping to around 65 percent in 2017. That equals millions of dollars lost, thousands of people unemployed and impoverished, and few bonuses and raises for those who have jobs.

Identifying Your Excess Capacity

If you're a smart business owner, you'll do anything to get rid of your excess capacity. A business can't operate and grow when goods or services are going to waste. Excess capacity stifles that dream, causing business owners to lose money rather than gain it. In fact, cash flow is a  top concern for small business owners, and it's not hard to see that excess capacity is to blame.

So how can you identify this problem in your own business?

Think about the goods or services that you can still sell. Is it unbooked time, advertising space, restaurant seats or  baseball tickets? Whatever the answer is, that's your excess capacity.

For example, say you recently opened a restaurant that has 100 tables but you only seat 80 tables on a regular basis, resulting in 20 open seats. If your average check size is $75 and you turn those 80 tables over twice a day, then calculating your excess capacity is simple: $75 (average check size) x 2 (turns per day) x 20 (open tables) = $3,000 per day in excess capacity. If your restaurant is open every day, then multiply your excess capacity by 365 and you're looking at $1,095,000 in lost revenue every year.

Putting Your Excess Capacity to Work

Without monetizing your excess capacity, you miss the chance to grow your business and change the world at large. So how do you go about monetizing your excess capacity? You must lean on non-cash transactions.

Over  30 percent of the global economy runs on non-cash transactions, and that's prior to the financial crisis.

If you look at it from a business perspective, 65 percent of all Fortune 500 companies use non-cash transactions – and most of those transactions center on minimizing excess capacity.

PDX Food Swap is another example. In Portland, Oregon, there's a gathering where locals come together to  trade homemade food goods. The offerings mirror what you'd see in an upscale market, but there's one main difference: The business owners are focused on non-cash transactions. In fact, the creator of the PDX Food Swap wants to build a cashless trading system to fuel community and business growth.

Monetizing your excess capacity using non-cash transactions is the solution to growing your business. By operating at maximum efficiency, businesses not only experience success but help improve the world.

Check out how other BizX members have put their excess capacity to work!




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