How to exploit your constraints

I wrote previously about constraints and how you can take advantage of them.  But how can you isolate and exploit a constraint?

First of all, identify your constraint.  

Here are some possible constraints:

• You have very little time to work on your business.
• Your production capacity is limited.
• Your store has limited floor space.

Next, find a way to measure your constraint.

• Hours per week;
• Number of units you can produce;
• Square footage of your store.

Now think about your business in terms of your constraint.  There are two primary strategies:

Open up your constraint.  Find ways to grow so that this constraint no longer hurts you.

• Quit another job so you have more hours available per week.
• Buy another machine so that you can produce more units.
• Rent more space.

Exploit your constraint.  Find ways to increase revenues and profits within an existing constraint.

• Hire an assistant or find ways to work more efficiently.
• Raise the price of your limited production units.
• Squeeze more inventory into your tiny store or eliminate less popular (or less profitable) products to make more room for the most popular and profitable products.

Acknowledgement: I adapted this from Eliyahu Goldratt’s Theory of Constraints.  Goldratt’s website is here.

[Image: Never Ending (2/365) by Burtoo, on Flickr]