Fulfilling Sales Orders places demands on your company’s Resources. The challenge comes as Sales grow steadily but for the Company, Investment in Capacity comes in discrete steps. Picture being a two-person operation and you must hire a third to keep up with Sales. That’s a 50% jump in overhead! Between needing the Resource and being able to afford the additional overhead is a RED ZONE for the company. The accompanying graphic illustrates the Demand on resources that follow Sales and the company’s actual capacity, represented by the ‘Overhead’ axis. The areas highlighted in red identify the red zone.

Successful entrepreneurs, through experience or dumb luck, discover or pick up the ‘tools’ needed to work through the red zone challenges. Tool #1: Make decisions and Act! The impact of each action varies widely, but in the end, conquering the challenge comes down to having more ‘points’ than it. A Hail Mary action is seldom available when you need it, so success comes from finding the little actions you can take while waiting for that big one. Accumulating points to meet the challenge requires looking in areas where you can quickly make changes. Fortunately, or sometimes not, the places to look are the usual suspects. Some examples:

Sales Mix: If you have a variety of products/services to offer, put added sales pressure on the highest margin items. Your cash margin is higher and contributes more to overhead for the same resource use.

Inventory: Carrying inventory ties up your cash. If you can measure turns on parts of your inventory in seasons (slow-moving), it pays to cut the prices to move it and free up some cash, even if less than you would like.

Productivity: Productivity is a very powerful force within a company. The simple calculation, Output divided by Resources Used equals productivity, can be a good guide. Look for ways to produce your products with fewer resources. Although you should be diligent in this anyway, people tend to find ideas in a crisis so look with an open mind.

The red zone is where the fight for success is most stressful. It is also the key to survival.