Tips for Handling High Product Demand

planningA good business plan accounts for growth, most often slow and steady growth. You leave yourself time to examine results and to plan for scaling up to meet demand. But if your business suddenly takes off in a big way, faster than you planned for, it can be disastrous.

Maybe the demand for your product was greater than you expected. Or maybe you planned to sell the product individually or by the dozen, but now customers are ordering it by the pound. Whatever the reason, congratulations! You're a success! Now how do you keep it from burying you?

Here are some tips to help you keep up with production and shipping as you upgrade from a small-time outfit to a major player.

Widening the bottleneck

Upgrading your business requires balancing the flow from incoming supplies through production and out to clients and customers. At this point, the problem is that you can't create enough supply to meet the demand, so you need to scale up.

Take a look at your inventory and how it flows in and out of your business. To keep your product on the shelves, you need to make sure you keep a large enough supply of your product's raw materials on hand, and that could lead to space problems.

  • You'll need shelving and other storage both for raw materials and unsold product. If you don't have enough space for all of that, you should look into third-party storage or moving into a bigger space.
  • To help control your supply, ask your suppliers about setting up automatic orders so that you keep a steady influx of raw materials without crowding your shelves.
  • Take a look at successful inventory forecasting models, to help you plan ahead.

With raw materials flowing into the pipe and customers waiting for product to come out of the pipe, you need to focus on raising your production speed. Consider these options:

  • Hire someone to help. Hiring an employee brings its own paperwork and problems, but if you can't keep up with the demand on your own, the headaches may be financially worth it in the end.
  • Stay organized. You and everyone else who works on your product needs to know where to find the materials they need and what they need to do when supplies are running low. Label everything and keep the work area clean and tidy.
  • Get the right supplies and equipment. You already have the equipment to manufacture your product, but do you have everything you need to sell it? If you’re shipping in bulk, you might need a stretch wrap machine, an industrial scale, pallets, a dolly or even a forklift, not to mention the smaller items like markers, labels and boxes. If you're looking to save a little money, you can consider buying a used forklift, or order supplies in bulk.

Consider the price

As you invest more in your business, take a close look at what you're charging for your product. You're doing more work, spending more on equipment, storage, legal counsel and maybe even employees. Having all this in play affects how much you're actually spending to make your product.

Do the math carefully and thoroughly, and don't forget to include the cost of your time. Do your best to calculate your product's break-even price, and then use that as a basis to reevaluate — only by selling above the break-even price can you make a profit.

Get some help

Finally, don't try to do it all on your own. Look for resources from your state's Better Business Bureau or its equivalent. You can also find plenty of successful small business owners who would relish the opportunity to mentor you through the twists and turns of the business world. You shouldn't need to reinvent the wheel, only make it go faster, and there are plenty of people out there willing to help. You just have to ask.