04/ 28/ 2006
by Vicki Gerson
Matching supply and demand in a service business can be tricky, but entrepreneurs can learn to balance the process through careful analysis. Here are some points to consider:
Customer volume patterns
It’s important for business owners to identify the patterns of demand. Do you know when the rush periods for your business are? If you own a deli, for example, do you know its peaks and lulls? Most likely, a deli starts getting busy around 11 a.m., and the rush continues until 1:30 p.m. If you own a golf club in the Midwest, however, the busiest hours are probably early in the morning in May through September.
Patterns vary for different services. A pro shop at a ski lodge might be busy early in the morning, but slow after 3 p.m. A hotel has high checkout times in the morning and a rush of check-ins after 2 p.m. Recognizing the patterns of demand makes it easier to staff a business in a way that ensures that top customer service will always be provided.
Busy seasons
November and December are peak gift buying periods, so if you own a gift basket business, this will be your busiest time of year. You may need to hire part-time help for stocking incoming merchandise, gift wrapping or sending out or delivering packages.
Meanwhile, CPAs and lawyers might stay busy from February through April 15th––the beginning to the end of tax season. They may need to work longer hours to handle the volume of business during this time.
Auto repair owners know that accidents occur during heavy rain, fog or snow. Bad weather turns into business. No matter what you do and where your business is, you should know what the peak months are for you.
Personal limits
Every entrepreneur wants as much business as possible, whenever possible, so that income is available during lean times. However, you must realize your limits. Service can suffer and mistakes can happen if you or your staff are exhausted. Exposing customers to poor quality or poor service will do them more harm than asking them to wait an extra week.
Business owners considering expansion during peak periods should consider the timing carefully. If you can't justify using a larger space more than two months out of the year, you could be wasting money and draining cash flow. Another factor to consider during an expansion is whether to hire more staff. If you constantly subject workers to layoffs in downtime, they will look for steadier employment. It’s important, therefore, not enlarge your staff unless you can offer them steady work.
Staffing strategies
To modify supply and demand, consider using some of these strategies to get you through the peak periods:
- Modify operating hours for peak periods. Open later and stay open longer in the evenings.
- Advertise the benefits of using the service during non-peak periods to attract customers.
- Market to retirees who may prefer using your services while other customers are at work.
- Provide discounts to people who repair summer products in the winter and winter products in the summer.
- Hire part-time or temporary employees during peak periods.
- Don't allow any employee to take vacation during peak business periods.
- Employ the use of technology to speed along the ordering process.
- Offer a price incentive for using the service during non-peak times.
- Allow customers to fax or e-mail in their orders instead of talking to an employee.
If you can shorten periods that customers have to wait or schedule appointments so that the wait isn't too long, you will have happier customers.
