What do jet engine manufacturers do with key components? The run them and run them and run them. They put them through the equivalent of thousands of landings and take-off, and millions of hours in the air.
Their sole purpose is to see when they break. When does that part shear off, collapse or buckle under the continual strain?
That’s how they know when airlines need to replace their parts.
If a jet engine manufacturer tests hundreds of those parts and every one of them, within a tight tolerance, lasts 10,000 hours, they’ll be pretty safe telling airlines to replace the parts once they’ve spent 5,000 hours in the air, for example. The chances of anything going wrong in that timespan are infinitesimally small.
While you probably shouldn’t test your business to destruction, you can try to model the same thing relatively easily. Most of the time you can work out what it would take to “break” your business.
Let’s say your factory can produce 10,000 units a week. What would happen if your order book doubled overnight? How would you cope…what options would you have?
Or your customer order telephone line can handle 1,000 inbound calls a day. What would happen if the number of incoming calls doubled overnight?
Or you need to make a gross margin of £500,000 per month to cover your fixed costs, but this month it’s only £250,000. What would you do…how would you cope?
Taking where you are today and moving some key numbers dramatically up and down gives you the opportunity to think through your options and understand where the weak points in your business model are.
In most businesses I see, putting through quite a lot more sales is a relatively solvable problem. Yes it might mean putting on a night-shift and paying some overtime, but it’s not usually the most challenging problem to handle.
By comparison, handling more customer orders is a much bigger problem, because you’ve probably optimised your call centre performance over the years and cut back on people, desks, PCs, phone lines and physical office space to make sure your costs are as low as possible.
So what happens if your world goes crazy overnight? Usually businesses have over-optimised their operations and have nowhere to go.
And if you think that’s unlikely, just remember the hand sanitiser business was the epitome of dull back in February 2020. Just look at it now – how would you feel if you could have ridden that wave of excess demand, but missed out because there weren’t enough people to answer your phones and take customer orders?
Of course, if you know what you’d do to handle a doubling of your business, you’ll have a pretty good handle on what you’d do if business blipped up by 20% overnight. Compared to having your business double, that would be a walk in the park.
Similarly, if your profits dropped by 10%, but you’d worked out how you’d handle things if they dropped by half, the likelihood of you being able to manage that without too much trouble along the way is correspondingly high.
That’s where the old army saying comes from – “train hard, fight easy”.
Once you know how you’d handle big swings, up or down, you can take small ones in your stride without over-reacting and possibly hampering your potential for tomorrow as a result of taking hasty action today.
But most businesses which train easy crumple at the first sign of adversity. Which is a shame, as it could easily have been so different.
What will you do today – train hard, or train easy…?