Does your business operates at full capacity? Have you ever wondered what the advantages of your business working at full capacity are? In this article, I would be sharing with you the advantages associated with working at full capacity.

Though full capacity is a term that is mainly associated with the manufacturing industry, the term is also relevant to other industries with other measurable outputs.

What is Full Capacity?

Full capacity is the maximum possible output a business can produce during a specified period of time using with installed equipment.

It is very helpful to know if your business is operating at full capacity.

Factors to Consider when Measuring your Business’s Full Capacity

To ascertain if your business is operating at full capacity, there are certain factors you have to consider. They include:

Possible Output

This is an important factor when measuring the full capacity of your business. Ascertain the limitations of your workers and installed equipment. Considering your existing equipment’s and staffing, determine the unit you could produce per hour in all stages of production and choose the smallest. For example, if production goes through four stages, and you could produce 400, 550, 600 and 700 units in the 4 production stages respectively.

Your capacity would be 400 units per hour. Multiply this by the hours you can maintain that capacity per day to determine your daily output at full capacity.

Your workers

Production machinery cannot operate themselves, you require workers to create output. Therefore you have to factor in your workers when calculating your capacity. Here, you calculate the maximum output an individual staff can produce per hour, multiply this by the number of workers you have and by the hours each individual worker works during the given time-frame.


It would be difficult to calculate the accurate full capacity of your business if you do not factor in downtime. If your capacity is 400 units per hour when equipment is running smoothly but takes 10 minutes to maintain equipment every 5 hours. This definitely reduces capacity.

You calculate this by subtracting the fraction of downtime from your potential output.

Here is how you do it; downtime here is 10/240= 0.0417. Due to downtime your output would be 400- (0.0417 X 400) = 383.32. 383.32 would be your full capacity, considering reasonable downtime.

Adding Capacity

To prevent wasting scarce resources, monitor the performance of your machinery and staffs. Purchase equipment, only when existing equipment is underperforming due to technical issues, machinery depreciation, or an increase in product demand which requires increased production. Adding capacity without a need for it would not only waste resources, it would also reduce productivity and increase costs.

Advantages of Operating at Full Capacity

Now that you already know what full capacity is all about and how you can measure the full capacity. Let’s consider the advantages associated with operating at full capacity:

  • It prevents waste of resources
  • It ensures productivity
  • It increases the profitability of your business
  • It curbs costs
  • It allows for the employment of resources in the best business endeavors and promotes strategic decision making
  • It also allows you ascertain how your business is performing and proffer strategies to improve performance


Why operate on a lower capacity when you can work on full capacity. Measure the full capacity of your business today and start making strategic decisions that would improve your business performance.

Why pay more when you can pay less? Whatever Industrial sector your business may belong, whether the manufacturing or the service industry; maintaining energy efficiency should never be overlooked.

With ever-mounting up expenses, maintaining energy efficiency could be a great way to curb expenses and improve profitability.

What is energy efficiency?

In reality, efficiency is achieving a certain desired result with the least waste of resources. It goes without saying that, a method is not efficient if there is another method that could achieve the same result with a lower employment of resources.

Thus, energy efficiency is using the least energy to derive the same outcome. A great example is the light bulb. The fluorescent light bulb requires lesser energy to provide lightening in comparison to the incandescent light bulb which requires a higher energy to derive the same outcome of lightning. Hence, to use the incandescent light bulb for lightning would be energy inefficient and a waste of resources because there is another method that provides the same service at a lower cost.

Why is energy efficiency important?

You may ask; why is saving energy important to my business? What are the benefits? Do I really need to maintain energy efficiency?

Not to worry we’d go through the benefits real quick:

It increases profitability

Findings show that businesses could increase profitability by 2% – 10% a year. Every time you save energy, you save money. Electricity costs are an integral part of running your business. So, when you save energy you reduce business operating costs, thereby, increasing profitability.

Saving energy may involve you purchasing energy-saving appliances, but in the end, it would reduce costs drastically.

It promotes productivity

If your business is energy efficient, it implies you are doing more with less which implies productivity. In fact productivity in another word is efficiency; so once your business is energy efficient, your business is productive.

It cuts cost

It is possible to cut the energy costs of your business by at least 20%. You can cut about 10% energy costs at no upfront charge. It is also reported that energy saving programmes have helped to cut energy cost by a third.  Hence, saving energy is a great way to cut costs.

How can you maintain energy efficiency in your industry?

Energy efficiency assessment

Without an energy efficiency assessment, it would be difficult to ascertain the most effective actions to take to reduce energy consumption. An energy efficiency assessment would measure your current energy consumption and greenhouse gas emission. This would go a long way in determining the most effective measures to take in order to maintain energy efficiency.

Routine equipment maintenance

A well-maintained equipment is more energy efficient in comparison to an equipment that isn’t well maintained. Well maintained equipment like heaters, boilers, air conditioners, Ovens etc. Run efficiently. Make sure the equipment you use is properly maintained on a routine basis.

Get your workers on board

Without getting your workers on board, your energy efficiency efforts may prove futile, ineffective and may not be maintained. Therefore, it is important to get them on board and ensure you imbibe an energy-saving culture in them. Create an energy efficient work culture in your business.

Opt for energy saving equipment

From light bulbs to Pcs; make sure you always purchase equipment with energy saving capabilities.

Switch-off equipment that is not in use

Although this sounds very straightforward, you could save a great percentage of energy by switching off appliances and equipment that are not in use. For example, a single computer on for 24 hours could accumulate to $200 a year.


Running an energy efficient business would cut cost, increase productivity and profitability. You can always pay less to get more, that is what efficiency is all about. So, choose to pay less by maintaining energy efficiency in your industry.

Capacity utilization is an important concept in determining industrial performance. It can be used to ascertain if your business is underperforming or outperforming. Utilizing industrial capacity to the full extent is critical to the successful existence of your business.

So why don’t we look at what capacity utilization implies real quick?

What is Capacity Utilization?

Capacity utilization is basically the extent to which a business or an economy uses its productive capacity.

It is the relationship between the output derived using a business’s production equipment and the potential output which could be derived using the same production equipment if capacity was fully utilized. Does this make your head spin? If yes, all you need to understand is that capacity utilization is the extent to which a business uses its productive capacity.

Productive capacity is the maximum possible output a business can produce.

Capacity is not fully utilized if a business can increase unit of production without increasing production cost. Hence, until production can’t be increased without incurring additional production cost, capacity is not fully utilized.

What is the Ideal Capacity Utilization Rate?

Capacity utilization rate cannot exceed 100%, but the reasonable or ideal expected capacity utilization can be said to be 90% because issues could arise with production machinery and workers. The machinery used for production could develop issues that would prevent it from working at its optimum. And if you agree with me, no worker could work at full capacity always. Putting these in mind, 90% could be said to be an ideal capacity utilization rate.

What is the Importance of Fully Utilizing Capacity?

Considering the fact that increasing capacity could prove expensive. It is wise for a business to make full use of its existing capacity.

The importance of fully utilizing capacity include:

It ensures productivity – Fully utilizing capacity ensures productivity because output produced increases without a rise in production cost. In simpler terms, you increase production without incurring additional expenses.

It reduces cost- A rise in output produced is usually accompanied by a fall in production cost. Hence, working to increase capacity utilization would reduce cost since increased capacity utilization is associated with a rise in output production.

It could Increase Profitability- A rise in output and a reduction in production cost, would result in increased profits for your business. However, if there is a reduction in demand and a loss in market share, it would not translate to an increase in profits.

How can you Increase Capacity Utilization in your Industry?

Proper planning

If you ever want to increase capacity utilization in your business, you have to plan properly and ahead. Planning ahead would help you employ your business resources in the best possible way. It would also help you easily adjust to the ever-changing business climate; making you react in the best possible way to the changes in demand, market share, manufacturing etc. Plan ahead to boost manufacturing, market share, and your product demand.

Structured approach

Your approach should be balancing your capacity with your product demand and market share to ensure profitability. Never increase capacity without an increase in your product demand or market share. Make sure the existing capacity in your business is fully used, before opting for a greater one.

Strategic decision making

In business, the strategy is everything. Your strategy should be to expand your business, maximize capital benefits with low production costs and increase market share. Your strategic decisions would go a long way in determining your level of capacity utilization.