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What's up, guys? Welcome back to Build. And today I want to talk about the real reason your business isn't growing. So I was recently on a trip and I had somebody come up to me when they saw me at a restaurant. And the guy, super successful, had an eight figure business in E commerce. At one point we were talking, he basically said, layla, I feel like I'm just leaving so much on the table. Like, I see all these opportunities, but I just. I just can't get to them. Like, there's just so much going on. And it is what inspired this podcast today because I said to him, I said, what if. What if you're not missing the opportunities because there's so much going on? What if you're missing them because your business physically does not have the capacity to absorb them? And he just kind of looked at me and he was like, what do you mean by that? And that is what I want to explain in this podcast. There is something that nobody wants to admit. Most businesses hit their potential not because the market won't allow it. They hit their ceiling because their capacity won't allow it. Okay? The reality is this. For businesses, opportunity is everywhere. Capacity is what is rare. And potential without capacity is literally just frustration. Like, if you feel frustrated with your business, it's probably because you have so much potential, but you have very little capacity and you don't know how to create it. And that is what I want to talk about with you guys today. This is something I've been thinking about so much since this conversation. And I, if you can tell, I'm, like, really excited about it, it's because I think it's a great way to explain a ceiling that many people hit in their business. And I think you could also apply it to yourself as a person. So I think it works in both ways. I want to reframe this because I think a lot of founders get it completely backwards. We spend so much time talking about the vision, the strategy, something bigger, and we spend almost no time talking about the thing that actually determines whether any of that fucking matters, which is capacity. Okay? And this is not just your personal capacity. It's not just how many hours you can work. I am talking about your business's capacity, which, of course, you are a factor in that. But today we're just gonna talk about your business. And I wanna say something that might make you even more uncomfortable. Okay? The ceiling on your business has nothing to do with your market. It has almost everything to do with what your business can actually handle. And I know that. That makes sense, makes a lot of people uncomfortable because they're like, well, Layla, my market is only my mark. I can't tell you how many people ask me this question. They're like, I think I've saturated my market. Please shut the up. It's just the worst thing that you could ever say and you have no control over it. So let's just forget that for now. Because most people don't have a market problem. I will tell you. There's 0.01% of people who do, and I would happily tell them if they did. Most people that say they have a market problem don't actually have one and don't even know how big their market actually is. So what actually does this mean? What does it have to do with. Okay, first, let's define terms. Because I think capacity is very abstract and ambiguous. And so I want to explain exactly what I mean when I say that in business, capacity is not desire. It's not intelligence. It's not. I want it really bad. It is four things. Okay? The first one, financial capacity. How much cash do you have, how big of margins you have, how much risk financially can you take as a business before it breaks the business and you have to shut it down, it ends it, you know, futo, right? The second one is human capacity. This is the people that you have. This is the depth of the skill of the people on your team, the quality of the people, the character of the people, the management bandwidth that you have. Do your leaders have room to lead or are they just executing huge? Huge. And most people definitely don't have leaders actually leading. They most of the time have them executing. Third, operational capacity, your systems. How fast can you move and how reliably can you deliver when volume increases because you've moved fast? And the last one is cognitive capacity. Okay, this one is hard to see, but it's the ability to make good decisions under pressure. When everything is growing, everything's going fast, can your team still think clearly and make good decisions, or does the stress make everybody stupid? I know it sounds dumb, but stress go up, stupidity go up with it. So that is something that you can remember. Now, here's the rule of thumb. Your business can only capitalize on opportunities it can absorb. So anything beyond your capacity to absorb essentially gets ignored, delayed, or honestly. It gets attempted and then it fails. It's really one of those three things. Like either it's absorbed, it's delayed, or you try to do it and you fail at doing it. That's what happens when we don't have capacity. And then people say things like, no, Leila. Like, the timing wasn't right. The market wasn't there. Our clients. No, no, no. Your capacity wasn't right. Timing was fine. And probably the task at hand was fine, too. You just didn't have capacity. So I'll give you a real example of this. I talk to a lot of founders who say some version of this, okay, you know what? The market shifted, and we just didn't get on fast enough. We just missed it. You know, everyone jumped on it faster. And when I dig in deeper, this is what I usually find. They didn't miss it. In fact, they fucking saw it. And they talked about it in their meetings, and they thought about it in their free time, and they listened to podcasts on it and they understood, but they couldn't act on it. Now, why couldn't they act on it? Few different things. They don't have cash to buffer a pivot, so they want to change their business, but they don't have enough money to support sustaining the old one and trying to do the new one. Second one, they don't have any spare teammates to actually run this experiment. So it's like, who's going to do it? And nobody can raise their hand because nobody has capacity. Third, they have no operational slack to absorb the disruption of trying something new. They don't have people with capacity to relay things. They don't have communication capacity. They don't have systems capacity. If they tried to do this new thing, they would have to get a whole new infrastructure stack because they have no capacity on the old one. So while their competitors pivot, they delay, they think about it, but they ultimately don't do it. Or maybe they try to do it and they fail because that's all they had capacity for. And what I want you to understand is that that is not strategy failing. That is capacity failing. And so often people confuse these two. They're like, oh, my God, the strategy didn't work. And I'm like, please don't say that. The strategy would have worked if you had capacity. Businesses with low capacity do not miss opportunities because they are dumb. They miss it because they're fragile and because they don't have the room. So, you know, it could be like one unexpected expense. One person quitting once a month, and suddenly it's like they literally can't do anything but react to something. You can't play offense when you're constantly playing defense. Another one that I hear all the time. Everyone loves to say, oh, yeah, yeah, we should try that. We'll test that. Maybe it's like a new channel, a new offer, a new pricing model, a new customer segment that you're going to serve. Whatever they're like, I want to test that. Well, testing very similar to capitalizing on opportunity or a new strategy requires resources that most teams don't actually have. Right. It requires people who are not maxed out. It requires leaders who can tolerate short term inefficiency while something new gets figured out, which requires a lot more effort. It requires systems that allow people to make mistakes without everything falling apart in them, thinking there's something wrong with that. And so if your team is running at like 95 or 100% utilization or 110%, which is what most teams are doing, then nothing new gets tested. And then everything new feels like it's too risky. Now why does it feel too risky? Because it's the cost of the thing you're currently doing. Because they know and you know that if you add on this new thing, there's a very likely chance that the old thing suffers. And so you can't take that risk. And it's all because you don't have capacity. And so innovation becomes this thing that you talk about, like in your very spare time that you have to think but you don't actually do anything about. And I will tell you what happens is that people get frustrated. Founders get super frustrated. They think their team isn't innovative, they think they hired the wrong people. No, you hired great people and then you gave them zero fucking room to do shit. A business that has no capacity cannot innovate. And a business that can't innovate caps its own upside. So you're essentially saying, we will only ever do exactly what we're doing now. Slightly optimized, that's it. And so you can maintain your company, but you cannot grow your company. Now this one I know is one that's going to resonate with a lot of you. Say you get an opportunity, like a real opportunity. Maybe it's a partnership that can open a new distribution channel. I hear that one a lot. Maybe you're an e commerce store and you can buy bulk offer that would essentially 3x your margins if you could actually fulfill on it. And so you're like, wow, this is amazing. But it requires real capital. And you look at the numbers and you're like, I can't fucking do this. Now. It's not because it's a bad opportunity, it's actually a great opportunity. It's that you don't have the cash to pursue the opportunity. So you can't absorb the risk. So the short term pain, you can't actually survive it. So you have to pass. And then you tell yourself, oh, it wasn't the right fit or the timing was off or you know, we'll get the next one. But the truth is the ceiling of your business is set by the floor of your financial capacity. So you can dream as big as you want, but if your bank account cannot back that dream up, then it just stays a dream. And I have watched so many founders pass on deals, on partnerships, et cetera, that would change their trajectory. Not because they made some bad call, but because they had no option. Because when you're thin, you don't really get to choose on it. You just have to say, it's either I survive or I grow and I have to survive. So we will default to survival. This is the thing that's so hard and this is the pattern I want you guys to see. Opportunity doesn't show up when we are ready for it. It shows up whenever the fuck it shows up. This is something I wish I understood early on. I say it to my team a lot. I say we can't time talent. You also can't time opportunity with your business. There's no scheduling it. There's no like, let me get my shit in order first. Like the market doesn't give a fuck about our internal timelines. I say this to myself as well because if I could, I would love to plan out all these big amazing things. Only businesses with excess capacity get to say yes to those things. They're the ones who get the opportunity. They get to say yes now. They get to say, we will figure it out and it be true. Everybody else has to say, oh, when things calm down, once we hire these people after this quarter, once we get this infrastructure. And I want to be clear, that's not being strategic. Strategic strategy is different than saying, I have big constraints and therefore I cannot do this thing. There's a big difference between choosing to wait and having to wait. A lot of people say, oh, I'm just being strategic. But they're actually stuck because they don't have capacity. And so this is the frame. I want you guys to think with this. This has changed how I do business. Most founders think if I build something great, capacity will come, revenue will come, cash will come, talent will come, capacity will come, right? If I build something great, capacity is going to come next. And I am telling you it is ass backwards if you don't have capacity on purpose, you will never express your greatness, okay? If you don't build capacity on purpose, greatness never gets expressed. Capacity is not the output for building a great business. Capacity is the input. If the thing that allows greatness to happen in the first place. So you don't earn the right to have capacity after you succeed. You have to have capacity to succeed. And that is why I'm always talking about building the machine before you meet the machine. Firing ahead of the pain. Like building cash when times are good, not scrambling when times are bad. Because opportunity has this fucking insidious, terrible way of coming at the worst times ever. And the only businesses that win are the ones that were ready before they even knew what they were getting ready for. This is why I tell my team, I say we want to over prepare, not over plan. Now, I don't say we need to under plan, but I say we need to over prepare, which means have more resources than needed, not over plan. We never know what's going to happen next, but we do know that we want to have a war chest and we want to have capacity. And here's the thing. As your business grows, the complexity increases. You have way more decisions you have to make. Mistakes get a lot more expensive when you make them. I say this a lot, but, like, if you're, you know, essentially when your business is small, it's almost like steering a rowboat. As you get bigger, it's like you're driving the Titanic. And it's like, we could be hundreds of miles out and still hit that iceberg, okay? So a lot of the times what happens is a bad call that you make when your business is small is annoying. When you're big, it's catastrophic. And if your capacity doesn't scale ahead of your growth, you start to feel it everywhere. It's like, you guys, some of you can really relate to this. Your leaders are going to become bottlenecks because there are more decisions than they can make. Your teams are going to feel burnt out because there are more tasks than they can actually execute on. And your opportunities are going to start to feel overwhelming, not exciting, because you know that you can't even do anything about them, okay? Growth is not what breaks companies. Growth without capacity breaks companies. It happens all the time. A business will hit a new revenue milestone, and instead of celebrating, which this has been me in the past, you feel worse, right? You feel more stressed, more overwhelmed, and more stuck. And you're like, what the fuck is wrong with me? Why is this not fun? Anymore, there's nothing wrong with you. Your capacity didn't keep up with the growth and that is it. The business outgrew the container and now everything feels like it's really tight. So if you're listening this far, you're probably like, geez, I feel this and this is fucking painful. What do I do? I totally understand. High performing businesses aren't just trying to grow. They actually spend much more time intentionally trying to build capacity before they need it. Okay, so that means having cash, buffering them before they need the cash. They mean having a strong bench before people leave or roles aren't making sense anymore. It means systems that work without full volume and it means that they have space to make good decisions before reactive and things break. Okay, so it's. If you really think about it and you really want to get this, like the best CEOs and operators and leaders that I know, they treat capacity almost like inventory. You have to stock it before the demand hits. You don't wait until customers are lining up for it for more product because you can't sell it to them. That's when it's too late. You're not going to get the order in time. It is the exact same with capacity. If you wait until you need it, you've already missed the window. This is why I am constantly pushing people to ask themselves, what do you need to be true before you succeed, not during and not after. Successful actions lead to success, not the other way around. So it's like building capacity is a successful action that can precede success. Even when it feels like you're spending money that you shouldn't, and even when it feels like it's inefficient. I swear to you, this is the unlock. If you can do this, then what you will see is that the most expensive inefficiency is the opportunity that you can't capture today because you won't build the capacity within your business. So if you're afraid of like, I don't want to be inefficient, I don't have access this. I want to make sure all my cash is invested. I want to make sure my people are maxed out, that's great. You're just trading that inefficiency for the inefficiency of the fact that you're not going to grow your business as fast. Let that sink in. So I want to leave you guys with something tactical because this is something I'm asking leaders on my team and I've been asking a lot of them actually lately. As they've been talking through their function scaling as we continue to grow as a business. First question, if the market doubled tomorrow, what would break first? You could even say, if my customers doubled tomorrow, what would break first? Not like, oh my God, it would be hard, but like, what exactly would break? That is your capacity constraint. And that's the thing that's limiting your upside right now, whether you see it or not. Because the moment that you have somebody come to you and they say, I can give you more customers, and you're like, I can't do it because I don't have enough of the team, or I don't have enough of the ops, or I don't have enough of the cash. Second question, what opportunities have you passed in the last year due to constraint? Not strategy. You have to be really honest with yourself here. How many times did you say no, not because it was wrong for your business, but because you just couldn't fucking do it. It was too overwhelming. You had too much stuff going on. Okay? That's not a strategic decision. That is a symptom of not enough capacity. And the last question, where are you running at 100%? That should be 70 to 80%, essentially. Where is there no room, no slack, no buffer? That is where your business is fragile. And that's where like one person quitting or one bad week, it just turns into like a whole full blown crisis. Those three things will tell you so much more about the capacity and the real ceiling of your business more than any like fucking strategy deck or, you know, consultant could tell you. Just ask yourself those three questions and I will leave you with this. Businesses don't fail because they lack ideas. They fail and they stall because they don't have capacity. And the hard part is that you don't even realize capacity is the problem because you think it's strategy, you think it's the market and you think it's timing. But it is almost always that people see the opportunity and they just can't move on it. They just can't do it fast enough. So build capacity first before you need it, and I promise you, you will be able to reach your potential as a business. I appreciate you guys. I hope you have a good rest of your walk workout week, day, month. I hope this is helpful. If it is, go ahead, share it with somebody. This is the stuff that wish I had done a decade ago.