An added benefit to coaching gymnastics at the worlds biggest summer camp of its type is that in between coaching sessions I get to observe this meticulously designed business.
The amount of planning, documentation and execution to run an organization of this size that has almost 75% turn over on its staff each week is incredible. I thoroughly enjoy watching the men and women that run the camp go about their daily/weekly routines.
Lesson 1: Being at capacity once a year does not mean its time to expand.
Today I find myself going over and over an interaction with myself and one of the lead directors. We were discussing the number of campers here the following week for each program. "We are at capacity" he told me. This meant that we have a set number of athletes we can fit safely in the facility utilizing our current processes.
- X athletes per coach.
- Y coaches per group
- Z groups per week
We were going to be full the next week. "So is it time to build a bigger facility" I asked. "Nope" he instantly replied. He was looking at the bigger picture. There are 52 weeks in the year, just because we are full one doesn't mean it is time to expand. In reality we are probably full 4-6 weeks of the summer. That is still a small fraction of the year.
Instead we need to incentivise the other weeks. Its obvious once you look at the bigger picture. I watch lots of startups get their first couple of sales and then immediately start investing in the infrastructure to scale up to millions of users without looking at the other variables, worse yet without testing the other variables.
Time of year, market trends, market size, distribution limitations, overhead, turnover etc. The thought process I was using during that conversation was the same thought process that lead to the rise of and fall of the 90s .com companies that sold dog food online for dirt cheap. Sure if you sell something for a 50% discount compared to the traditional market you're going to have an edge. But when we stop and look at other factors such as in this case the cost of delivery which could fluctuate up to five times the amount saved then you realize this model is not feasible.
The outside factors here I was not examining is that the market for what we do only exists for 12 weeks in the summer and would supply us to capacity for a fraction of those weeks.
Fortunately brighter men than I have spent the last 45 years painstakingly testing all of these variables and more.
The lesson learned:
Just because you reach capacity one week, one month, even one year it does not mean it is time to start scaling up.