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> The most capital intensive process of your business should be the bottleneck. Can you explain what this means? You find the bottleneck, then invest the most
by yblu 5y ago
> The most capital intensive process of your business should be the bottleneck.
Can you explain what this means? You find the bottleneck, then invest the most capital to improve it? Or whatever you're investing the most is the bottleneck? Or something else?
- azornathogron 5y agoI'm not a business person, but I assume it means this: Say you run a factory making widgets, and the process has several steps. One of the steps requires a very expensive machine. That step is the most capital intensive. You want that machine to always be running at its maximum throughput. You do not want it to be idle waiting for some other step, otherwise that big capital investment is being wasted. When the machine is at maximum throughput then it is also your bottleneck. Hence, you want the bottleneck to be at the most capital intensive process in the business, to maximise the productivity of your capital.