3 Constraints
At every point in time, every business has only 3 possible bottlenecks:
Production constrained - You can’t make any more stuff
Delivery constrained - You can’t get more stuff to the purchaser
Demand constrained - You can’t sell any more stuff
For example, a packed restaurant on Friday night is not demand constrained — adding more people who want to dine there will not increase sales. They are (probably) delivery constrained. Adding another table, Alinea will successfully add more revenue that night.
If you’re production constrained, then making one more unit will make one more sale. Example: an N95 mask factory at the beginning of the pandemic.
If you’re delivery constrained, adding one more truck, one more barge, one more dining table will result in another sale.
If you’re demand constrained, then finding one more buyer will make you more sales. If that’s not true, you’re not demand constrained.
—
That’s it.