Carrying Capacity

In our simulation, we learn that there are different definitions of Carrying Capacity.

If the CFO demands that we maximize profit of acquisition based on one-year profit, then our Carrying Capacity is 37,678 new customers (at an investment of $500,000).

If the CFO demands that we maximize profit of acquisition based on five-year profit, then our Carrying Capacity is 45,000 new customers (at an investment of $1,000,000).

If the CFO demands that we maximize profit of acquisition based on ten-year profit, then our Carrying Capacity is 47,951 new customers (at an investment of $1,250,000).

Notice that the difference between spending $250,000 on customer acquisition and $1,250,000 on customer acquisition isn't great.

Notice that the difference between spending $250,000 on customer acquisition and $1,250,000 on customer acquisition is HUGE when evaluating 10-year profit.

In other words, we frequently optimize for short-term profit, and we wonder why our business never grows in a healthy manner.

Measure Carrying Capacity. If you want a healthy business in the long-term, you have no choice but to know what your Carrying Capacity is.