11 Mar 2010
Do any of these business challenges ring true for you?
Long, ever-increasing “to do” lists?
Tasks taking longer than you expected?
Gnawing, all-consuming feeling that you will never catch up?
Too much time “in” your business rather than “on” it?
All businesses must abide by one simple rule -- the 80/20 rule -- to thrive and survive in today’s highly changing, highly competitive times.
It is not a “rule” in the sense that someone decreed it. It is more of a phenomenon -- formally named the Pareto Principle -- named after Italian economist Vilfredo Pareto. In the 1800’s, Pareto discovered that all economic activity was subject to the 80/20 Rule… 20% of your activities account for 80% of your results.
Most business people have heard of the 80/20 Rule. Yet less than one out of every 10 individuals actually applies it on a consistent basis in their business affairs. As we start into a new year, wouldn't it be nice if you doubled, possibly tripled, your business results with half the effort and time?
Let’s look at 3 of the many examples where the 80/20 Rule can have far-reaching impact on your business in the coming year.
Your “To Do” List
From a list of 10 items on your “to do” list, 2 of these items are worth as much or more than the other 8 items combined. Each of these tasks may take the same amount of time, but only 1-2 of these tasks will have 5-10 times more impact on your business. In fact, one item on your list can be worth more than all the other 9 items put together. Which 1-2 tasks on your current "to do" list will have the greatest impact on your new year performance? How will you manage your time
differently to make those items a top priority?
Your Client Base
While you are probably aware that 20% of your clients generate 80% of your revenues, do you know which 20%? On the reverse side on this equation, ask yourself:
How much time do you spend servicing clients who don’t buy much?
How much time is spent with clients who bought from you last year and aren’t clients now?
How much time is spent with prospects who ask lots of questions, then buy from someone else?
Be rigorously honest with your answers. Your business success depends on it.
Alan Weiss -- author, "Million Dollar Consulting" -- recommends that you drop the bottom 15% of your customer base every year. Such housecleaning efforts make room for more lucrative clients. Are you ready to do a little customer base housecleaning to grow your business faster?
Peak Revenue Times
Are you aware that 80% of your business will be done in 20% of the time (year, month. week, day) your business is open?
All businesses have busy and slow cycles. As the saying goes, every business has its “Christmas” season, but it may not be in December. Can you identify what months, what days in the week, and what hours in your day generate the most business? How can knowing this information make you smarter in growing your business?
Applying the 80/20 rule to your business is not just time management…it is success management. Adhering to this one simple rule in your business can multiply your revenue, save you time, increase your productivity and put a smile on your face more frequently ... by as much as 100%, 200%, even 500%. Isn’t it worth it in the long run?
Make a commitment to apply the 80/20 Rule in at least 2 areas of your business. Choose your most challenging areas first. If you already have detailed information about those areas, start analyzing it now. Identify where you are
getting the highest payback for your time, money and effort.
If you don't have the information on hand, start by setting up a tracking system. E.g., if you are tracking your client/prospect base, use a contact management program to keep detailed notes with whom you spoke, how much time they took, how much they purchased, etc. After 3-6 months of data, summarize by client and rigorously scrutinize with whom you are wasting time and with whom you should be spending more time. Focus on those top 20% for regular follow-up. Let someone else look after the rest.
As Mary Kay said so eloquently, "Don't spend million dollar time on penny tasks." This quote applies to every aspect of your business. If you are ready to create massive propulsion NOW, the 80/20 rule is your greatest weapon.
Michael A. Evans