The 80-20 Rule
The Pareto Principle is one that is followed by most successful business operators. It’s name is derived from the nineteenth century Italian economist of the same name and is a performance rule which states that 80% of your results are achieved from 20% of your activities.
It can also be expressed as 80% of revenue is generated by 20% of your client base and 20% is generated by the remaining 80% or activities which take up to 80% of your effort may only produce 20% of your results and profits.
The obvious trick is to determine which 20% will yield the desired results.
Focus On What is Working
From a marketing perspective the Pareto Principle indicates that we should concentrate on the big picture and not waste our efforts on activities that, at best, will provide only mediocre results. That 80% of your client base, although providing you with diversification, can be the most demanding and yet the least profitable part of your business.
You can harness the message from the Pareto Principle in your own business by:
- Focusing your attention on those clients who provide you with the bulk of your work and your income. It’s a matter of practicing the “love the one you’re with” concept by offering your existing clients your full range of services.
- Concentrating your marketing efforts on those activities that have traditionally accounted for the major part of your business — developing word of mouth referrals.
- Putting your efforts into those services which represent the major component of your income.
Use the Pareto Principle to Be More Profitable
It’s worth reflecting on the Pareto Principle and determine those activities which sap your energy and your time but which don’t make a useful contribution to your results. Once you identify them you need to decide on whether they should be eliminated.
Proper Business Processes Help Guard Your Success
With your business’ legal issues, it is critical to dot all your i’s and cross your t’s. Most startup business owners that you run into have a few stories of things they learned the hard way.
One of the most important ways that the Professional Bookkeeper™ program really distinguishes itself is in how it helps new businesses avoid legal hangups. Knowing the best ways to protect yourself ensures that you get paid for every hour of work that you do. You will learn how to earn $30-$60 per hour doing the kind of bookkeeping needed by every small business.
Learn More About the Professional Bookkeeping Program