The 80:20 Principle
"The most profound principle in business... and life".
yet woefully under-utelised.
Perhaps the 80:20 Principle can help.
The Pareto principle (also known as the 80:20 rule and the law of the vital few) states that, for many events, roughly 80% of the results come from only 20% of the activity... which means you may waste up to 80% of your efforts right now...
But how do we use 80:20 in business?
It should be simple, really - define the 20% of inputs (activity) that yield the 80% of results and do more of that...
But, if it were that simple, everyone would be doing it and they aren't, in fact I challenge you right now to search Google for actionable insight from the 80:20 principle - they're simply not there. I did the same years ago and was disappointed... so I've spent, literally years, defining these and I can tell you a few that you can actually implement to tremendous effect right now, but lets finish the story.
As an Established Entrepreneur, you’ve made progress, you’re turning 10, 20 even 30 million in a year and still each time your sales increase your expenses simply rise up to EAT the profits.
The cycle drives you to work longer hours, stressing to pay your staff and suppliers at the end of the month, (an effort lost on them), questioning your goals and abilities and generally wondering if a job would be easier... Not a Fun place to be...
For Example - 80% of your Money comes from just 20% of clients.
80:20 suggests that 80% of turnover derives from just 20% of clients or 20% of products AND 80% of profits come from just 20% of clients and products.
But they aren't the same clients i.e. high turnover clients tend to yield less profits. I can tell you exactly why in my 5 day email course.
Find the profitable 20% Clients and focus on finding more of these?
Your job is to find the nuggets
Those really profitable parts of your business we call nuggets... find these and then focus more and more energy into growing just these. Its really a case of less is more. By doing this you can grow profits without the massive increase in turnover. You wont need more staff, bigger premises and the ever increasing overheads and you already have the clients…
80:20 implies that there is great waste, that the most powerful (minority) resources are being held back by a majority of less effective resources.
80:20 is the problem – but it also offers the solution – a tantalizingly good one.
Example 2 1 in 5 clients are able and willing to spend 4X with you right now...
You are definitely not extracting full value from you existing clients. You can sell more to existing clients... much more. You simply need to identify which of these are willing and able to buy more from you and then craft or find products of ever increasing value, to put in front of them. Resell, Upsell, Cross sell and Referral.
Your Database is valuable - it's much easier and cheaper to sell again to previous clients than to find a new one, it's also certain that for each existing client there's more to be collected.
And so the story continues - affecting every aspect of your business - I GUARANTEE IT.
WHERE TO START?
I’ve been crafting 8020 practical applications for years now, with extraordinary results.
I managed to turn (really) poor sales results around in a week, by finding the one simple thing that the girls were doing wrong.
One salesperson made a 10 000% improvement between 2016 and 2017.
I found the cause for decline in an entire industry in less than a month and
I worked out how to double and treble profits in almost all my clients businesses.
I have been meticulously documenting these for future use in other businesses and industries as well as in our personal lives…
Reserve a free consultation with me to see if this fits your needs - or signup for the Free 5 day email course below.
OR Signup for a FREE 5 day email course on 80/20.
What you Get:
A quick test to see if your business is 80:20 or not.
Why big clients tend to be unprofitable and what's better.
An 80:20 view of your products and services.
Three step approach to building an 80:20 strategy that delivers.
Part 1: Sell more to existing clients - step by step