Remember Pareto

There are two things that business people find very challenging: thinking ahead and doing things in order of importance. Doing these two things makes the difference between success in business and just surviving. And the same is true for all areas of our lives. Leadership trainer and author John Maxwell says, “thinking ahead and prioritizing responsibilities marks the major differences between a leader and a follower.” Most people have heard of the Pareto Principle, more commonly known as the 80/20 Principle. Roughly stated this says that in most businesses 80% of your business comes from 20 % of your customers. Other examples of the Pareto Principle are:
  • Reading: 20 percent of the book contains 80 percent of the content.
  • Job: 20 percent of our work gives us 80 percent of our satisfaction.
  • Products: 20 percent of the products bring in 80 percent of the profits.
  • Party: 20 percent of the people will eat 80 percent of the food!
So… when it comes to your priorities, 20 percent of your priorities will give you 80 percent of your production IF you spend your time, energy, money and personnel on the top 20 percent of your priorities. When you do this you are getting a 400% or fourfold return in productivity. Think what this would mean in your business! Every business person needs to understand the Pareto Principle as it applies to the areas of customers, team and leadership. In the area of customers, it is vital to identify the 20 percent who account for 80 percent of your business. These are your “raving fans” and strategies must be put in place to care for them appropriately. For your team, you must identify the top 20 percent producers. Spend 80 percent of your people time with these people to develop them to their full potential. YOUR CHALLENGE:  Take a look at how the Pareto principle applies in your business and get focused on the most important and most impactful areas of your business.  

Get More Cash

Cash – don’t have enough of it? Not surprising as this is something business owners struggle with every day. Raise your prices.  Most of us our afraid to increase our prices because we see our competitors dropping their prices to get the sale.  That’s because all they know is how to sell on price, not on value.  If you have been listening over the past few months you have learned how to build your value, sell on emotion and consistently wow your customers. Here is a little known fact that may change your opinion about price increases.  If the margin in your business is 25% and you increase your prices by 10%, you can effectively lose 60% of your sales and still bank the same amount.  It may be hard to believe, but it’s true. You can raise your prices, even in this tough economy you can raise your prices if you know how and when. Be sure to raise your prices in your busiest season as this has several benefits.  You are in demand and you will focus your scarce resource of time on better margin opportunities, and you are busy and mentally better prepared to handle the transition. Three easy steps: 1 – List all your products and services and rank them on the amount sold for the same time last year. 2 – Remove the most price sensitive items. 3 – Raise your prices 10% on all the products and services that are left. It’s really that simple. YOUR CHALLENGE:  Make sure that you are selling on value and then take a serious look at your prices.  

Become the Student

Do you feel stuck, do you feel like something is holding you back, or maybe you are looking for new ideas and new strategies but for some reason you keep doing the same thing over and over again expecting different results? It’s time to take control of what you worked so hard for…your business.  What are you doing differently right now, this very minute, to grow yourself, to open your mind, to get new perspectives? It has been said that the difference between where you are now and where you will be in 5 years, will be the books you read, the workshops and classes you attend, and the people you meet. You need to consider taking ownership of your learning and your personal growth. So here’s some ideas on how you get started at learning…. 1 – Read 10 pages a day, the average business book has approximately 180 pages, this would be 20 books in a year.  For those slightly less ambitious, 5 pages a day will still get you 10 books a year. 2 – Find a class or a seminar where you can learn something new.  There are many opportunities to learn offered through local chambers, libraries, other businesses. 3 – Subscribe to an feed or online newsletter that provide you with daily, weekly learnings.  Choose an industry that you want to learn more about, or something inspirational. YOUR CHALLENGE:  Start a book that you already own that you have been putting off, and look for opportunities to put learning into your routine.  

Networking as a Marketing Strategy

The #1 reason businesses “network” is to increase leads to the business and make more money. When you ask a business owner where “networking’ ranks in importance in their marketing plans most will always say it’s in the top 3 strategies. So, if the #1 reason businesses join BNI, join a chamber, or other group is for networking and networking is one of the top marketing strategies…then it begs the question: What are you doing, reading, or attending to increase your knowledge and skills in networking? Here are some tips to make your networking an effective marketing strategy… Before you head out the door….
  • Be clear on ideal customers
  • Identify the best networking functions to attend (find out from others where your ideal customer ‘hangs out’)
  • Set goals for how many new prospects you’d like to meet at the event
In the moment….
  • Top 4 things that must exist if someone is going to buy from you: They must like you, believe you, have confidence in you, and trust you (if all four exist, they may buy from you. If any one of the four is missing, they will never buy from you.)
  • Of these four things (like, believe, confidence, and trust), like is the most important. It is the “ticket in the door”. A prospect must like you before they will ever believe you, have confidence or trust you. No one ever says, “I trust that person but I don’t like them…”
  • The “close” in networking is to get an ideal target to agree to a one-on-one follow-up meeting. Get a very specific commitment if possible.
After you connect with someone….
  • Prompt follow-up (Have a system for same day if possible.)
  • Send a personal note by mail! (The average worker in the U.S. gets 52 emails a day and over 50% are deleted without opening. 6 billion individual pieces of mail are delivered each year in the U.S. – 75% are thrown in the trash without opening. But, over 90% of handwritten, hand addressed notes are opened and viewed – which statistic do you choose?)
YOUR CHALLENGE:  Take a look at the current networking you are doing and look for two ways that you can improve your effectiveness.