Word up Wednesday – The Rule of 80/20

One of my favorite things I learned from all those economics classes I took in college was the Rule of 80/20.  More formally called Pareto’s Principle.

The 80/20 Rule means that in anything a few (20 percent) are vital and many(80 percent) are trivial.  I don’t love the word trivial when talking about customers or time – but so be it, the definition.

You can apply the 80/20 Rule to a lot of things – but the one example that always stuck with me was  –

80% of your business comes from 20% of your customers.  Or – conversely – 20% of your business comes from 80% of your customers.  

OK – so what does this mean?  It basically means that a large portion (80%)of your sales, repeat business and referrals comes from 20% of your customer base.  So in terms of customer cultivation, you should spend more time and energy focusing on attracting and keeping those 20%.

Further explanation states that the “trivial” other 80% of your customer base only provides you with 20% of your sales.

The word trivial here implies that those customers aren’t important and you shouldn’t focus on this group.  NOT SO!  You still need to do things to attack these people, just don’t spend all your time on it.

Here’s a little background on Pareto’s Principle – this article gives a good explanation of how the rule came about.

The question you should be asking is – how can this be applied to my current situation?

• Well, if you’re in business, it is easy to see who are your repeat customers and what products and services are they buying and using.  (If you’re not tracking your sales, or if you don’t know who your top customers are – please call and let me show you how, it’s really quite easy).   I would venture to say that 20% of your customers are repeat customers who keep coming back or referring their friends to  you.  Likewise – they are probably providing you with 80% of your total sales.

• Another way to apply this rule is – 20% of your services or products are providing 80% of your sales.  So concentrate on those.  Take me for example, most of my readers find me on Facebook.  One of my “fans” will like a blog or comment on a post and that will pop up in their news feed.  Their friends see it and check out my page and hopefully become a fan too.  Of the other ways I promote my blog – Twitter, LinkedIn, web searches and tagging my blogs, Facebook brings me the most attraction.  My strategy should be to open up more conversations on Facebook and try to get more “likes” on that page.  Twitter and LinkedIn are helpful, and I should still work on cultivating those contacts – but since those two have proven to not be as “lucrative”, I shouldn’t put the majority of my time into those outlets.

• Here’s one more – I’m a member of my son’s PTA at his school.  We use the 80/20 Rule all the time when we are trying to estimate how many families we should plan on coming to an event or participate in a fundraiser.  We figure that 20% of the school is most active and that gives us a rough number of how many to anticipate participating.

Sometimes the 80/20 Rule doesn’t work, but I still try to apply it.  Usually it works itself out, but it gives me a jumping off point when I’m trying to figure an estimate on something.

Give me a challenge  – give me a situation and I’ll apply the 80/20 Rule to it.   Be it laundry, cleaning house, running errands, cultivating customers, – – give me your best shot!  I’d love to see how we can apply this rule to other situations.

Happy Wednesday Everyone,

~Amy

 

 

 

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Word up Wednesday – The P Words

Have you ever noticed that many higher positions in a company all start with the letter P?

Take a look:

President: Top executive responsible for a firm’s overall operations and performance. He or she is the leader of the firm, serves as the main link between the board of directors (the board) and the firm’s various parts or levels, and is held solely responsible for the firm’s success or failure. One of the major duties of a President is to maintain and implement corporate policy, as established by the board. Also called CEO (Chief Executive Officer) or managing director, he or she may also be the chairman (or chairperson) of the board.

Principal: “One of the primary persons” — either the owner, proprietor, sole shareholder, director, president, managing partner and the like.

 

Partner: Individual who joins with other individuals (partners) in an arrangement (partnership) where gains and losses, risks and rewards, are shared among the partners.

 

Proprietor: Sole owner, or one of the owners.

 

Do you run your own small business?   What is your title?

Have a great Wednesday!

~Amy

Word Up Wednesday…Audit

EEEKK!!!  Just the sound of word makes people cringe.

But let’s look at it – – it isn’t really all that bad.

Audit – (n). an official examination and verification of accounts and records, especially of financial accounts.

 

 

 

 

 

 

 

 

While we typically think of audits as financial accounts there are actually many types of audits – – think:

•  safety
• efficiency
• electricity/energy
• insurance
• and I know a certain someone who happens to write this blog who does Time and Energy Audits.

I think audits are actually a good thing and should be done from time to time in different areas of your home or small business.  Audits keep people honest and in compliance with codes and laws (building codes, tax codes, etc).  Audits can also find ways to improve your “systems” and help you “trim the fat” and  become more efficient.  Which will most likely help you save time and money.

Think about an energy audit done on your home.  Here an energy expert will come and look at your insulation, sealants (around doors and windows) windows, etc. and help you find ways to keep the heat or the cold in (whichever you wish).

Audits can cost money though, but this is a case where an independent audit and the money spent to have one done can end up saving you money in the long run.

If you are curious about the Time and Energy Audit I conduct, let’s connect! (There is no charge for the call – and I’m really nice).

Have a great Wednesday!

~Amy 

Word Up Wednesday – Brick and Mortar & Click and Brick

If you operate a little store from which you sell your products or offer your services in a physical location…you are operating a Brick and Mortar.  Likewise, if you have a physical location where your clients can meet with you, you are a Brick and Mortar.

A doctor would have a B&M location where he sees patients.  A gift shop or coffee-house is a B&M; customers physically go to the location to buy the products.

A Click and Brick is a combination of a physical location and also does business online.  If you operate a little art gallery where people can come in and purchase pieces of art but you also offer sales via the internet from your website or blog….you are a Click and Brick.

Many times you can enhance your presence if you offer an online option to your customers to purchase your products and goods.  Just be careful not to overextend yourself with online sales that distract from your physical location – by either taking away your attention from your walk-in customers or deplete  your inventory too much that your shelves are bare.  On the flip side, don’t forget about the online customers by having slow response times and shipping delays.

Are you a brick and mortar business that can add some “clicks” too?   This doesn’t have to be just a store….if you offer a service oriented business, you can extend your offerings to online customers or clients as well.  Let’s chat if you’re thinking of how to implement this option to your current business.  Shoot me an email or leave a comment below.

Happy Wednesday!

~Amy

PS – we’re going strong on my challenge this month to buy 100 copies of my eBook…Making Time for Dinner.  Have you purchased yours yet?  If so, send me your thoughts!

Word Up Wednesday – – Delegate

It is interesting when I looked up the official definition to this word….all I found were links to the upcoming elections.  Well – DUH – Amy – we are in an election year and there is lots of talk about delegates.

But I’m looking at this word as in – delegate – – like to assign part of your workload to someone else.

Delegate: v;  to send or appoint (a person) as deputy or representative.

I think one of life’s most valuable lessons to learn how to delegate.  Yet, I feel , for small business owners, this is probably one of the hardest things to learn and to do.

For me, when I was running my own business I had a couple of issues that set up hurdles for me to delegate:

1. I was very independent and felt as most small business owners, that I was able to perform every task needed for my company.
2. I was afraid I wouldn’t be able to afford delegating my workload to others.

Both of these situations are very common lines of thinking when I talk with other small business owners.  And one of the things I like about being a small business owner myself and now consulting with small business owners is the “I can do it” mentality.  But careful to not let this get in your way of yourself.   Yes, it is probably true that you can do “it” – whatever it may be.  But too many “its” and the service or product that you offer will begin to suffer.

It is important to take stock in the things in which you excel, the things  you with which you struggle and the things which you don’t like doing very much.

For example: when I wanted to convert my business from a sole-proprietor to a Corporation, I know in my heart and my mind that I would have been able to figure all that was needed to do this.  I mean, I have a BA in Business.  Surely, that should give me a leg up on knowing what to do.  But, I also admitted to myself that:

1. I am not a lawyer, and
2. I didn’t have the time to learn what was needed. Even from all I learned in college, I didn’t learn the intricacies of setting up a corporation.

So I allowed myself to hire a lawyer to handle this part of my company.  That was probably the best idea I ever had.  Not the becoming incorporated part (although that was pretty smart too), but the hiring a lawyer part.  He told me things about what was required that I didn’t even know I didn’t know.

A client of mine hates to do invoicing for her company.  I suggested she hire a bookkeeper to come in and do all her financials once or twice a month.  She did so and now she doesn’t put invoicing her clients off until the last-minute.  She saves herself many minutes each month not to mention the headache she doesn’t get anymore.

For personal or home management, it is important to realize where you can delegate certain tasks too.  Delegating household task can be to hired help, like a babysitter or a house cleaner.  But it can also roll into your kids.  Heck I’ve even delegated mouse patrol to my cat – – I mean – there are just some things I won’t do!

Seriously, there is no reason our kids can’t do household chores these days and I’m always amazed at parents whom I talk with that say “Junior can’t do that”.  And I ask…”have you had him try?”  I think kids as young as three should be delegated things to do.

WORD OF CAUTION!  I have learned it is best not to “delegate” household chores to your spouse or partner.  This gives the wrong impression that you are really in charge and/or have some superiority over your significant other.  It is best to use words like “share” or “let’s combine our efforts”.

One last thought – – trust.  It is important to trust the person to whom you delegate jobs.  Whether it is a co-worker you are asking for help on a project, an employee or a contractor…if you don’t trust them, they will fail.  And – it is oh so important to be specific in what you are looking for and when giving the details of the assignment.

Did you know I can help you with finding ways to delegate some of your tasks  – – and we’ll find more minutes in your day!  Give me a call…I’d love to chat and get things rolling.

Happy Wednesday!

~Amy

PS – we had a pretty good day, yesterday,  on our 100 for May challenge….will you help me sell 100 copies of my eBook, Making Time for Dinner this month?  Buy your copy today and ask your friends to do the same.  And thanks!