The Pareto Principle, also known as Pareto’s 80/20 and the 80/20 rule or principle, is a theory that states 80% of what happens comes from 20% of events. Thinking about this in business terms, 80% of what you’re experiencing in your business is a direct result of 20% of what happens. Because of the large effect that Pareto’s 80/20 plays in business, it is a critical component. In this post, you’re going to learn how it directly affects you.
Most of Your Profit Comes from a Small Number of Clients
If we asked you to think about your best clients, how big would your list be? Chances are, it’s fairly small. This is your core group of clients that provide most of your income. This is usually around 20% of your client base.
What does this teach business owners? Two things: it teaches them who to focus most of their time on (it’s much easier to sell existing clients on more services and to get referrals than it is to acquire a new client). It also teaches them the type of potential clients they should look to secure. Make an ideal client profile based from the characteristics of your best clients. This will help you refine your marketing efforts to attract the type of clients you really want.
Distinguishing Your Most Popular Services
Continuing on with the principle that 80% of your profit come from 20% of your clients, let’s use the Pareto principle to determine your most popular services. What are the services that generate most of your profit? Focus on continuing to sell these services. Look for complementary services that you could offer to current clients and to bring in new clients.
Keep in mind that we’re not saying that you should only offer your most popular service. You can and should continue to offer other services that your target market finds valuable. However, having this information can be a key component in expanding your business.
Determining the Best Use of Your Time Every Day
When you know which services and clients generate most of your profit, it is much easier to manage your time. Every day, your calendar or project management system should reflect the most profitable projects first (unless a task will take you less than five minutes to do). Then, add in other tasks. If you can’t get everything done, get help.
Clients ARM provides remote services for service based businesses such as engineering firms, law firms (including virtual law firms!), doctors, and businesses of any size. We can help with a variety of important administrative tasks that will keep your time open to handle profitable projects and grow your business. Some of our most popular services are accounts receivable, client intake, customer care, billing, electronic filing of insurance claims, and management of IOLTA trust accounts. To learn about all of our services, click here.
To learn more about how Clients ARM can help you better manage your time (and save you money when compared to traditional hiring), schedule your free consultation. Our seamless services are the perfect solution to businesses who want to keep their clients happy. Ready to get started? Give us a call now. You’ll be glad you did!