Many people are familiar with “Pareto’s Principle” or the “80/20” rule. In starting a new business, this rule is sometimes the make or break factor for whether a new business will stick around for years to come.
To refresh your memory, the 80/20 rule, as applied to starting a new business, states you’ll get 80% of your results from 20% of your activity.
Those activities in this business are:
- Implementing, measuring and refining the marketing, advertising and referral generation within your business. The goal is for your business to be able to establish the ideal balance between the quality of the response your marketing efforts generate with the cost associated.
- Educating your customers and creating new sales from the interest generated from your marketing efforts. This is a combination of not only sitting with enough people to generate the sales your business needs, but also honing your skills in this area so you can educate your customer and build value in the solutions you generate for them.
- Order fulfillment or operational effectiveness – this means applying the product cost effectively when it comes to running a CTi Dealership. What you charged your customer for the project, less what you spent for materials and the labor needed to install the project makes up the “Gross Profit” within the Dealership.
As you become more skilled in not only using the product more cost effectively, getting the project finished more time effectively but also building more value in your solutions and thus generating sales at a higher price with your customer all lead to greater profitability within the business.
Your first duty as a business owner is to figure out what activities make up the 20% that generate 80% of your results. Once you’ve figured this out, make sure you’re devoting your energies to these activities daily and minimizing the 80% of the activities that only produce 20% of the results.
