More Wisdom from Steve Clark

Thursday, November 05, 2009

More Wisdom from Steve Clark

Yesterday and Today, I'm featuring a couple of articles I received from Steve Clark:

"Let the 80/20 Principle Pay Off for You"
by Alexandria Brown

It pays to play to your strengths. But how do you pinpoint the areas that will increase revenue and earn you more money? Simple: by following the Pareto Principle. Developed by Italian economist and sociologist Vilfredo Pareto, this short, simple rule states that 80% of our results come from 20% of our activity.

You may have heard that we wear 20% off of our clothes 80% of the time, and the same 80/20 rule applies to business. For instance, 80% of your sales come from 20% of your customers. Conversely, 80% of your complaints come from 20% of your customers and 80% of the profits made in your industry come from 20% of the companies. The exact percentages may vary, perhaps 75% and 25% instead of 80% and 20%, but the concept remains the same.

By identifying customers and areas that are most valuable to you and your business, you can boost your bottom line without working longer or harder. In fact, you'll be working smarter. At the same time as you're finding your most profitable areas, you also need to think about those customers or products that are not performing well and may actually be dragging down you and your business.

For instance, if you own a secondhand music store, you probably have some inventory that is flying off the shelves and other products that just aren't selling, no matter how low you price them. By dividing your products in categories (perhaps by music genre), you could see which items your customers are buying and which ones you should stop carrying. By matching your products to customer demand, you'll be able to turn over inventory more quickly and make more money, all without adding more square footage or spending more money on advertising.

Here are some areas to consider in your own business:

*Employees - Who is your rock star salesperson and what you can you do to help them achieve even better results? Also, who is underperforming and might they be better suited to other tasks? Both are important considerations.

*Customers Calculate how much revenue you're getting from each customer and subtract the cost of administrative time or other costs to maintain that relationship. Once you've figured out which customers are in your top 20%, you can make some strategic decisions about how to better meet their needs.

*Markets - If you sell products to different markets, evaluate these markets with the same principle you used for evaluating your customers. The markets that are earning you the most money should become obvious, so you can start examining the direction in which the company is headed.

Once you've identified areas that aren't paying off, you have to be ruthless and kick them to the curb. Your business cannot flourish if you're spending valuable time and resources on customers or products that are unprofitable. Once you make the strategic decision to cull wasted space and focus on areas that earn more money, you'll have a much better chance of surviving, and even flourishing, in a competitive business environment.

© 2009 Ali International, LLC

Self-made multimillionaire entrepreneur Ali Brown is devoted to creating financial freedom for women globally through the power of entrepreneurship. To learn how to create wealth and live an extraordinary life now, register for her free weekly articles at www.AliBrown.com

Steve's Weekly Tip: Respect Yourself

Too often managers and owners of small businesses let somebody else do the planning.Instead of scheduling their meetings around their own timetables, they often set up meetings around other people’s timetables. It’s important to remember that your time is just as valuable. This is just one way to manage your time more effectively. Other tips include:

* Devote only an hour a day to answering your e-mails, if that. Many managers drop everything they do to respond to an e-mail or at least read it as soon as it pops up on the screen, causing distraction.

* Schedule time for yourself so that you can focus on a task without an interruption. That means no phone calls and no e-mails.

* It sounds obvious, but try to get eight hours of sleep each night. The more sleep you get, the fewer mistakes you make and the less inclined you are to waver from your plan of action.

* Don't try to do everything yourself. Hire good employees and train them well, then delegate some of your tasks to them.

* As for meetings, keep them short and to the point.

About Steve:

Steve Clark is the CEO of New School Selling, Inc., an international business development and marketing company. He consults and coaches business owners, sales executives and entrepreneurs to develop and implement more effective sales and marketing strategies that increase revenues and improve profit margins.