When things are not running as smooth as you'd like and
profits are not growing as much or as fast as you'd want them to, it may be time for a time-out, regroup and
go back to basics.
With more and more competition coming from all the four winds, with
more technology being available today than ever before, with boat-loads of information being bombarded at us
enough to make the most sane person crazy, it's easy to get lost and get confused about what really matters in
your business and it's easy to loose profitability, balance and
We've all heard about The Pareto Principle, a.k.a. the 80/20 Principle. As you
know, the principle can be applied to many situations, but in our context, we'll focus on the idea that
80% percent of the positive results in your business are driven by 20% of your activities. In other words,
approximately 80% of your profits are attracted by approximately 20% of your daily business
If that is true, then the best things to focus on are
those in the 20% category. So, the first thing to do is to thoroughly analyze your business systems to
determine exactly what is bringing you the most profits.
One way to carry out such analysis is to measure
everything. If it can't be measured it can't be managed. That's where the concept of "metrics" comes
Here's just a sample list of what you must measure in your business in order
to discover what is working and what is not:
Of course, there's more. Most of us know this already, but it does take some
focused time and effort in setting up the systems to track all those numbers, so... sometimes we just
don't. But that can set you up for very unpleasant surprises.
- Amount of money and effort invested in each of your marketing
- Number of leads coming in from each of your campaigns
- Your conversion rates - How many of your leads are actually becoming
paying customers, clients or members
- Your follow up programs
- The LTV or "Life Time Value" of each of your customers - How much money
each of your customers invest in your products or services in a 5 or 10 year period or
- Your operation expenses - including your business building mortgage,
lease or rent; your employees; your office equipment and supplies, etc
The time and effort it takes to create such tracking
systems are worth the investment 1,000 times over! If you've gotten that taken care of, good for you. If not,
it's not too late. Start simple and move swiftly through each component.
Once you know for sure what is bringing in the profits and what is actually
making you loose profits, it's time to get rid of all the waste and focus on the productive activities and
Every sport, every program, every profession, and every business has its
fundamentals. Find 5 to 12 crucial activities that bring in that 80% of the results.
Let's take basketball, for example. The fundamentals there are passing,
blocking, shooting and rebounding. That's where the focus should be both in practice and in an actual
game. It's easy to get side-tracked and get into activities that don't produce a high return on
In business, the fundamentals are:
a) Lead generation/attraction
b) Lead conversion
c) Product/service fulfillment
d) Customer service
That's it! So you define the fundamentals of each of those. Create your system
manuals and training program and enforce them. After that you evaluate your results through the metrics
systems you set in place and you're there!
Two great books that we recommend that will help you create a well-oiled,
money-making machine are: Michael Gerber's "The E-Myth Revisited" and Chet Holmes' "The Ultimate Sales
Machine." If you've read them, I'm sure you agree with us that they're two of the best books written on
the subject. If you haven't read them, we highly recommend that you invest less than $30 dollars (for
both... including shipping and handling) and read them as soon as you can. Both resources are listed on
page 64 of our eBook, "15 Proven Principles for Success in Business" if you want to learn more about
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