The Pareto Principle means setting priorities for your business and your life.
How good are you at setting priorities? If you’re like most people, “setting priorities” means putting out the biggest fire! But if you think ahead and truly prioritize important tasks, your business, and your life, will improve. Using something called the Pareto Principle, otherwise known as the 80/20 Principle; you can get really good at setting and keeping real priorities.
Are you a leader or a follower? Author John Maxwell made a very thought provoking statement about being able to successfully set priorities: “Thinking ahead and prioritizing responsibilities marks the major differences between a leader and a follower.” So, are you a leader or a follower? Maybe the better question is do you WANT to be a leader or a follower?
If you want to improve how you set and keep priorities, then you need to become a better user of the Pareto Principle. What it says is this: only 20% of something is the most important part of 80% of the total. In business that translates to 80% of your business comes from 20 % of your customers. Want some other examples of how it works? Ok, 20% of your products bring in 80% of the profits of your business; or 20% of your job responsibilities give you 80% of the satisfaction in your job. See how that works?
Let’s break down how to apply this to the most important parts of your business. First, customers. You need to identify who your best customers are, and then put strategies in place to reward them for being your best customers. Make a special program for them. Include a referral program especially for them so you can add more to that 20%.
Next, products. What are your best selling products and accessories? Spend more on them than on others that aren’t selling as well. Discount the non-sellers and beef up the types that you know sell best. Spend your money on things that you know will bring in more to your bottom line.
Last, employees. Face it; you know that your top sellers are bringing in 80% of the sales. For your team, you must identify the top 20 percent employees. They do 80 percent of the value that is brought into your business. Then be a leader. Either train those who you think may benefit and get better, or fire them. Reward your best sellers with the best hours, or more of them and see your sales soar.
Use the Pareto Principle and begin setting priorities for your business and you will be successful.
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