Most of What You Do Is Pointless (But That’s Actually Good News for Your Business)

But don’t worry: most of what I do is pointless, too. Most of what we all do is pointless. Let me explain…

Way back in 1906, an Italian economist named Vilfredo Pareto noticed something remarkable: 80% of Italian land was owned by just 20% of the population. He was intrigued by this, so he did what any sensible economist would do and went to look closely at his garden.

There, Pareto observed 20% of the pea pods in his vegetable plot contained 80% of the peas. And so he named the 80/20 Principle.

The 80/20 Principle is a common rule in business and in life. (It won’t be exactly 80/20 – more like “big number/small number” – but you get the idea.)

For example:

• 80% of your profits come from 20% of your customers

• 80% of your headaches come from 20% of your customers

• 80% of your sales come from 20% of your products

• You wear 20% of your clothes 80% of the time

• 20% of your carpets get 80% of the wear

And so on and so forth, in all areas of your life. There are lots of other examples too, but we’ll focus on the first three today because that’s where your biggest wins can come from.

And it’s not only interesting (if you’re a nerd like me) – it means you can dramatically improve your productivity and profitability by focusing on the right stuff.

So, what to do?

First, I recommend you do a little customer sales analysis and find out which are your most profitable customers. Put some extra effort into contacting these customers – not just now, but in the future too.

They’ve proved themselves to be worth a lot to you, so give them the attention they deserve.

Start by sending them a little thank you card containing a special offer just for them. You’ll be amazed at the response you get.

Second, identify the customers who cause you the most problems. We all have them: they’re late payers, they take up loads of your time with trivial stuff, and they’re always after a discount.

Then ditch them. That’s right: stop doing business with them. They’re not worth much to you, and when they do put business your way it’s such a hassle it’s barely worth it.

My business got a lot more profitable and fun, and much less stressful, when I sacked my worst clients.

It was scary, yes. I was worried at the time because after all, money is money right? (Wrong, but more on that another day.)

It was a great decision and I absolutely don’t regret it.

Third, find out what your most profitable products or services are and develop them. How can you make them better? How can you adapt them to appeal to more of your customers?

What are your least profitable products or services? I bet you’ll find they’re also the most annoying ones to deliver. Or they’re the least relevant to your core business.

Perhaps you tried them on a whim? Which is fine, but it’s important to let go of your whims when they’re no longer serving you.

Perhaps most excitingly from a personal point of view, though, you can apply the 80/20 Principle to your time, too.

If you look closely at your activities, you’ll probably find 20% of the stuff you do daily produces 80% of your results, whether that’s at work or at play.

So start keeping a brief diary of what you’re doing with your day. Be brutally honest. Record every time you check your emails, wander onto Facebook or have a quick sneaky go at Angry Birds.

You’ll probably be shocked – I was when I did this exercise for the first time. But it was one of the best things I did.

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