Last night before retiring I read a weekly e-letter from a gentleman, Dave Rothfield, I met years ago in Florida. His wisdom reminded me of something I learned as a development officer and consultant for nearly 10 years of my life and career.
Basically Pareto figured out that 80% of something comes from 20% of a total “something”. In the case of fund raising development; 80% of all funds raised will come from 20% of a donor base. Each year I spent raising charitable dollars for several non-profit agencies, I did the numbers. Sure enough; between 75 and 80% of all funds raised in any given year came from 20 to 25% of the base. It never varied!
“So what“, you say. As a woman who owns a small business, I’m not involved in raising funds for a non-profit. I want to make a profit!
Of course you do. All women in business want to make a profit. We chase business – especially new business – when we ought be chasing the base we have that provides us 80% of our total revenue base. In other words, the 20% who do just that.
But isn’t it “new business” that provides our growth? Yes – and no! If chasing new business holds us back from developing deeper, stronger relationships with the folks who are already advocates of what we do; then the answer is a resounding NO!
However, there’s more to Pareto’s Law that we may miss because we don’t understand how to fully utilize and apply it to our current business strategy. We accept that a fellow developed his calculation hundreds of years ago and it held true for everything over time that it was named a “Law”; but we continue to avoid adopting it because someone – somewhere – sometime, told us to chase new clients/customers because that’s how a business grows!
Each of us has the same hours in each day, week, month and year. We can use them to run down new prospects – or we can divide our time using Pareto’s Law to do so. We can spend 80% of our time developing the 20% of our current customer base – and the other 20% on developing new business.
Let’s see! Assuming a 40 hour work week, that would be 32 hours spent developing, strengthening, deepening our relationship with the 20% who already know, like and trust us – and 8 hours developing new business relationships. But what if I said you could spend all 40 hours devoted to your 20% advocates – and still develop new business contacts?
“No way“, you say! Well the truth is you can do that. Without ever leaving your current business base! Without spending much of each work day out and about – racing and chasing – new business prospects at every networking event you can dredge up. Nothing wrong with networking; but you may want to consider networking the 20% who might go to the moon and back for you because of who you are, what you do, and most importantly – how you do it!
Whether we are a woman who owns a small business or one of any size – or works to build the business of another; we can apply Pareto’s Law in ways that saves us time, energy, effort and money! And we do it by developing our business growth strategy around the 80/20 rule.
We look to our current base of operation and develop our strategies with them in mind! We put our shoulder-to-the-wheel hours developing those relationships and a wee bit of time searching for new business outside the current base with folks we don’t yet know.
I could give you some pointers and ideas for how to do so; but then I’d be giving away something I teach and train on. But I will say this – let those who already love you, become advocates who will help you develop new business relationships that grow your business. Reward them for doing so and they will reward you back with new business.
The 20% of time left in the work week becomes developing relationships with contacts and connections provided you by those who would go to the moon and back for you and your business.
Wow! That’s a way of looking at Pareto’s Law from a very personal perspective. It does relate to “me” – and to “my” business. It is a way to utilize business time in better ways that save energy and effort with a much more likely pay-off!
Just a couple of things for consideration if you decide to give Pareto’s 80/20 Law a whirl:
1. Analyze your current base
2. Segment your base by the % of business they provide each month; quarter and year
3. Determine who your 20 percent-ers are
4. Develop a business strategy to best utilize what they do for you.
5. And include in that strategy what you can best do for them!
I suspect you might find that putting Pareto to the test is one heck of a way to use the time you have – and build a highly successful business.
For yourself – and those who know, like and trust you already!
Linda S. Fitzgerald, Visionary Partner
Champion of Ordinarily Extraordinary Women of the World
A Women’s Place Network, Inc. dba
Affiliated Women International
Neighborhood Boutiques-OPEN FOR BUSINESS
Empowering Women to Thrive
JOIN US HERE:
The Neighborhood at Facebook
Neighborhood Boutiques at Facebook
Image: Google Images
[author] [author_image timthumb=’on’]https://pbs.twimg.com/profile_images/2382941337/pjm5n494765lxfks49h7_400x400.jpeg[/author_image] [author_info]My passion is to see women become all they are designed to be – personally and professionally. I write, teach, mentor and coach with that passion in mind. As an author and prolific blogger, I reach out to women in all walks of life, especially women of faith to empower and equip them for greatness. [/author_info] [/author]