If you want to grow your business revenues much faster than you are now, it’s important to start focusing on the right activities in your business.
The key in achieving personal effectiveness is to focus the majority of your time on high- impact, revenue-generating activities that are most essential to your business. To increase your overall effectiveness, it’s important to know and understand how to accurately identify where you spend your time.
The 80:20 Rule
I’m sure you have heard of Vilfredo Pareto or at least Pareto’s Law. Pareto came up with an economic principle that said 20% of the people typically own 80 percent of the wealth. Two decades later, management guru Joseph Juran introduced this “80/20 Rule” to the business world, calling it Pareto’s Principle, or Pareto’s Law. Over the years, Pareto’s Principle has been applied to many areas of business, concluding that 20% of our efforts produce 80% of our results, or 20% of your team produces 80% of your results.
For you, this means that to increase revenues it’s important you focus on the right activities in your business and then hire, barter or outsource people to do everything else.
Multiply your business revenues and personal effectiveness many times over using the 80:20 rule.
Suppose your business has 25 different activities, such as sales, marketing, operations, finance, customer service and more. According to the 80:20 rule, 20% of those activities will generate 80% of your revenues. Conversely, 80% of those activities will generate only 20% of your revenues. Doing the math shows that 5 out of the 25 activities will produce four-fifths of all the income your business generates.
Now, assume that your business takes in $50,000 a month. According to the 80:20 rule, 5 of your 25 activities would account for $40,000 of your monthly revenue, which works out to $8,000 per activity. Conversely, 20 of the activities would produce only $10,000 each month, which works out to be just $500 per activity. Sixteen times 500 equals 8,000 so your top 5 revenue-producing activities are 16 times more effective than the bottom 20.
Suppose you took it even further and moved the 80/20 ratio to 90/10, so that only 10% of your activities produced 90% of your revenues. That would make you 81 times more effective than you currently are now. Merely by focusing your time and attention on the five or ten activities that have the highest impact on your business, you can increase your revenues and income by 16 to 81 times!
Here’s the million-dollar question: what specific activities should you be focusing on?
Here’s a brief three-step process to help you work more effectively in your business.
Step 1. Identify your Passion and Purpose
Passion is a very powerful emotion and is infectious. When you express passion, people are automatically attracted to it. When you’re passionate about what you do, your product or service speaks for itself. So the first big question is: what are you passionate about. What do you love doing?
Next, look at your purpose. Are you in business merely to earn an income, accumulate wealth or do you have a strong desire to help others and be a service to others?
When you can match up your purpose and passion, magic happens. It puts you in front of all the others who have lukewarm enthusiasm for what they do. What is your purpose in business, how does it match up with your passion, and how do you combine the two to make the world a better place?
Step 2. Identify Your Strengths
The biggest mistake business owners make is thinking they have to do everything themselves. Everyone has strengths and weaknesses. In order to succeed in business, you must get very clear about your unique abilities and then focus on them almost to the exclusion of everything else.
You will become a better business person when you identify your strengths and spend most of your time using them to perform the highest-impact activities in your business.
Step 3. Manage Your Time
When you’re a business owner it’s difficult to manage your time. What you can do is manage your activities by tracking where you spend your time on a daily basis and using that information to help you focus on high-impact activities.
One of your most important tasks is identifying the highest income-generating activities in your business and devoting a minimum of 80 percent of your time to those activities. This principle works whether you’re a “solo-preneur” with one product or service or a larger operation with a larger product or service offering and a team to support your daily efforts.
Monitor & Measure Your Activities
You can’t manage what you don’t monitor or measure so your first step is to identify where and how you spend your time. It’s important you identify what you are currently doing and what you should be doing, based on your highest income-producing activities.
For the next two weeks write down every activity you do in all areas of your business and how much time you spend doing it.
High income-producing activities include making a sale or something that leads directly to a sale. High-impact activities include producing a great website or making sure that your ad copy is properly written to make sales for you. These activities don’t directly make a sale, but they play an important role in generating revenue. To determine whether an activity represents one of your unique abilities, ask yourself two questions: What drives me crazy when other people don’t do it as well as me? What do I play at that other people consider work?
Track all your activities over a two-week period, noting how much time you spend on each activity each day. Before the two weeks is up, you will probably begin to see that you need to be spending more time on some activities and less on others. You will also begin to see that there are lots of activities that you should not be doing. This doesn’t mean they don’t need to be done, only that you should not be doing them.
What activities should you be doing? For the entrepreneur and small business owner, the highest income-producing activity is generating revenue. Every day, your primary focus should be on how your company will generate more revenue. If you’re not spending a minimum of 80% of your time on income- generating activities, your business will struggle to grow and increase revenues.
What about all the other activities that are just as crucial to your business? Here’s the challenge: For a small business, generating revenue must come first and management second. Otherwise your business will never grow to the point where management becomes as important as sales.
Revenues are consistently increased when the owner leverages his or her personal strengths through the use of other people’s unique talents and abilities. In other words, successful business owners focus on their highest income-generating activities and then build great teams around them to do all the other important activities they don’t do well.
It’s a fact, you don’t have to do everything yourself. Start focusing your efforts away from working in the business and focus them toward working ON it.
Make a commitment to yourself to spend one hour each day to identify which activities you need to be doing and tracking how you spend your time. Over the course of 365 days, that adds up to the equivalent of nine 40-hour weeks, or two solid months of working on your business rather than in it. Just imagine what you could achieve with that kind of concentrated effort!
Time to Take Action
- Keep an hourly log for two weeks of your business and personal activities during your working hours
- Determine which are the real high income and high impact producing activities vs. the tedious menial few
- Take consistent action and maintain focus every day to ensure you are focusing on the high income and high impact producing activities.
To receive an expanded whitepaper on this topic including a full worksheet on increasing effectiveness please email email@example.com or call Tania on 1300 76 49 20.