By: Richard Koch

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#1: Vilfredo Pareto's principle explains the imbalance ratio of efforts to results

• The wealth of nations is controlled by a few minorities
• The principal means that a minority of efforts account for most of the output
• Only a few things are responsible for the vast majority of things we see around us
• A few steps are always essential in the grand scheme of things. Understanding this will help prioritize things that matter

#2: Use 80/20 to boost business profitability

• this principle can help you identify loopholes in your business. How?
  • Hire and analyst to study the 3 components of your business
    • Products:
    • Customers
    • Market position
  • how many products or product lines do you produce in a month, 6 months or a year?
  • Choose the most reliable stats and what are the sales and profits from these products.
  • This way you'll understand what customers buy the most and how often.
  • Also those that do not contribute significantly to your sales
  • Doing this you'll understand that only a few customers contribute to your business profit
  • Ask yourself these
    • Is it a price problem for the bottom 80%
    • Does your product not appeal to them?
• Your market share is determined by the number of people who love and consistently buy your products
• Creative ways to maximize your products and boost sales
  • Focus on serving the top 20% and make efforts to reduce losses coming from the bottom 80%
  • It's also a great idea to study your competitors. Understanding if you have the same product line and if their product is moving
  • Things that matter most must never be at the mercy of things that matter least

#3: Learning about your top customers will help you multiply sales

• There is a reason why your customers are buying from you and not the competition. If you can find out why, seek to do more of that and please them.
• After figuring out your top 20% you should figure out a way to keep them glued to your business.
• Knowing you top 20% should also impact your marketing strategy and business decisions
• Target your marketing at the top 20%
• Sales and marketing go hand in hand. Both are important to keep your business going