2. Concentrate on the parts of the business that give the greatest return
There is a well known principle called the 80/20 rule which is the subject of a whole book written by someone called Richard Koch. Essentially the rule states that 80% of what you achieve comes from 20 % of the effort that you put in. In other words, a few things are important but many other things are not.
For example—20% of customers, markets and products/services generate 80% of profits.
It makes sense to use the 80/20 rule in your own business by identifying the 20% of your customers, markets, products and services that generate 80% of your profits and then explore what you can do to get more of your 20% customers, sell more of your 20% products/services and penetrate more of your 20% markets and channels. Also explore how you can make your 80% customers, products, services, markets and channels more profitable. And if that isn’t possible, consider scaling down or even withdrawing from these areas.
Balance Accountants specialise in helping business owners to have better, more profitable and more enjoyable businesses. If your business is not performing as well as you want it to then you should contact us now.