There are over a thousand multinationals (MNCs) here in Ireland – some foreign-owned, some Irish-owned.
Those MNCs who generate a profit paid corporation tax last year amounting to nearly €23 billion.
The top 10 MNCs were responsible for 57% of that total.
Astonishing. Because 10 MNCs amounts to less than 1% of the total number.
The numbers are just one more recent example of the Pareto Principle – sometimes known as the 80:20 rule.
The numbers “80” & “20” come from Pareto, a 19th century Italian economist, who observed that 80% of the land was owned by 20% of the population.
The particular numbers though are not important. And neither do they even need to add up to 100.
The essence of the principle/rule is that a majority of effects come from a minority of causes.
And this applies in your business. For example, not all clients/customers are equal:
You get a majority of your grief from a minority of your clients.
Last week a client said: “Also – diplomatically advised a client today – we couldn’t help them ( they tortured me during covid) – and so I’d have been a busy fool! Not repeating“.
Well done him!
You get a majority of your profits from a minority of your clients. For all you know, you might be losing money on some clients. You could conceivably get rid of a loss-making client, do less work, and improve your bottom line!
You spend a majority of your time on a minority of your clients.
The list goes on.
So – what to do?
The Pareto Principle applies in all areas of your business. But let’s look in particular at clients:
If you have a system for ranking your clients – great!
If you don’t have a system – create one!
Then use it. Rank those clients and then take action on what the data tells you.
Ok – you might not be quite ready to be ruthless and cast some clients adrift. But at least tweak what you do to pay less attention to some and more attention to others!
PS: Sign up here to get my free ebook – “Get Off The Hamster Wheel: The Smart Small Business Owner’s Productivity Bible“. You’ll read it in less than 15 minutes!