There are two numbers every Recruitment and Search Business Owners should be obsessed with… 80 and 20!
Together they have the power to increase your business revenue and profits substantially without having to work any harder than you’re currently doing…
You may be familiar with the ’80/20 principle’, and it was discovered by Vilfredo Pareto, an economist who stumbled on the idea during his studies of the disparity of wealth in society.
In short, it means in any system the majority of effects come from a small number of causes. In Vilfredo’s case he found that 80% of the wealth was owned by just 20% of the people.
But you can see the 80/20 principle in full flow all over the place, everywhere you look… You wear just 20% of the clothes in your wardrobe 80% of the time.
Just 20% of the carpets in your home get 80% of the wear.
80% of the people live in 20% of the towns.
80% of people die from just 20% of the most common causes.
80% of crime is caused by just 20% of criminals.
80% of your profits come from just 20% of your sales.
80% of your headaches and issues come from just 20% of your clients.
80% of the revenue in your business comes from just 20% of the fee earners.
80% of all your results come from just 20% of your work.
And so on…
The numbers might not be 80/20, it could be 99/1 or 25/75 or whatever.
The point is, wherever you look in the universe, the principle holds; the overwhelming majority of effects come from a small number of causes.
This should get you VERY excited.
Think about your current business revenue.
Let’s say you’re currently generating £100,000 (or whatever your currency is) per year, working five days per week, Monday to Friday.
If the 80/20 Principle holds (and it does, I promise), then you’ll find you can make £80,000 of that £100,000 working just one day per week, say Monday.
So the question then is… would you take a 20% cut in pay for an 80% cut in your working hours?
You’d have to be completely insane to turn down an offer like that, wouldn’t you?
Because, you’d then have an extra four days a week to find ways of making that 20% (and a whole lot more) back.
All you have to do is discover exactly what 20% of activities generate 80% of your results, and then you can very quickly and dramatically improve your business simply by spending more time and energy on those things.
Simple, right?
And to take this even further, you can dig deeper with the 80/20 principle to further improve your results. So once you find what 20% of activities generate that 80% of your results, look a little harder and you’ll find that just 20% of that 20% generates 80% of the overall results.
So, for example:
If you’re currently generating £100,000 (or whatever your currency is) per year, working five days per week, Monday to Friday… then, using the 80/20 principle, you could generate £80,000 working just one day (or 10 hours) per week. Taking this to the next level means you could generate £60,000 by working just two hours per week.
OR even better… You can simply use your time more effectively and, rather than just spending two hours per week on the activities that earn 80% of the results, you could spend 50 hours per week (a 25x boost) doing the same activity and, all things being equal, boost your revenue to £1.5M (or whatever your local currency is).
Quite a jump from the £100,000 we initially started with, and without working any harder, just working smarter on the right things.
So the key is taking a deep dive into the numbers of your business, and find out exactly what gives you the top 80% of results.
From the fees you charge, to the type of clients you work with, to the terms you work on, to the activity you do each day, to the consultants in your team – get really strict with this, and the deeper you can go the better.
And once you have these numbers, ruthlessly cut the waste. Get rid of, outsource or delegate anything that is only getting you 20% of your overall business results.
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