Wilfredo Pareto discovered the 80/20 rule when he wanted to determine who owned all the lands in Italy in the 18th century. He found out that 80% of the lands holdings were owned by just 20% of the families. As he continued his research he soon discovered that many things fit that profile.
So how do we apply the rule to sales? Well as entrepreneurs we seem to manage to bog ourselves down doing all sorts of non-productive activities. Sure we justify them as necessary activities but in many cases we’re just doing busy work that could easily be delegated or maybe not even done at all.
Because sales are such a critical element of our businesses, it is the #1 item that owners ask for help or guidance when I advise them.
So here is my simple formula; until you have enough sales to provide you with sufficient revenue to cover your monthly fixed cost, including your salary, you should be spending 80% of your time on sales related activities, period! Make sure these activities are actual productive and really sales related. Too often, we classify all sorts of activities as sales related when in fact, they’re really not.
So what are sales related activities? Here’s a list of seven:
- Preparing prospect lists
- Making calls to the list
- Sending emails to the list
- Going to meetings with existing or prospective clients
- Preparing quotes or proposals
- Following up on quotes or proposals
- Cold calls if necessary
In other words, activities directly related to generating an order.
For some people these are unpleasant activities but as business owners you need to get over it and make this activity a priority otherwise you’ll struggle along for years.
The 80/20 rule for sales will help to keep you focused on what’s important. Thank you Mr. Pareto.
I’m Greg Weatherdon and this has been your Small Business Minute.
You may also enjoy “No Sales, No Business!”
Copyright © Greg Weatherdon 2016
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