Trailblaze & Grow Category: Entrepreneurship

Save Time

Analysis to Help You Stop Wasting Valuable Time

How useful would it be for you to know exactly where your time was best spent? How would it improve your productivity if you could quickly and reliably determine which customers were most lucrative for your business, and which ones were costing far more than they were worth holding on to? Fortunately, the ability to determine exactly that was established more than 100 years ago.

Back at the dawn of the 20th century, an Italian economist realized that he could mathematically calculate the fact that 20% of Italian citizens owned about 80% of the nation’s wealth. This equation proved to be valuable in analyzing far more than just the wealth distribution in Renaissance Revival-era Italy. In fact, the so-called “Pareto Principle” has been (and continues to be) used as an effective method of measuring distributions of wealth, effort, sales productivity, and countless other applications. This is because there is a fundamental truth — what some might call a philosophy — associated with the 80/20 equation discovered by Vilfredo Pareto.

What is the fundamental philosophy of Pareto?

At it’s core, the philosophy of the Pareto Analysis is based on an understanding of the fact that a relatively small percentage of input is responsible for a significant amount of the output. More specifically, that 80% of output can be attributed to 20% of input. This, of course, works when analyzing wealth distribution (as it was originally used by Pareto), but it also works in a number of other applications as well.

Perhaps the most compelling application — at least in our entrepreneurial and capitalistic society — is use of the Pareto Analysis when assessing productivity. More specifically, an entrepreneur, or salesperson, can usually attribute about 80% of their profit (or sales volume) to about 20% of customers. On the other hand, about 20% of customers often take up about 80% of the bandwidth available to an entrepreneur or a sales team.

The Pareto Analysis can be applied to any number of things:

  • Customers – both the time demands and their profitability
  • Daily tasks – where your time is spent productively and unproductively
  • Wealth – where the majority of your wealth is coming from, and where the majority of your expenses are derived
  • Anything else you can think of!

Using Pareto Analysis to become more productive

In order to use Pareto Analysis effectively, you must first be willing to accept a couple of facts: The first is the fact that some of your clients or customers may not be worth your time. Even if they are paying you what seems to be a valuable amount, the reality is that the opportunity costs associated with highly-demanding clients may be preventing you from gaining more worthwhile (in the long term) clients. The second thing you must be willing to accept is all work is not equal.

Not all clients are worth keeping. Many businesses, particularly those that are just starting out, are reluctant to turn down any work that comes their way. After all, money is money, right?

In fact, taking on a client that continues to be unprofitable or is demanding a disproportionate amount of your company’s time can ultimately prevent you from developing new, more profitable business elsewhere. You can use the Pareto Analysis to determine which clients are taking a disproportionate amount of your time (so you can try to phase them out) while also helping identify which clients are producing the vast majority of your revenue (so you can nurture and grow those clients as well).

Some of the work you do isn’t worth the effort. The bottom line is that you simply cannot do everything, and you certainly cannot do everything well. As such, you should use the Pareto Analysis to determine which specific aspects of your day are producing the majority of benefit, then work to eliminate or delegate/outsource anything that does not fall into that category.

Try using the Pareto Analysis yourself, and see if you can make your day more productive by eliminating the time consuming, unproductive tasks and focusing on the high-yield tasks.

Fundatmental Truths

Five Fundamental Truths from an Entrepreneur

April marks the 2-year anniversary for Trailblaze Growth Advisors. In that time, I have learned a great deal about what it means to be an entrepreneur and what it takes to succeed when I am directly responsible for my ultimate success or failure.

Being an entrepreneur is the most difficult but rewarding experience I have ever embarked upon. Looking back, I am so glad that I decided to make the difficult leap, and I hope that the fundamental truths I learned along the way can help other aspiring entrepreneurs on their journey.

According to a study by the Kauffman Foundation, the number of new businesses started by entrepreneurs is starting to increase to levels not seen since before the 2008 Great Recession, and furthermore is trending toward the massive numbers (in excess of 85%) seen during the boom times of the 1990s. In addition, the Wall Street Journal has reported that about 54 million Americans – or about one-third of the workforce – are now freelancers or contractors, and that number is expected to increase over the next few years.

Clearly, the trend is moving toward Americans charting their own path through entrepreneurialism, and my hope is that the lessons learned by previous and current generations of entrepreneurs – myself included – can be used to the benefit of the new generation.

With that said, the following are five fundamental truths I have learned over the past years as the founder of Trailblaze Growth Advisors.

Prepare for the leap

There is no question that making the transition from a full-time salaried employee to an entrepreneur with no income guarantee is scary. If you are fortunate enough to still have a “regular” job, make the most of this time by preparing for the leap to full-time entrepreneurialism.

Take this time to aggressively network with your target market. Make as many connections as you can, and try to establish yourself well before actually giving up the regular paycheck. If at all possible, try to start your entrepreneurial venture as a part-time project while keeping your job, so that you can make the transition as smooth as possible.

Don’t be afraid to ask for help

One truth that I actually found to be a bit surprising at first is how willing people are to help. The concept of paying it forward is alive and well, particularly among fellow entrepreneurs.

You should learn as much as you can from experts in your field and anyone else that has experience and expertise that could benefit you and your business. The key, of course, is to ask for their help. Don’t be afraid to ask, and remember to return the favor when you are in a position to help an aspiring entrepreneur sometime in the future.

Always remember that you are the face of your company

As the founder of your company, you are the brand – particularly during the early stages. In addition, you are the Chief Sales Person at your company. Every major deal will ultimately involve you, even if you have hired a sales team. For people who are natural introverts (like myself), this can be a challenging truth, but ignoring it, or pretending that it isn’t the truth, is simply counterproductive.

You need to always be ready to give an elevator speech and a sales pitch. If you are an introvert, that just means you need to put more effort into practicing.

Don’t sacrifice your being

This is perhaps the hardest lesson to actually execute. When you are starting a business, you are going to be working nights, weekends, and holidays. In order to differentiate yourself from your better-established competition, you are going to have to work far harder than them. However, it is absolutely imperative that you also reserve time for you. Stay active and exercise, meditate (if you don’t meditate, you need to learn—it is an absolutely essential practice for an entrepreneur’s mental health), make time to spend with family and friends, and do your best to maintain a hobby you genuinely enjoy.

The importance of making time for yourself cannot be overstated. If necessary, write it down into your schedule as an appointment to yourself!

Balance being flexible and knowing when to say no

When I was first starting out, I wanted to accommodate every client that came my way. Conceptually this makes sense, since the need to generate revenue for the business is paramount in the early stages. However, the reality is that not every client and customer is going to be worth the time it would take to provide them with the level of customer service you want to provide. Not all customers are profitable, so learning how and when to say “no” is an essential part of being a successful entrepreneur.

Hopefully you can learn something from the fundamental truths I learned during my first two years of Trailblaze Growth Advisors. It has been a great ride, and I am proud to say that Trailblaze Growth Advisors was named a “rising star” of VentureScape’s Office Hours Class of 2015 by John Backus.  Feel free to reach out to me any time at info@tbgrowthadvisors.com.

Photo credit: Julian Partridge / Foter / CC BY-SA