The 4% Rule For Moving The Money  Needle

The 4% Rule For Moving The Money Needle

This really became clear to me when I learned about ilfredo Pareto
Pareto was an Italian economist who became famous for his 80/20 rule. This is now commonly called the Pareto principle. He first discovered this rule when he found that 80% of a nation’s wealth was controlled by 20% of the population. As he studied this phenomenon more deeply, he found a disproportionate relationship between cause and effect in other areas of life, including real estate, growing crops, and all sorts of things:
20% of the input creates 80% of the result.
20% of the workers produce 80% of the result.
20% of the customers create 80% of the revenue.
20% of the roads cause 80% of the crashes.
And on and on…

 

In my deep dives into marketing psychology, I’ve found his 80/20 rule to hold true for almost all areas of business, including…
Popularity of products.
Sources of incoming leads.
Customer service problems.
Reasons customers buy.
Activities in your business that produce revenue!

 

And while you might have heard about the 80/20 rule, most people never truly apply it to their business let alone other areas of their life.
In business, the little stuff kills the big stuff. What I mean is that there are lots of small, nit-picky things in your business constantly screaming for attention, but these aren’t the tasks that produce revenue.
When I started to apply this in my business, revenue skyrocketed. To give you an example, here are my business activities:
All Business Activities
Checking emails
Writing copy
Speaking with clients
Having meetings
Creating Facebook ads
Checking stats
Creating systems & processes
Coming up with offers & promotions
Training/On-boarding staff
Creating sales funnels
Sending emails
Shooting videos
Recruiting
Running errands
Making webinars
Creating proposals
Scheming & plotting
Setting up systems
Looking at analytics
Public relations/Interviews

 

The 80/20 rule demonstrates you can and should disregard 80% of your business activities. They should either be delegated or outsourced so you can focus on the top 20% that produce revenue.
Once you’ve done this in your business, you need to take it one step further and truly become a high-performance entrepreneur. You see, you should apply the 80/20 rule to the 80/20 rule itself. That is to say, 80% of the 80% of the revenue comes from 20% of the 20% of your revenue-producing activities.

 

To put it more simply…
4% of your activities create 64% of the revenue in your business In my business, after cutting out the 96% of my activities that produced little or no revenue, this is what the top 4% revenue-producing activities looked like:
Revenue-Producing Activities
Writing sales copy
Coming up with offers & promotions
Creating sales funnels
Shooting videos
Doing webinars
Scheming & plotting
Because these 4% of activities literally bring in 64% of all the revenue for my business, I hired an operations manager and other team leaders to do all the other things that don’t move the money needle.

 

Sadly, here is where most entrepreneurs and top employees mess up. Instead of investing their time exclusively in their super-productive 4%, too many business owners and salespeople get caught up in the minutiae of the day-to-day 96%. All day long, they go from putting out one fire to another, never having a chance to invest time working on the 4% that moves the money needle and propels their
business forward.

 

So what are your top 4% revenue-producing activities?
Are they creating new offers? Motivating sales staff? Increasing lifetime customer value? Whatever it is, you need to figure it out. And once you’ve put together a list of these vitally important revenue-producing activities, it’s time to get to work and start automating and creating systems for just about everything else.

 

You shouldn’t invest your time in boring, low-value tasks. Because every minute you spend on low-value tasks or putting out fires is time taken away from the areas of your business that have the most leverage and the largest potential to make you money.

 

This goes well beyond business activities. You see, you want to audit your time and where it is being spent and where you are getting the most leverage. For example, are you still cleaning your house, cooking your meals, doing laundry,
and running errands?

 

This life admin work is nothing more than a collection of low-level activities that can easily be outsourced. But how do you know when it’s time to hire a cook or a cleaner?
The very first step is to figure out how much you’re earning per hour right now.

 

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