What assets did you create in 2017 that you can leverage? Plus… tips for not falling prey to ‘Bright Shiny Object Syndrome' … avoiding an ‘overweight' business that kills profit … higher level strategy with the 80/20 principle and MORE…
Transcript
Hello again. Dr. Sabrina here with more strategies for effective end of the year strategic planning as we're closing down 2017 and getting ready to go into 2018. I don't know if you're in any way like me, but I suffer from ‘bright, shiny object syndrome' and I love things that are new. I'm always looking at ‘what else could we add? and ‘how could we be doing things better around here?' When we suffer from bright, shiny object syndrome it can lead to an overweight business where we just pile more and more things on in our business without fully leveraging what we've already put in place.
So before you start thinking about all the new things that you're going to do in 2018, and rest assured, I'm going to get you there. But for today I want you to focus more on what you've already put in place in your business in 2017 that is working and ask yourself two questions. Of the things that are working, which systems, which processes need more work? Which ones are incomplete? Heaven forbid we have incomplete things in our business. I know I have tons of them. I have a long list of things from 2017 that we've implemented that are almost done, but not quite. So look for yourself, what is in your business that is almost completed, but needs to be polished, that needs to be honed in, refined to make it work more effectively?
What have you already put in place? Identify those things and then identify the things that you've put in place that are working exceptionally well. Put a big circle around those things, star them. Those are things that you want to look at going into 2018. How could you leverage those more, especially when it comes to serving top clients and customers? Anything that you've done that has worked exceptionally well in taking care of your top clients and customers you definitely want to be intentional about carrying that forward into 2018 and not just carrying it forward, but looking at well, how could you leverage it? How could you do more with that?
The other thing that is so critically important as we're reviewing 2017 is looking back and identifying the things that we've put in place that are not working so well, that did not get us the results that we were looking for and cut those things. Because that's where a lot of profit gets sucked right out of a business.
Along these same lines think about the lessons that you learned in 2017 as you conducted business. What insights did you have that you can take forward into 2018 and build on and also look at what were the breakdowns? What were the things that did not go well in 2017? The insights that you get from the breakdowns often can be the most valuable insights, because it tells you what you're not going to do again or you're going to do again, but do it differently.
Now I want to teach you a strategy and this is a higher level strategy and I typically just share this with clients, but I want to share it here with you as well, because I think it's going to be very helpful. You've heard me talk extensively about the 80/20 principle and applying it in our business to make our time more and more valuable as we're working on the business and we're looking at creating $10,000 an hour value with our time. So as you're doing your strategic planning, the 80/20 principle really comes into play, because you need to be aware of who are the top 20% of your clients and customers who are responsible for 80% of the revenue in your business.
As you look at what you've done in 2017 that you want to do more of, you need to look at, ‘how did those activities that we did in 2017, how did they impact our top 20% customers and clients?' And as you're looking at what you are going to drop and stop doing, you want to make sure it doesn't impact your top 20%, first and foremost. But also what's typically very illuminating is realizing that sometimes we have expenses in our business that don't do anything to serve our top clients and customers … our top 20%. Those are things that you should strongly consider stopping for 2018, because that's impacting your profit in a negative way.
So the question that I typically get asked at this point is, “Sabrina, well how do I do this 80/20 calculation?” I actually recommend that you look at 24 months' worth of revenue in your business. So identify what two years of revenue is in your business, get that total and then determine what 80% of that is. Then list out your clients and customers by revenue in descending order. So the customer that has paid you the most over 24 months is at the top of the list, on down to that customer who you might be negative on or maybe pays you a penny for something. That's descending order.
So once you've determined what 80% of the total revenue for 24 months is, you just start adding at the top of your list and keep adding the dollars up, the revenue from each individual client and customer. Adding that up until you get close to that total that is the 80% of your 24 months' worth of revenue. And then you draw a big line and you can quickly see which clients and customers are responsible for the 80% of your revenue in your business. Typically that's going to work out and follow the 80/20 principle, where that will be 20% of your customer base. It's not always a clean calculation, but this at least helps you clearly identify which clients and customers are responsible for 80% of the revenue. You're going to need that as we go forward and look at your strategic planning for 2018, because you want to be particularly mindful of how you're going to serve those top clients and customers better and better.
If you would like my help turning your business into a highly profitable, great place to work in 2018, fill out a profit maximizer application form at profitgift.com. Once you've filled that out we'll review your application and you'll get on a strategy call with a member of our team.
That's it for now. Keep your eyes out for part three of my strategies for effective end of the year planning.
Dr. Sabrina Starling, The Business Psychologist™ and author of How to Hire the Best specializes in transforming small businesses into highly profitable, Great Places to Work!
Employee problems can be one of the biggest stumbling blocks for any business owner. With her background in psychology, and years of driving profit in small business, Dr. Starling knows what it takes to find, keep and get exceptional performance out of your biggest investment-your employees.
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