When it comes to growing their businesses, there are too many people that seem to focus on following the Law of Large Numbers. They feel as if the more customers and clients they are able to have, the more successful their business will become due to all of the work that they will be receiving. It is all a numbers game to them, which is why they want to focus solely on getting as many clients as possible. In theory, it seems as if this is the very best approach to take – especially if you are interested in making a lot of money. The more clients you have, the more money you make. That is so simple that a 3rd grader running a lemonade stand during the hottest day of the summer could figure it out. And by the way, when I was a kid, I had the worst lemonade stand ever. The table was wobbly and there was way too much sugar in the lemonade! I hope you never stopped by! Lol! Anyway, that’s another blog altogether.
It is imperative for you to realize that this is not the proper principle that you should be following if you want to experience maximum growth within your business. In order to make a maximum amount of money, you need to focus on a minimum amount of clients. Does that mean that you need to shut everything down when you have acquired a specific number of clients, placing a “Closed” sign on the door of your recording studio? Of course not! However, it does mean that you need to change your perspective when it comes to how much value you place into growing your client base.
You need to realize that the Law of Large Numbers is not necessarily the principle that you need to be following in order to effectively grow your voiceover business. Regardless of the type of business that you have, the best course of action to take would be to follow the Pareto Principle instead. What in the world is the Pareto Principle? That is technical name for what many people today commonly refer to as the “80/20 Rule.”
The Pareto Principle was originally developed based on a mere observation of wealth throughout Italy. It was determined that 80 percent of the country’s wealth belonged to just 20 percent of its population. This observation was then applied and proven to exist within many different aspects of life as well. 20% of the features found within the average product generate 80% of the usage. 20% of the complete list of computer viruses is what lead to 80% of the computer crashes experienced each year. However, what we want to focus on today is how the Pareto Principle applies to our clients – 20% of your clients will generate 80% of your revenue.
I know that’s a lot of numbers and if you’re like me, math was more than likely one of your least favorite subjects in school, so let me break this down for you even further.
Let’s say that you have been able to follow the Law of Large Numbers to grow your client base to the point where it has recently reached an amount of 100 clients. You might be ecstatic over this milestone, since (theoretically) it should spell long-term success and peak potential for your business. However, based on the Pareto Principle, 80 percent of the revenue that you are going to receive is going to be generated from 20 percent of those clients. If you generate $50,000 in sales this year from your business, $40,000 of it was generated by 20 of your 100 clients.
Regardless of the numbers that you place within this hypothetical scenario, the result is always going to be the same. You will clearly see just how powerful that 20% truly is to your overall success. What does this mean for us? How can we use this principle to take our business to the next level?
Identify the Core Group of Clients
You need to first be able to identify which clients are included within that core group of 20%. Pay close attention to the specific clients that have given you substantial amounts of work within the past year and then list them in order. Focus on the value of the jobs and projects that you have received, not necessarily the quantity. For example, one client that has given you five jobs totaling $1,000 is more valuable than one client that had to give you ten jobs just to reach the same amount. Creating this list will make it rather easy to identify your core group of clients.
Shift Your Focus to the Core
Once you have identified your core group of clients, then you need to make sure that they have your undivided attention. Now, this does not mean that you should immediately burn bridges with all of the clients that did not “make the cut” when you were identifying your core group. That would actually defeat the purpose, right? However, you need to make sure that your core clients are treated as your most valuable assets. Do you find yourself putting their projects on the back-burner just to address the needs of some clients that were featured at the bottom of your list? While this might be acceptable occasionally, what will happen if your core clients are always being placed on your back-burner? They will eventually find their way to the front burners of someone else’s stove.
Manage Your Business Based on the Core
If you truly want to take your business to the next level and increase your revenue, then you need to manage it based on your core group of clients. Focus on getting as much quality work from them instead of quantity work from everybody else.
Get the Law of Large Numbers out of your head when it comes to growing your client base and managing your business overall. The Pareto Principle (excuse me…the “80/20 Rule”) is the approach that you need to have from here on out. Stop stretching yourself so thin trying to please and satisfy the needs of the masses when not even one-fourth of your clients are truly keeping your business afloat in the first place. Doing so will also lighten your overall load because you will be able to identify the dead weight that is weighing you down in the first place.
Do not allow the clients that are not listed within your Core group to sink the ship of your business, causing you to drown in the sea of competition. Use that 20% to not only keep your boat afloat but to also assure that you will experience the joy of smooth sailing from this point forward.