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The 80/20 Rule or the Pareto Principle is named after the economist Vilfredo Pareto who observed that 80% of the results are caused by 20% of the inputs. In business it means that 80% of your revenue comes from 20% of your clients. It serves as a general reminder that between inputs and outputs are, and always will be, imbalanced. For example, let's say you have 100 clients in your current business. It means that 80% of your revenue comes from 20 clients only. Logic says that you should focus on the top revenue generating clients more, but most of the time human nature takes over and we apply the same amount of work and attention towards all your clients, even though sometimes it would not be worth the time and effort to do so when compared to focusing on the top 20% clients. For example, sales agents who us feel that sometimes smaller clients actually take up more time to handle but provide smaller revenue or smaller margins.

So, taking this knowledge into account, how do we improve our bottomline?

Some businesses actually have rating systems for their customers. They keep track of how often they buy or use their services and also track how much margin they can get. The top customers usually get rewards for being loyal customers and get offered exclusive deals. The exclusivity and the rewards keep the client from shopping around for other service providers. Businesses like pay TV, although they would never admit it, have a system put in place in their massive call centers which, depending on the client's concerns, would get offered different deals depending on the customer rating. It would be taboo for businesses to openly admit they discriminate between their own clients, but look at it this way: which one would you consider doing business with, client A who pays on time all the time, you get high margins from you, almost never calls in about complaints and has been your customer for more than 10 years or client B who is always late on payment on a comparatively smaller bill, has a lot of qualms about your services and always threatens about shopping around for other companies while only been doing business with you for less than a year?

Some businesses actually focus on B2B (business to business) instead of B2C (business to consumer) because businesses are more likely to get more services or products from your company and are usually bigger clients. Let's say you run a computer repair shop and cater to 100 clients a month. They bring in their computers or you do house visits and you charge for those. Let's say you get a clean $100 off each customer. but your bottomline is around only half because of your operating costs. Your bottomline for doing daily work the whole month is at $5,000 a month. That amounts to $60,000 annually. Let's compare it to a business where you focus on offering you services to businesses that have servers and they call you in once or twice a year to do maintenance on all their office computers. You only take a day of work but charge $2000. Let's say you have around 20 clients and thus only work 20 days a year and get $40,000 for those 20 days of work that year. That means you can add more clients as you move along, and since you cater to businesses you can also hike up your asking price if they want more work or more complicated work completed. Which business model do you think is better and more scalable?

Good businesses focus on replicating their top 20% clients and focus on acquiring high-paying customers. Some businesses focus on getting more clients that have the same qualities as their top clients. Some businesses therefore cater to the high end only because of higher margins and have more capabilities of making big payments. It makes their workforce more efficient by focusing their efforts on those clients that provide the biggest revenue to them, instead of allotting them equally over all their clients. Though each client is important, it would definitely mean more to the company's bottomline if they failed to provide quality service to their top clients and lose them to the competition. It also applies to employees. 20% of your top employees provide 80% of your company's revenue. It doesnt mean that you should get rid of those 80%, but it would help for your business to take time and share their best practices with each other or undergo coaching or training so each of them brings more to the table and therefore improve your profitability.

The 80/20 Rule or the Pareto Principle is one important aspect of business that entrepreneurs should know since leveraging it to your advantage helps your business improve its efficiency and profitability.

The introduction of fast, cheap and accessible internet has made big and significant market shifts. Having a traditional brick and mortar shop is not really needed anymore nowadays for starting a business (depending on the business) as more and more people go to the internet to buy the things they need and have it shipped directly to their homes. Online shops are some of the most common types of online businesses that benefit from this. Companies like Amazon have made a living and has thrived in the age of the internet. A good store location generates a lot of foot traffic, but having an online presence opens your business to a global customer base without an overhead cost for rent. Businesses who fail to follow suit experience a slow and painful death as they can see how their sales can slowly grow smaller as months and years go by.

People nowadays have also moved from an acquisition model (buying goods and services) over to a subscription model. The introduction of high speed internet has given way to companies like Netflix or Spotify to dominate the streaming services market by providing their customer's shows or music on-demand, instead of buying or renting a physical copy of the. Blockbuster, a big movie rental chain in the US, used to be a big hit back in the 80s and 90s but is now more or less a relic of the past as video rental was replaced by streaming services. The introduction of the digital downloads and streaming services also killed off the local video game shop and music store.

If you are a company that offers customer relations management services and similar services like accounting or bookkeeping, everything can be done using cloud services. You don't even need an office for this - you can hire home-based employees and save money because you don't need to pay rent and pay for utilities. People also don't need to wake up and prepare themselves and travel to work. This flexibility allowed employees to work even during travel, something very important to business people.

Fast internet connections also allow small businesses to outsource work to other countries, which was usually only available to giant companies. Since most business processes can and are done using software, employees can collaborate over the internet. and as mentioned before, can even work from the comfort of their homes.

The age of the internet and social media also brought changes to how businesses communicate with their customers. Customer service has now shifted into customer engagement. Nowadays it is simply not enough to provide good customer service, but to also engage and talk on a personal level with your clients.

With enough creativity and business IQ, any business can become successful in the age of the internet. So one question remains: what's keeping you from becoming an interpreneur?