End of the Year Tech Business Planning: 80-20 Rule

The end of the year brings a lot of fun things, especially here in the US. Thanksgiving, major religious holidays and of course end of the year planning for the next year.

What? End of the year planning is fun?

Ok, maybe not necessarily fun, but I always find it exciting to see how the year is going to end and swing it around into the new year.

Unfortunately, many technology business owners worry more about the end of this year versus prepping for the beginning of next year. It's a tough balance, but setting up for next year now is the key to a running start for the beginning of the next year.

For the next few weeks I'll be going over using your business metrics to not only see how you did this year, but also help you plan at least the first quarter of next year.

My favorite metrics are those that correlate to the 80-20 rule. They relate to clients, vendors, employees, contractors, marketing, sales and pretty much your entire business.

Today let's talk about the 80-20 rule as it pertains to your clients and client management system. Don't have a client management system? Then let's get you started now since it will help take a huge burden off of your shoulders at the end of every year.

Look, we've all been in a position where we picked up a client or two (or ten) that we just can't stand. Maybe we didn't see it coming and maybe we did and just saw it as more revenue.

Truth be told, bad clients typically make you LOSE money. That means you are better off not having them on your list at all. They serve no purpose to your bottom line or the sanity of you and your employees.

Part of your client management system should involve having policies regarding how you get paid (or how fast), how to deal with complaints, how accessible you and your employees are, and how you keep in touch with clients.

Additionally, you need to have some metrics to know how much revenue and PROFIT each client makes for you, how often you do work for them, and track how much effort it takes to keep them satisfied. That pretty much means using metrics to see how valuable they are to your business.

There are more pieces to client management systems, but these are some basics. When you have these metrics and tracking in place, you are easily able to apply the 80-20 rule on your client list.

So what do you do? You determine which 20% of clients cause you 80% of your headaches. Which clients are your bottom 20% in actually helping your business operate and profit.

Like I mentioned before, you are better off without these clients then with them. So your choices are to either tell them you can't service them anymore (and maybe find them someone else to service them if you think there could be a bad blood issues) or you raise your fees to them to the point that if they choose to pay it, you can handle having them stay as a client.

Often times for very low revenue/profit, but high maintenance clients, not only do they pay the money or ask you to not drop them, but they actually calm down and stop being a pain to you and your business.

Let's end this segment on this note:
No client that makes you cringe every time someone brings up their name is worth having. This is your business. You made it to provide a valuable service. You didn't build it to be someone else's punching bag. You deserve that respect so don't accept anything less.

As always your comments and questions are always welcome.


To Your Business Success-

George Sierchio
The Consultant's Coach