3 Theories That Can Make You Rich! (Part 3)… & 1 That Won’t!
Have you heard of the “Wealth Formula”? It’s been going around the Internet for a few months now and like most get-rich-quick schemes, it fails to live up to the promised claims…or profits. Complaints are now being logged in at the BBB and FTC website en mass much to the surprise of absolutely nobody other than the unfortunate souls that opted to send in their hard earned money. Of course, regular subscribers will immediately recognize this trend for exactly what it is…a prime example of rule number one covered earlier this week…the tendency to overestimate highly improbably “opportunities” while overestimating real risk associated with taking routine action. It is the same reason some people may dismiss today’s article as nothing more than hyperbole. As a social media management firm, we don’t operate in the realm of hyperbole – only the plain hard facts with sufficient stats to back it up. Why? Well simple, we must stake our reputation on results each and every month. Today is the third installment of “3 Theories That Can Make You Rich” with a short discussion on one that certainly will not.
Before reviewing today’s final theory, let’s take a few minutes to analyze 1 theory that won’t make you rich…it goes by a lot of different names but essentially they all boil down to the same thing; “think” or “believe”. Now, don’t get us wrong; the mind is a powerful tool especially when used creatively and constructively. The ability to influence one’s own fate is well known in psychology; there is even a term coined “self-fulfilling prophecy” which essentially states that what someone believes is more likely to become a reality because their attitude (and actions) are in alignment with this belief. But notice the last emphasis…actions. Thought alone doesn’t get anything done. The best attitude on earth won’t replace hard work or common sense and that is where the difference resides.
Scams – like the “Wealth Formula” circulating around the Internet – play on the emotions of people that want to believe in something better without providing the foundation for action. Without proper skills, knowledge and ability there is little more being sold than a hope and a dream. A dream that desperate people will cling to in the mistaken belief that success comes to those that believe it will.
On the other hand, there is a very real power of positive thinking. It’s well known to help maximize sales, enhance communication and improve relationships. Why does it work with the other doesn’t? Again, real tools are provided not merely hopes and dreams. One of these tools is a well known principle or theory called the Pareto Rule. It essentially states that 80% of profits will come from 20% of effort. Likewise, the top 20% of your best clients are likely to generate 80% of profits. It doesn’t take a rocket scientist to realize that amazing profit potential is possible by focusing on the top 20% of productive labor and the top 20% of profitable clients.
Although this may initially seem like a “No brainer” it is actually so simple that it easily overlooked. To put it another way…the “recipe” for amazing success is to do two things:
1. Focus all of your efforts on the top 20% of your productive labor. This means eliminating non-core functions. So for example, let’s assume a client owns a lawn care company….what generates profit? Well, doing lawn maintenance of course. But there are numerous non-productive tasks that go into the general business; acquiring new clients, billing, handling quotes and even machine maintenance. None of these actually generate a profit but are all necessary parts of running a business. Unfortunately they are time consuming and actually reduce the ability of the business owner to perform the duties which DO generate profits…ie, mowing lawns. To add insult to injury, the IRS rarely allows one to deduct the value of time spent on many of these important but non-core tasks. Imagine the additional profit generated by outsourcing non-core functions in order to focus exclusively on productive measures! In addition, when hiring outside help, time is automatically included in the total cost/quote so becomes a legitimate business expense.
Sounds Great doesn’t it?! Of course it does and it’s one reason more business owners than ever are outsourcing their social media management tasks to reputable firms who are able to handle all those routine social media marketing and outreach tasks. Automation enables far superior contact with fewer long terms costs and its increasingly possible to offset many support issues to the social media realm. But the benefits don’t stop there! Imagine if you could identify the most profitable clients and duplicate them..that leads us to the second stage of the profit equation.
2. Focus your attention on the top 20% of profitable clients. Let’s face it; clients aren’t all created equal. Some seem to require a lot more time and attention for roughly the same money. Others are a breeze to work with and pay premium rates. Which would you rather have? The second of course. Now imagine for just a moment if it were possible to gain more of those great clients…and fewer of those time consuming less profitable ones. With proper analysis, information insight and long term social media planning it often is possible! Social media provides greater access and information to metrics, consumer spending patterns and other data than nearly any other advertising and marketing method in existence.