Whether you’ve been in business for 10 days or 10 years, at some point you have (or will soon experience) burnout. It could be that you are so busy working long hours trying to satisfy your clients’ needs that you just can’t handle the workload anymore. Or, more likely, you are so frustrated trying to find clients, reliable vendors, or affordable financing to keep things going that you just want to throw in the towel. It doesn’t matter which stage of business development you find yourself in; there are always difficult obstacles to confront and issues so challenging they sometimes make you want to toss your smartphone off a cliff and check into a spa for a month. Never fear, outlined below are reliable ways to stay sane while still remaining productive.
Live by the 80/20 Rule
There are certain rules of business that are simply too important to be ignored and the 80/20 rule is one of them. The 80/20 rule (also known as the Pareto principle) states that, for most events, approximately 80% of the effects come from 20% of the causes. The theory was originally developed by Joseph M. Juran, a business management consultant who named his astute analysis after the Italian economist Vilfredo Pareto. Pareto had observed that in his native Italy, only 20% of the population owned 80% of the land. In his quest to determine whether the rule had universal application, he studied his own garden and, to his surprise, realized that 20% of his pea pods housed 80% of the peas.
Understanding Juran’s work can go a long way toward improving efficiency and reducing frustration in your business on a daily basis. For instance, look back through the transactions you’ve concluded in the last year or review the activities you feel have yielded the most benefit to you; then estimate the amount of time spent on those activities. What you will likely discover is that a) not only were the majority of your business transactions sourced from a small percentage of your overall client base, but b) that same small percentage of clients only accounted for a fraction of the servicing time you spent on clients! The uncomfortable truth is that countless hours, emails, phone calls (and headaches) were likely devoted to a large percentage of clients that contributed to a small percent of business or no business at all. Worse, that larger non-productive percentage pulled attention away from the smaller percentage of clients that generated significant revenue for you.
Unless you’ve already integrated the 80/20 rule into your business practices, it is likely that you expend about 80% of your resources on clients that only return around 20% of your revenue; and 20% of your resources on clients that generate about 80% of your revenue. So now that you know about the 80/20 rule, what should you do about it?
Cull Your Client Base and Increase Your Bottom Line
If you are like many business owners much of the time you spend is on pro bono activities; meaning the customer you are working with wants something for nothing or the customer interaction does not immediately produce revenue. There will always be a need in business for free advice/assistance, and completely eliminating this time is not only impractical, but not a good thing, either. However, giving gratis advice and assistance must be a selective endeavor; it cannot take precedence over one’s general livelihood. You can certainly spend time assisting clients of value who may not immediately return business benefit; but spend only the time you can afford to spend with them, and determine in advance how much time that should be. For everyone else, create a fee or cost schedule to monetize your time spent over and above the free assistance that comes with their purchase of your product or service. This action alone culls out the serious queries and eliminates individuals trying to take advantage of your good will. It will also help introduce an additional revenue stream you may not have otherwise had. Truth is, asking for a legitimate fee is often the quickest way to get rid of time-wasters.
It’s understandable that the above tactic of introducing a cost for a service may not apply to every business, but almost every business has customers of some kind, many of whom are unproductive. Reviewing your client roster and eliminating those unproductive client relationships is an equally effective way to solve this problem.
One Ticket to Burnout Central
Have you ever spent a long time working on a business transaction that didn’t pan out, or been stiffed on a payment for one that did? Nothing will push you closer to the edge than a paycheck you worked hard to earn that never shows up. Unfortunately, both of these scenarios have befallen most of us, and if they haven’t, just wait; they will. What to do? Employ the following four practices to help mitigate your exposure to such unpleasant situations:
- Get everything in writing. It’s sad to say, but business is not a place where the words “I trust you” should ever leave your mouth. Whether it’s a promise from a client or a vendor’s commitment to follow through on an order, if it’s not inked, it doesn’t exist.
- Do your research. Save yourself endless anguish and major disappointment by knowing who and what you are working with. If you are searching for a lender, a website like lendver.com is the best place to start. For anything else, Google is your friend and almost any relationship can be adequately vetted online.
- Stay away from “too good to be true” business deals. If it seems too good to be true…it is. Stick to what works for your business and what you know. Unfortunately, there are a lot of scammers out there who pray on people and business owners looking for a once in a lifetime opportunity.
- Work with reputable and established partners. Companies who are laser focused on what they do and have built an industry reputation by doing it, are the business partners you should align with. For example, SmartBiz is the # 1 online marketplace for SBA loans and has provided over $1 billion in funding. If you’re looking for a working capital provider to partner with and make the process easy for you, SmartBiz is the way to go.
Peace of Mind
Avoiding burnout can’t be more vital to your longevity in business. Too many people start a company enthusiastic and determined to succeed, yet are out of business in under a year, burnt-out, disillusioned, and with less money in their pockets than when they started. This doesn’t have to be your fate, and by integrating a few simple fail-safes into your business plan, you can be sure to prevent it. When you’re building your client base, you may at first feel awkward being selective about which clients you take on, but that discomfort doesn’t mean you have to work with everyone.
You may feel desperate for business or believe you are obligated to take any opportunity that comes your way, but don’t do it! Choose wisely who you will commit to, because as much as the wrong client will ruin your month or your year, the right client or transaction could make your career. Have faith in the tools and resources that are available to you (OnDeck offers free resources to help small business owners). Spend the bulk of your time on the clients who will help you grow your business and make you the most money. It may sometimes seem that you are swimming against the tide, but if you stick to the 80/20 rule and the tips above, you will have what you need for your business to succeed.
Need a reliable and reputable lender to help you grow your business? Contact our 2019 Best Credit Line Lender Fundbox, or our 2019 Best Working Capital Provider SmartBiz, or our 2019 Best Business Term Loan Lender OnDeck.