Imagine if 20% of the work in your consulting business created 80% of your revenue and growth!
What if you could make improvements that compound on each other, like compounding interest in an investment?
What if you could do it gradually over time and get 260% growth in a year.
You can do it.
While mentoring 27 private consulting clients over the last two years I began hearing the same obstacles and the same causes.
- Everyone was working hard in their business serving clients. Lots of hours for clients, but no time spent making their own business better.
- Few had time to work on their own business, growing revenue, making it more efficient and stable, and giving them more income and freedom.
- Few had worked on productizing their expertise, so they were trapped working for hours.
There is a solution to those problems.
Pareto Principle, the 80/20 Rule, and Kaizen
Part of the solution lies in Pareto’s Principle, the 80/20 Rule. Another part is Kaizen, continuous small improvements.
Pareto’s Principle is the 80/20 Rule. 20% of causes produce 80% of results.
Pareto Principle is a concept used to explain many effects in economics, business, society, systems design, biology, more. 20% of the input causes 80% of the results. For example,
- 20% of the clients are 80% of the revenue
- 20% of your work gets 80% of the notice
- 20% of clients cause 80% of the problems
It’s not always exactly 20/80, but in the large number of analytics I’ve run it’s usually darn close. Here’s an example from my own career as a consultant.
Kaizen is the Japanese business culture of continuous improvement, creating major impact by making continuous, small improvements. As solo independent consultants we rarely have the time to make major improvements, but we can do small changes over time.
A Real Pareto 80/20 Business Case
For the last 13 years of my 30+ year consulting career I consulted in strategic performance and digital marketing. One of the top content marketing software companies asked me to find which pages on their website contributed the most to the bottom line.
After a data dump and quick analysis, it was obvious that 80% of their website value contribution was produced by just 25 of the 735 pages on their website.
This prompted changes to the site structure, visitor flow, internal links, and content topics. That improved site results. Another win for Pareto.
Minimal effort, maximum results.
But wait. Your business processes have many interlinking parts.
What if you improved each of the parts.
Breaking up your consulting business processes into an interlinking chain makes it easier to find related processes to improve.
Breaking Your Business into a Value Chain
These interlinking parts are called the Consulting Business Value Chain.
This is the model I’ve seen in my mind for years. This independent Consulting Business Value Chain seems to model almost every client scenario I’ve had through 30+ years consulting, training thousands of businesspeople, and mentoring 27 consultants. It explains at a high level how to grow a consulting business.
What if you could make a 1% improvement in each link in the chain?
1% improvement in each link compounds to an 8.29% improvement for your entire business value chain.
In addition to thinking about your business processes as a chain, think about it over time.
Compounding Business Improvements with Kaizen
Kaizen is the principle of making small continuous improvements over time to get massive improvements in the end.
Kaizen is one of the simple principles that enabled Toyota to surpass US manufacturing for many years. (Eventually US manufacturers were forced to adopt Kaizen and the principles of TQM developed by Edwards Demming.)
Now, imagine using Kaizen to continue making small improvements and compounding those improvements over time.
What if you continued to improve performance in each link by 1%?
Your business isn’t static! It grows over time, and you (should) keep improving it over the months and years.
Compounding Improvement Over Time
You find a course and mentor who will guide you through the step-by-step methods, strategies, tactics, systems, and tools to make ongoing improvements to your consulting business?
What is that for a year? That would be 8.29% improvement per month compounded for 12 months.
That is (1+.0829)^12 or 260% growth in one year. You’ve almost tripled your company’s results in one year.
260% growth in one year!
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