Fatality Rose From The Ashes Because Of Pareto’s Principle

Fatality Rose From The Ashes Because Of Pareto’s Principle

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Vital Stats

  • Players: Phillip Gimmi and Jared Koning
  • Company: Fatality
  • What they do: Inbound marketing and appointment setting
  • Launch: 2016
  • Visit: fatality.co.za

As a small business owner, we all struggle to find new customers. This is part of the burden of entrepreneurship that most people don’t like to talk about.

Entrepreneurship is hard, you need to be able to provide a great product/service at the same time you need to be the accountant, operations manager, do the HR and get the marketing done. Above all, you need to increase sales and grow the business.

We not equally good at all jobs, we usually have an area of mastery. When we spend time on things we not good at, we taking precious time away from what we are good at. We need to manage our business the way Pareto would have done if he were a modern day manager.

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Pareto and the Pareto principle

Vilfredo Pareto was an italian economist who lived at the end of the 19th century and discovered that roughly 80 percent of the wealth of the country was distributed to the top 20 percent and that 80 percent of the population only had 20 percent of the wealth and this ‘rule’ remained historically true.

He called this discovery the Pareto’s principle, it’s also commonly referred to as the 80/20 principle.

Years later after studying Pareto’s principle, an enthusiastic entrepreneur/management consultant by the name of Richard Koch had a stunning realisation about this economic principle. He realised it applied to management as well. He discovered that 20 percent of the work done gave roughly about 80 percent of the return, whereas the other 80 percent of the work done only gave about 20 percent of the return on the business.

 

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This research by Richard Koch was taken one step further by life long learner and adwords expert, Perry Marshall. He discovered that the 80/20 principal was just the tip of the iceberg. He spent months analysing his adwords account and realised that there was an 80/20 inside of the 80/20.

In other words 4% of all the search terms he used across all his accounts that he managed brought in roughly 64% of the qualified traffic. This applied to all industry and multiple countries. He further elaborated that their is an 80/20 to everything we do, all we need to do is take the time to work on our business rather than just in our business.

What to focus on and who to partner with?

The problem is that most business owners are good at the technical skill they sell and not necessarily good at finding customers or running a business. This means you get really good ‘lawyers’ ending up being very bad salespeople and business owners. They decided to be a salesperson when they have never been in sales.

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It’s like getting a law degree and opening up a surgical practice. It does not make sense. These people that sell the technical skill they good at may it be accounting, legal advice, human resources, graphic design, information systems etc. should focus on their strengths and hire for their weaknesses.

The difference between ‘in’ and ‘on’

fatality-south-african-logo

The other challenge that these business owners have is that they too busy working in their business and not spending enough time working on their business. They jump on the hamster wheel and go! When you ask them to stop and spend a few hours each day to work on their business they look at you as if you crazy.

Saying they can’t stop because they too busy. Ironically, they are only as busy as they are because they don’t spend enough time to find ways to do things more efficiently. They are literally keeping themselves stuck within their business working long hours and having an unbalanced lifestyles.

According to Michael E Gerber the entrepreneurial myth is a ‘technician’ who started a small business thinking they are an entrepreneur and then left wondering why the business is not working. They know how to do the work and mistake the work for running the business and this is a fatal mistake. Working on the business is not the same as working on the work within the business.

Key takeaway

These are the two biggest challenges both Jared Koning and Phillip Gimmi had to face before growing Fatality and helping 25 b2b based businesses. These two points are the some of the biggest internal struggles many entrepreneurs face and either don’t realise it or don’t talk about it.

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Once we overcame these two realisations, it only took a few short months to rise from the ashes, experience hyper growth and help many other businesses grow.

The first point is you need to identify where the majority of the impact is coming from and focus on making that work very well compared to trying to make everything work well. Additionally if you not good at sales, don’t try to be. It’s easier to become better at what you good at compared to becoming good at something you bad at.

The second point is If you to busy doing a good job for your customers business, you probably part of the majority that are neglecting their own business. If you are a skilled attorney in a law practice and you love being an attorney then get someone else to run the business so that you can do your best work first and always. Working in a business compared to working on a business could not be any more different than what it is.

You can overcome this like Fatality has done, by choosing the right type of partner so that you cover each others weaknesses or alternatively hire the right type of staff that covers your weaknesses. This way your organisation has no weaknesses and each person is allocated to their individual strengths.

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