With all of the political turmoil going on around us, I’m not about to get into a political debate here. Instead, I’ll refer to the line that helped make him (more) famous….”You’re Fired!” Yep, it’s a line that he seemed to take a lot of enjoyment from, as he fired the least performing person each week on the show The Apprentice.
Let me ask you a question; Do you understand which clients create profitability in your company and which do not? Most businesses have a certain type of clientele that consistently fail to produce profits. In the rental business this might be some of the smaller backyard parties or even larger events that have so much cost involved with them that they are simply not worth all of the effort and work to earn practically nothing in return.
Here’s a good way to find out. Make a list of all of your recent customers and rank them in terms of profitability. That is based on the NET profits, not the gross earnings. You might be shocked at what the numbers show. You may have heard of the 80/20 rule, also known as the Pareto Principal. In this case, it states that 80% of your profits come from just 20% of your customers. If you look closely, I’ll bet those figures are pretty close to accurate. So which customers are not worth the effort? Which ones are actually costing you money? Consistently purging your client list is a good thing. It means you will only be working for the clients you want to and who deliver you profitable results.
This does not just have to apply to customers, but can be used in all walks of life. I once owned a pontoon boat that was fully loaded with all the bells and whistles. I loved it, but I always felt bad that I was not able to use it more often. That’s when I discovered “Boat math.” I simply ran the numbers and discovered that each time I took the boat out, it was COSTING me around $450. I figured this by dividing all of the yearly costs, like slip fees, maintenance, gas, insurance, etc., with how many times it went out each year. $450 per trip was not worth it, when I could RENT a similar boat for less than half of what it was costing me.
What’s costing you in life and business? Take a moment and figure out ways to purge customers, and other things that eat up your profits without the returns you desire. And then say “You’re Fired” and start living life on your terms.
Ted Amberg's Blog 