Writing a Business Plan - Describing How Your Business Will Profit

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Is your business plan targeting your best market segment? You see, we are all created equal, but some of your prospects are more "equal" than others. According to a universal law, 20% of your prospects are 16 times more valuable than others. Let us learn how to use this powerful law rule to increase the revenue and profit of your what is 123 profit.

Rule of Thumb

Most salespeople readily see that most of their sales come from a few customers, but successful salespeople discover that the 80/20 rule of thumb applies to their customers. They know that 80% of their sales come from the top 20% of their customers, whereas only 20% of their sales come from the bottom 80% of their customers. Does this seem true for the customers of your business?

Universal Principle

Let us see why the 80/20 rule will work in your own business. This rule of thumb is actually a universal law that applies to any large random sample of input and output data. Pareto (1896/7) discovered that the relationship of inputs to outputs - in both nature and society - is consistently 80:20 and the log of this distribution is linear. Recently, Newman (2006) proved that, at equilibrium, the top 20% of inputs generate 80% of the outputs. Newman found that even the input-to-output relationship of random numbers approximates a straight line. This mathematician confirmed Pareto's discovery -- so evidently, the top 20% of your customers will generate 80% of your sales and 80% of your profit from customers.

Suppression of Pareto's principle

Without a doubt, Pareto's distribution of inputs to outputs should be as respected as the "bell-shaped" normal curve, yet knowledge of this universal law was suppressed. You see, people felt that 20% of the households should not control 80% of the wealth, and judged this fact to be so grossly unfair it was immoral. However, Pareto's discovery, like all universal laws, should not be judged nor suppressed. Should knowledge of the law of gravity be suppressed since people can die from a bad fall? Of course not! Neither should knowledge of Pareto's universal law be suppressed.