Larry BraunerAccording to Wikipedia, the 80/20 Rule or Pareto principle “states that, for many events, 80% of the effects come from 20% of the causes”.

The 80 and the 20 are not exact. The 80/20 Rule is what’s commonly known as a rule of thumb.

The 80 20 Rule is an abstract concept, but it’s important to understand it, so let me provide you with some concrete examples that I believe will help.

The 80/20 Rule and You

Approximately 80% of all income is paid to 20% of all people.

The highest paid people earn substantially more than the lowest paid ones. This is a phenomenon of which nearly all of us are acutely aware, and it often seems unfair.

However, 80% of all productivity comes from the efforts of 20% of all people. These 20% of people are the ones who:

  • have a good measure of internal motivation
  • have a high level of personal productivity
  • consistently invest in personal development
  • commit to their goals and focus their efforts
  • leverage their money and their time

Needless to say 80% of all people follow the 20% of all people who lead them.

While 80% of people spend their disposable income on what Robert Kiyosaki points to as worthless items which they think are assets, the 20% live frugally and spend as much as possible on income producing investments that pay them over and over again.

While 80% of people trade their time for money, the 20% use their time to develop businesses that leverage the time of the 80% employees — and also outsource and sub-contract to other businesses in order to gain even more leverage.

The 80% of people tend to take it easy or look for get rich schemes and shortcuts to success. They follow the path of least resistance, and they settle for much less than they really want.

Are you in the 80% or the 20%?

If you’re in the 80%, ask yourself what shift in thinking could transform you into one of the 20%.

The 80/20 Rule and Other People

If you’re in the 20%, then you need to apply the 80-20 Rule to the people around you:

  • 80% of your work is done by 20% or your workers. Spend 80% of your time developing your most productive workers.
  • So too in a direct or networking sales business: 80% of your results will come from 20% of your team. Spend 80% of your time developing your most productive team members.
  • 80% of your business comes from 20% of your clients or customers. Your time should be spent conducting business with your best clients. There are some business experts who would go as far as firing the 80% of unprofitable clients. That may not always be feasible. In many industries such as health care or telecom firing costly customers could result in a public relations nightmare.

The 80/20 Rule and Social Marketing

Here are some Internet and social media applications of the 80-20 principle:

  • 80% of all blogging is done by 20% of all bloggers
  • 80% of all blog comments are made by 20% of all blog readers
  • 80% of all online social networking is done by 20% of all online networkers
  • 80% of all networkers flock to 20% of all social networking sites
  • 80% of all traffic goes to 20% of all websites
  • 80% of all spam is generated by 20% of all spammers

You can add to the list when you comment on this post — assuming of course that you’re one of the 20% of all readers. :)

You Can’t Know Everything

Expertise is a valuable asset when it comes to personal branding. As an expert you can teach and mentor others and differentiate yourself from your competition.

To become a top expert in any field requires years of dedication. You still won’t know everything there is to know.

You can generally acquire more knowledge than 80% of all people with 20% of the effort it takes to become a top expert. This feat often takes much less than a year. To overtake and pass the remaining 20% of all people might take many years or even a lifetime.

I like to call this particular aspect of the Pareto principle The Law of Diminishing Returns. Beyond a certain point each successive increment of result will require more effort than the previous increment. It becomes harder and harder to justify additional time investments.

In this era of specialization you can read a few books on a subject and know more about a subject than nearly everybody else. That’s the kind of expertise I’m recommending — coupled of course with some practical hands-on experience.

Invest your time to acquire knowledge that your prospective clients or customers will appreciate.

When I was a teen I worked and struggled obsessively to become a top chess player, and I succeeded.

Nowadays I prefer to grasp multiple subjects and to seek synergies among them: many types of data analysis, search engine optimization, marketing, social networking, blogging, etc.

My broad base of knowledge — fused with solid logic, trusted intuition and other abilities and skills — fuels my overall critical thinking outside the box strategy.

You Can’t Do Everything

Like it or not we can’t follow up on every idea or opportunity that presents itself. The Law of Diminishing Returns guarantees that. Therefore we must make value judgments and set priorities every day.

Fortunately the 80/20 Rule is on our side.

80% of all benefit accrues to us by accomplishing 20% of everything on our plate. Each day we ought to focus on a half dozen high priority agenda items that will move our businesses and our lives forward.

If only we did that consistently each and every day our lives would be filled with accomplishments and satisfaction.

Nobody however is perfect. We all have bad days. Yet, the 20% group prioritizes and moves forward with much greater focus and consistency than the 80% group.

Please don’t underestimate the power of the 80/20 Rule and the enormous potential of a modest 20 percent.

Did you enjoy this article? Subscribe to my RSS feed or by e-mail. Visit my About, Services, Media Buzz and Connect pages to learn about Building Your Audience and Brand on the Web. See also my Disclosure Policy regarding affiliations and compensation.

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Larry Brauner

What is Spam?

Wikipedia defines spam as “the abuse of electronic messaging systems to indiscriminately send unsolicited bulk messages”.

While most people think of spam as junk e-mail, Wikipedia points out that the term applies equally to the abuse of other electronic media:

  • Instant messaging
  • Usenet newsgroups
  • Search engines - This includes creating spam websites, keyword stuffing and social media abuse.
  • Blogs - Besides the computer generated spam a blog receives every day, there are people who believe that a blog’s comment space is some kind of billboard. The same people like to advertise on social networking sites in their and other people’s comment spaces.
  • Wikis - Wikipedia itself is a target of spam content.
  • Online classified ads
  • Mobile phone messaging
  • Internet forums - This is a first cousin of blog and social networking comment spam.
  • Fax transmissions

Spam is Offline Too

It is easy to extend the definition to include non-electronic media and communication:

  • Three foot rule - Anybody unfortunate enough to be standing next to the spammer gets an earful.
  • Car windows - This includes flyers on the windshield and sizzle cards between the rubber and the glass of the driver’s window.
  • Telemarketing and automated dialers - They really sound pretty much the same. It’s hard to tell which is real.
  • Rest room graffiti - Okay, maybe I am taking this a bit too far. However, I couldn’t resist. I’m sure by now you get the general idea.

Spam is Bad Business

Spam is anti-social, alienating and unprofitable, unless as Diane Hochman says, you’re going to do it right and set up an offshore server to blast spam messages to millions of inboxes.

Spam is highly inefficient and ineffective. Nearly everyone is turned off by spam or chooses to ignore it. Some forms of spam are illegal in many jurisdictions.

Forty-four years later, spam is a perfect example of Marshall McLuhan’s “the medium is the message”. The spammer’s methodology becomes the focus of attention rather than the message’s intended content.

Why Do People Spam?

Spammers mistakenly believe that spam is marketing. Spam seems like a good simple marketing shortcut.

Spammers are taught to play the numbers game. Somebody out there is going to fall for it. When spammers fail, they rarely consider that their spam “strategy” was flawed.

The Law of Attraction

Learning to market correctly takes time and effort, but it’s worth the investment. You will attract success. Spam only attracts failure.

Read my articles on online social networking, blogging and personal branding, and come join me to learn more at My Private Classroom.

Real marketing and personal branding shall prevail.

Please share your spam stories. Post a comment. But please, no you know what.

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Larry BraunerDiane Hochman spoke recently in My Private Classroom about moving the free line, a concept that every marketer engaged in list building these days ought to understand.

Internet marketing expert Brad Fallon explains the “free line” concept in this YouTube video:

Sales FunnelWiden your sales funnel at the top to let more people in, but don’t widen it so much that you have nothing left to sell. You have to find the right balance.

You can give away free information, training or product samples, even free trials of services. However, choose carefully where to move the free line, and once you’ve made that choice, stick with it.

Don’t let the customer move the free line. You do have a right to get paid.

Don’t miss any posts. Register, it’s easy, or subscribe to my RSS feed! You can also subscribe by e-mail.

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Larry Brauner

Home Business Survival Crash Course

People launch all types of businesses every day.

Despite enormous investment and months or years of preparation most new businesses fail. Their once well lit storefronts and offices are now dark, and their employees are searching for new jobs.

I don’t have precise statistics for a home based business. I estimate that perhaps 98% of new home businesses never earn a dime. If my estimate is too high, it can’t be too high by much. Don’t let anybody tell you otherwise.

My first home business with Excel Communications lost money for five years before finally turning a profit. I have since embarked on other ventures. Some have worked out well, and others not.

Let’s discuss why home based businesses usually fail and what you might be able to do to succeed. First I’ll share my thoughts about this, and then you’ll have a turn to express your point of view.

Reasons for Failure

The following list of causes for failure is arranged with readability in mind, rather than the relative importance of the contributing factors:

  1. YOURSELF - You have an uphill battle if you lack internal motivation, commitment, relevant skills (such as organization, communication, sales, marketing, online social networking or prospecting), proper training, posture, preparation, productivity, or some combination of these.
  2. Others - Other people can lack all of the above. Sadly, they can also lack integrity. I believe that people not doing as they say they will is very disappointing and the greatest business obstacle. Read the story of Orovo and Network Success Builders for a good example of this.
  3. Hype - Exaggeration and misrepresentation of products, services and business opportunities are all too common today as people try desperately to differentiate themselves from their competition in an over-crowded marketplace.
  4. Company Affiliations - Your success is likely to be tied to the success of a parent company. New companies are unstable and inherently risky to do business with. However, old companies tend to have insufficient momentum.
  5. Wrong Side of the Marketing Equation - Your cost per acquisition or sale exceeds the value of the sale. The more you sell, the more money you lose. Every business, even a major corporation, can find itself on the wrong side of the marketing equation.
  6. Over-Reliance on Systems - Your business depends on a system, and when that system stops working, just as systems usually do, your business also stops working. People who preach that people don’t duplicate but systems do are lying big time. Do not fall for this one! What is the truth? Please read on.

Work on Number One

You are #1. Your long term business success hinges upon your mastery of life and business skills and upon your growth as a person. Read books such as biographies, business books and books on personal development. Read blogs, watch videos and associate with successful people. You will improve your chances of succeeding in your personal life and your business endeavors.

Check Out People and Companies

Do the best you can to check people’s backgrounds. Request references.

Look up companies at the Better Business Bureau, and see if they belong to the Direct Selling Association — even though neither guarantees a company’s legitimacy!

Google people and companies alike, and don’t stop after page one or two. Keep going. Try adding in keywords such as scam, rip-off, accused, alleged, cheated, lied, stole, swindled, cheated, convicted, etc.

Limit the extent to which your success depends on people and organizations doing exactly as they say they will. Try to diversify your business so that it doesn’t collapse if a single person or company flakes or rips you off.

If you’re honest like I am, you’ll tend to place too much trust in others. Trusting people is good, but be sure to limit that trust and the damage that any single person or business can inflict on you.

Don’t Fall for Hype

Do you believe everything you hear? Then I know somebody who will sell you the Brooklyn Bridge. Old New York joke, but I can assure you that the joke doesn’t date back to before 1883.

All kidding aside, there are people out there who will say just about anything to get you to buy from them or to recruit you into something.

Do your homework. Use common sense. If something sounds not quite right or too good to be true, assume that it is until you believe that you’re proven wrong.

Consider getting a second opinion from a highly knowledgeable independent third party. Don’t ask Uncle Harry, your neighbor or your accountant. Ask an expert. You will probably have to pay for the advice you get, but the time and money you can save by avoiding a scam or jumping into a business with the wrong expectations may far exceed the cost of a qualified consultant.

Old vs. New Companies

Mange your risk.

Younger people can assume more risk than older people, because they have more time to recover from setbacks. A startup business will best suit a young person. High risks, high rewards.

Older people ought to be more conservative and choose a business with a proven track record.

If you are middle aged or older, here’s another option for you. Spend part of your time and energy on a new business that’s just launching and the rest of your time and energy building something safer.

Even a young entrepreneur can use this strategy, but it does have a drawback. It’s harder to focus on two ventures than on one.

Business Analysis 101

If you’re math phobic, this one is going to be difficult, but help is available.

Your cost per acquisition should be less than the net present value of your expected future profits from the acquisition, also called the customer lifetime value.

CPA < NPV

In plain English, don’t let your cost per sale (in both time and out-of-pocket dollars) wipe out your profit. You can never make it up in volume.

If you cannot figure this one out, get help from a business analyst or a qualified accountant. You’ll have to do your part. You will need to track your sales and your expenses very carefully in order to reach a correct conclusion.

If the basic marketing equation (CPA < NPV) doesn’t balance in your favor, consider using an ethical funded proposal to fix the problem.

Sell another more profitable product or service to “get the customer in the door”. Then sell your main product, service or business opportunity to the customer on the back end.

Systems Don’t Work

Last but not least, despite all the hype about the SpiderWeb System and the Reverse Funnel, systems don’t duplicate. They don’t work for long. In the home business world these systems produce a bunch of clones that run around competing with each other. Believe me, that’s not a pretty sight.

Unfortunately people don’t duplicate either. We know this from the childhood game of Telephone. The message always gets distorted. Any person can become a weak link in the duplication process.

Now, the one thing that does duplicate…

Leadership

Leadership does duplicate. Leaders will get the job done. If more leaders are needed, they will find them.

How do you find leaders?

Be one! Leaders attract leaders.

Now It’s Your Turn

Be a leader. Write a comment.

Did you enjoy this article? Subscribe to my RSS feed or by e-mail. Visit my About, Services, Media Buzz and Connect pages to learn about Building Your Audience and Brand on the Web. See also my Disclosure Policy regarding affiliations and compensation.

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Larry BraunerI’m working on an in-depth business article, but I decided to take a breather to make an important announcement.

Free Social Media Marketing Training

Until now access to the Web 2.0 social media training at My Private Classroom for Marketers had been restricted to private membership. Today that has changed. My Private Classroom is now open to all absolutely free.My Private Classroom My Private Classroom is a regular Ning social networking site, and you can add me there as a friend just as you would at other social networking sites.You will learn online social networking strategy, video marketing, social bookmarking, personal development and much more.

A Word of Caution

Before you head over to My Private Classroom, I recommend that you carefully read The Darker Side of Funded Proposals. A word to the wise will hopefully be sufficient.

Did you enjoy this article? Subscribe to my RSS feed or by e-mail. Also, visit my About, Services, Media Buzz and Connect pages to learn about me and my social media and web marketing services.

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