Business is all about numbers, a good friend of mine once said. It cannot be farther from the truth. It is so true that this statement keeps ringing in my head all the time. However, after much thought and analysis,I started to notice patterns. My web hosting business, hostcats, does healthy business and we are always coming up with ways to get more clients. At the same time, we are doing our best to keep our clients happy. However, just look at what I discovered which would made Pareto say ” I told you so”:

80% of my profits come from 20% of clients: In spite of an apparently good cash flow situation, I realized that over 80% of my revenue actually comes from just about 20% of my clients. What do you think you can make out from this seemingly simple statistic? It’s a remarkable insight because we have about 80% of our clients who are non-profitable for us and still we do business with them. Instead of making us money, we bleed.

80% of my precious time goes to serve just 20% of my clients: Following from the point above, the reason why we bleed is because 80% of my clients who only contribute 20% of my revenue still take up enormous amounts of time and demand just the same resources such as staff, server space, server up-time, infrastructure and customer service. Time is lost on all these clients who demand more and more for their ever shrinking billing amounts.

Only 20% of my total expenses are justifiable ones: I am a total believer of investing into my business. However, I cannot invest if I don’t see a discernible return on that investment. I spend a lot of time and money on my business and a substantially large part of expenses goes towards “petty expenses. I have no control over these expenses and they occur for no reason whatsoever.

Could you do something about these facts and figures that might very well be a part of your business? Have you given a thought to your revenue and expenses?

Be Sociable, Share!

• 

1 Comment »

Trackback URI | Subscribe to the comments through RSS Feed