Small Business Digital CoachGROW REVENUES BY 25 TO 100% OR MORE IN 90 DAYS OR LESS while reducing advertising cost and effort

In 1941, Joseph M. Juran, a management consultant discovered Pareto’s work and expanded it into a framework for use in quality control.

The 80-20 principle (also known as the Pareto Principle, 80-20 rule or the law of the vital few) was further popularized by author Richard Koch with the publication of his 1997 book “The 80/20 Principle”.

Since that time, small business owners have been subjected to various “experts” and “gurus” citing it as some sort of cure all for management headaches.

Many of these gurus have essentially taken what amounts to a useful observation and have made it a holy grail of management thinking.

In reality, there is another principle that I think has far wider application than even the 80-20 principle.

I call this principle The Precious Pearl Principle or The Rule of 1.

Let me illustrate this principle by presenting the following scenario:

Assume you are an emergency room doctor, and you have a gentleman before you who happens to have a cavity in his tooth, nerve damage in his arm, and a massive gash in his femural artery from which his life force is leaking out in a continuous red bleeding stream.

Which problem do you attend to first?

If you have any ounce of medical knowledge (or have ever watched more than 2 episodes of medical TV shows), you probably realize that you’ve got to stop his bleeding first and foremost.

The Precious Pearl Principle is named based on a parable told by Jesus (Matthew 13:45-46) in which a man/merchant went about looking for “Goodly Pearls” and after he’d found “a pearl of great price”, went and sold all that he had to buy the field in which he found the pearl.

The Pearl of Great Price was the highest priority action. In a business, your “precious pearl” is the highest return lever you can act on. In the emergency room example above, the “precious pearl” is closing up that bleeding artery. Everything else becomes subordinated to the priority of that action.

In the Theory of Constraints management philosophy first articulated by Dr. Eliyahu Goldratt, this “precious pearl” is known as the “Core Constraint”.

I plan a detailed treatment of the Theory of constraints later on. For this lesson, the important thing you should take away is that the core constraint finds its definition based upon a goal that you have set.

For instance, in the emergency room example above, your goal as the physician is to keep the man alive and nurse him to complete health. While there are at least 3 obstacles to your patient reaching his goal, the tear in his femural artery is the core constraint that should be dealt with.

What does this have to do with managing your small business?

Well, small business owners often struggle with priority and time management. Many of us spend hours and hours working on the “right things” in our business instead of the “most important thing”. If you find yourself multi-tasking, you’re probably working on the “right things” instead of the “most important” thing.

3 Important Questions You Can Ask Yourself Right Now

These are some of the questions that begin to come up when you focus on the “precious pearl” in your business.

In my marketing consulting practice, I take the approach that the highest return lever in most small businesses continues to be their marketing system. Within that marketing system, the “precious pearl” is to:

Develop, Define and Communicate Your Competitive Advantage; the idea, promise, or offer that differentiates your business from all other competitors (including “doing nothing”). This idea is also called your Unique Selling Proposition or USP.

If you haven’t properly developed an effective unique selling proposition in your business, every subsequent marketing effort and activity may yield sub-par returns. A USP makes every advertisement, every networking conversation, every marketing campaign work 5 to 20 times harder.

My work with my business growth consulting clients always, always, begins with an examination or development of a USP that actually works.