I have just heard that at the end of this month, there will be a massive hike in the price of petrol, well over 10%. This, coupled with the 12,5% Eskom tariff increase is going to hurt. How then will this affect inflation in South Africa?
I’m told by the experts that our inflation rate is around 4%. But my expert at home (my wife) says this is nonsense and her basket of groceries has gone up by more than 20%. Whether this is just her way of claiming more grocery money or not is by the way, but in my own practice my costs have gone up by more than 10% in the last year. And that is scientific because my costs are well recorded.
So how are these increases, and others, going to affect your business? If you increased your price by your own inflation rate would you lose market share? Only the really courageous will ever find out (unless you are Eskom). There is that old rule that 80% of your income is generated by 20% of your work (the Pareto Principle), and that if you are clever you can apply this Principle in your business.
You may have heard of an author and marketer named Perry Marshall, he authored the books “80/20 Sales & Marketing” and “The Ultimate Guide to Google AdWords”. In his books he is adamant that the Pareto Principle should be the primary focus for marketing any product. I must confess that whilst I understand the principle, I don’t have the courage to apply it in my consultancy Practice.
There are a number of people that take this theory to the extremes. Take, for example, Yaro Starak. He believes, and indeed has published all sorts of blogs and articles on the subject, that the 80/20 rule should be applied not just to your business, but to your entire life. He says that when you start to analyse and breakdown your life into elements it’s very easy to see 80/20 ratios all over the place. He says the trick is that once your key happiness determinants have been identified, it is easy to make everything work in harmony and avoid wasting time on those 80 percent activities that produce little satisfaction for you.
I must say that I really like the idea, but can it work? Probably not for me but maybe there are some of you that might enjoy playing with the idea. If you want to know more about this, just google ‘Pareto Principle’. It might just change your life.