You probably know the Pareto Principle, aka the 80/20 rule: 80% of the consequences in any situation tend to result from 20% of the causes. For business owners, what this means is that 80% of your revenue comes from 20% of your clients, or 20% of your overall efforts. Thinking about your business valuation firm in terms of the Pareto Principle can help you operate more efficiently because it asks you to focus on the efforts that yield the strongest results. However, there’s another principle that can also deliver major efficiency benefits: the Matthew Principle. The basic version of the Matthew Principle is the old adage that says that the rich get richer while the poor get poorer, but it’s not as cynical as it sounds. What the Matthew Principle is really getting at is a question of leverage: It’s easier to achieve advantages when you start from an advantageous position. You can apply the Matthew Principle to your business valuation firm by identifying or creating seemingly minor efficiencies that will compound in value over time (and you know we all love compounding). Putting them in place early gives you a competitive edge your firm can build on for sustained, even exponential, growth. Outsourcing some of your key tasks can be one of those efficiencies, since it frees up the time and energy you need for cultivating client relationships and expanding your list. If outsourcing helps you complete certain tasks even 15% more quickly than you otherwise could, that’s not insignificant—especially not over the long term. According to the Matthew principle, these types of built-in efficiency boosts can promote major long-term growth.
