Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
6 Aug 2025 · 3 min
0:00
In this episode of the Double Your Profit series, the host explains how the Pareto principle (the 80/20 rule) applies to business profitability. He argues that roughly 80% of a company’s results come from just 20% of its activities, while the remaining 80% of effort yields only 20% of outcomes. Listeners are guided through a three‑step process: (1) identify the low‑margin, high‑effort parts of the business that consume time but add little profit (illustrated with a $10 M construction‑service split where construction drags capital but contributes little profit); (2) ruthlessly eliminate or outsource those wasteful segments; and (3) double‑down on the high‑profit 20%—the core service or department that actually drives earnings. The host cites Tommy Mello of A1 Garage as a real‑world example of focusing on a core audience and scaling that profitable segment to explosive growth. The episode concludes with a call‑to‑action for listeners to share their favorite lesson and subscribe for future content.
Chapters
Welcome back to the Double Your Profit series. Today, the topic is the 80/20 rule of profit. The 80/20 rule is called the Pareto principle, and what that means is 80% of your results are going to come from 20% of your work, and 20% of your results are gonna come from 80% of your work. You pretty much heard that right. Most of your time, 80% of your time, is only gonna contribute 20% of your total results. So that means you have a bunch of time-wasting customers, you have a bunch of low-margin work, you have a bunch of busywork that isn't actually contributing to the bottom line of the business. So what do you do about it? The first thing is you have to identify what is the 80% that is bringing down the rest of the business. So an example for my industry would be new construction. If I'm looking at a $10 million company and $5 million of it comes from service and $5 million of it comes from new construction, my guess is that the new construction side is going to be a lot of work. It's going to take a lot of energy. It's going to consume a lot of working capital, but it's also going to contribute almost none Probably 20% of the overall firm's profit, whereas 80% of the profit for that firm will come from the service side. This can look a lot of different ways, but the first step is identifying what is taking up a ton of my time and what is contributing almost none of my profit. Once you've identified what that customer or business unit or segment of your business is, the next step is ruthlessly tearing it apart. You want to basically yeet that department out the window and get back to focusing 80% of your time On the thing that is actually contributing. Because so far, what's probably happening is the department that's contributing all of your profit, you're only spending 20% of your time on. What would happen if you spent 80% of your time on that department? It would contribute even more dollars to your bottom line. So we killed that department, and now we wanna make sure we're killing any other time wasters so that we can get focused on the things that matter. The biggest businesses out there have the least amount of things that they do. Tommy Mello at A1 Garage is such a great example. He understood his core audience. He understood the profit driving. He understood which department drove his profit, and he doubled and tripled down until it blew up to what it is today, which is the final lesson. Once you figure out what the 20% is that is contributing all of your results, you scale the shit out of it because that is how you scale a business. If you've been following along so far, please drop your favorite lesson in the comments below. I'd love to hear it and make sure you sub so you don't miss the next video.
