The Pipeline Principle

Pipeline

My father always has and always will be one of my greatest sources of inspiration and insight.  One of the things that I most respect about him, is his business acumen and work ethic.  I could spend all day describing what that looks like, but I think that a good portion can be summarized in one simple principle.  This principle is easy to understand, adopt, and follow and it has greatly contributed to my dad’s success in the workplace as well as my own.

Oil PipelineThe success of virtually every kind of business is contingent upon its production levels.  Farmers need certain yields, car dealerships need to meet sales quotas, manufacturers need to make specific quantities of parts.  If you meet those levels you make money, if you don’t, you lose money.  It’s a very simple concept.  However most people find that meeting a specific production level one month doesn’t necessarily translate into success in the next.  That is why a framework is important for avoiding that volitility.

Production conceptualized in terms of a pipeline.  What you produces flows through that pipeline.  If your production is high, your pipeline is full and you make money.  If it’s low, your pipeline is down to just a trickle and you don’t make money.  Therefore it is important to make sure that you constantly have business lined up to flow through your pipeline.  This in essence is the pipeline principle.

Let’s say you are a car salesman and you need to make $2000 a month to cover your basic living expenses.  You know that you make an average of $200 per car you sell and that 1 out of 10 customers you talk to buy a car from you.  In order for you to cover your expenses, you need to sell 10 cars per month.  Obviously if you only speak with 10 customers you probably won’t meet your goal.  That’s where your pipeline comes in.  Because 10% of customers buy a car and you need to sell 10 cars a month, you know that you will need to speak to at least 100 customers each month (i.e. you need 100 customers in your pipeline).

Like I said, this concept is extremely simple (you might even be thinking, well duh Steve).  If you’ve been struggling with production, take a minute to analyze your situation and figure out what you need to do to meet your goals.  You will find the pipeline principle can be used for just about anything; work, school, even dating (be careful though).

One Reply to “The Pipeline Principle”

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