I’m a huge fan of the Pareto Principle . Everyone knows what it is, and if they don’t they should. It’s the rule that states that 80% of the effects come from 20% of the causes. Lots of people like to use this principle in business to explain all sorts of behavior. I like to think about products with a variation of that principle I call the “4 for 1 rule”. Its a derivation of the 80/20 principle and a strategy all businesses should employ once they have exited their infancy and have an established revenue stream.

The rule is simple. As a company, you are going to have a flagship product that started your company that you built your foundation on. Its the product that pays the bills, allows you to operate, and hopefully throws off some money so you can afford some Budweiser beer and BW3’s chicken wings (disclosure: long AB, and BWLD). This is the “1″ in the “4 for 1″.

Now that you’ve got that going for you, what comes next? Well, for starters you need to appease the 95% of your customer base that is appeasable. The other 5% aren’t humans, they just are robots placed on the planet to drop hate bombs on people selling stuff. That will take some time for sure and it’s a full time job. Your company is also going to be concentrated on growing your revenue through sales and that’s a full time job as well. With all of the hours of spare time you are going to have with nothing to do, you should also be strategizing about 4 other products to compliment the 1 that’s already under your belt (”4″ in the “4 for 1″). It doesn’t have to be 4, its staying under that limit that matters. These can be pipe dreams in your head, or fully functional beta products that you are trying to role out. The important thing to remember is to have only 4 product “ideas” officially on the table at any time. Too many companies I have worked for have spread themselves to thin. Chasing multiple products with capital allocations that don’t justify their ROI. Keeping this 4 for 1 rule keeps you focused and tight as a company. It makes you REALLY evaluate whether this is a product that will have traction in the market. It also helps you scale better when you get to that point.

Having multiple products isn’t for every business. Most small companies are happy with 1 product bringing in some dough and that is definitely fine. But if you want your company to someday go from small to medium size, keeping the 4 for 1 rule a priority will help.