We’ve
all heard of the 80/20 Rule. The 80/20
Rule means that in anything a few (20 percent) are vital and many (80 percent) can
be trivial. Business owners know that 20 percent of the work (the first 10
percent and the last 10 percent) consume 80 percent of your time and resources.
This
works in your personal life as well.
·
80% of your music
selection comes from 20% of your iTunes selection.
·
80% of your television
viewing comes from 20% (or less) of your channels.
·
80% of your
experiences comes from 20% of your friends and family.
The
same for us here at the TSBDC, since 80% of the TSBDC’s economic results comes
from 20% of our clients.
Some quick
background: The rule of 80/20 was first stated by Italian economist
Vilfredo Pareto, so the rule is also known as Pareto's Principle. Pareto
observed that 20% of the Italian population owned 80% of the wealth.
I
witnessed the 80/20 Rule while growing up and working in our family-owned furniture
store.
·
80% of our inventory
came from 20% of our suppliers (lots of Lane and Ashley stuff.)
·
80% of the advertising
results come from 20% of a campaign (everyone wanted 90 days same as cash.)
·
80% of our customer
complaints come from 20% of products (we once tried to sell lawn mowers…..bad
idea.)
The
concept is that just a few things are responsible for the majority of your
productivity. Just imagine if you apply
that to your business.
For
example:
·
If 80% of your business’
results come from 20% of your employees, you need to find a way to reward and
retain that 20%.
·
If 80% of your revenue
comes from 20% of your customers, you need to find more customers like that.
·
If 80% of your
customer service is spent on 20% of your customers, i.e. you may need to let
those customers go.
·
If 80% of your sales
come from 20% of your marketing efforts, you may want to find a way to expand
that particular marketing strategy.
You get
the concept. The important thing is to take notice in your business which 20%
of functions are responsible for 80% of your success.
