Business, Opportunity And The 80/20 Rule
In business and opportunities the 80/20 rule can be utilised much more frequently and to your advantage. In every walk of life the 80/20 rule seems to hold dominance. 20 percent of actors rake in 80 percent of the wages. 20 percent of sportsmen win 80 percent of the prize money. 80 percent of your business comes from 20 percent of your clients. The 80/20 Rule and how it affects your Business is quite simple.
So how do you use it in your business? Who are your core 20 percent of customers? They should definitely deserve more than 20 percent of your time. What about using the formula - your top 20 percent of customers deserve 40 percent of your time? When it comes to marketing 40 percent of your budget should be allocated to the top 20 percent. What about the time spent in business discussing and debating the issues? Most meetings and time spent focus on the 80 percent that is not important. Again analyse your time spent on each issue. If it is not that important to you or your business then halve the time you spend on in it.
Double the time you spend on critical issues which will have long term affects on your business. What about staff? 20 percent of your staff will bring in 80 percent of your business. Surely they deserve more than 20 percent of your time? Allocate 40 percent of your time and resources to the top 20 percent of performers in your organisation. They will feel respected and valued. 80 percent of your profits will come from 20 percent of your products. Spend more time and resources to developing your main products and less on trivial products that will never generate any useful income. Mr Richard Smith from System Designer says the following: "In R&D (research and development) we have the 90/10 rule - 90 percent of the design effort will be taken up by 10 percent of the project specifications. Often that 10 percent turns out to be bells and whistles that are not required. The key to it is spotting the 10 percent and convincing the customer they are wasting resources on features not required." "The key: Get to know your customer and their product.
That way you can deliver what the customer needs and not just what the customer asks for. (The two can be very different!)" Most business opportunities that are examined will end up being binned. Less than 20 percent will end up in generating an income or some profits for you. The 80/20 percent principle definitely works. What other areas of business could you use it in?.
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