The 80-20 rule in business means that 20% of your time should be spent on the areas of your business that create 80% of your results.
This ratio can help you become more efficient and more profitable.
By identifying and focusing more time on the most important areas, you can achieve higher growth and better results.
Most successful businesses tend to focus this on their customers – they switch the balance round and rather than focusing on 80% of their customers that only generate 20% of their profits they spend more time on the top 20% of their customers that bring in 80% of their profits…
But the 80/20 principle can be applied to all aspects of your business, not just customers. It can be meetings, human resources and training…
Or, as in the case of Interface the products and services you sell…
In Richard Koch’s book ‘The 80/20 Principle – The Secret of Achieving More with Less, he told a great story about a modest company in Georgia, USA called Interface Inc. They sold carpets and made average profits.
They applied the 80/20 principle to their business and turned their company from an also ran into a winner.
Interface sold carpets mainly to business premises. They realised that 80% of the wear and tear occurs on only 20% of any carpet (the walk way areas, the areas under desks and by doors).
So, they altered their business model.
They now lease carpet tiles, so customers no longer need to replace a whole carpet when 80% of it is still perfectly fine.
Their customers lease carpet tiles off Interface and Interface frequently visit their customers, inspect the carpet and replace any worn tiles.
This application of the 80/20 principle has transformed the success of the Interface business which became a £500m success but also lowered costs for the customer and secured their future loyalty.
Are you applying this same logical 80/20 thinking to your business?
Start looking for 80/20 wins in your business, there will be more than you think… http://www.bvisionaccountants.co.uk/bitesize-the-80-20-rule/