RONALD J. CAPPUCCIO, JD, LLM (TAX)


TAX, BUSINESS AND ESTATE ATTORNEY

QUESTIONS
856.665.2121

80/20 Rule

The Pareto Principle, defined in Wikipedia as:

The Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor sparsity) states that, for many events, 80% of the effects comes from 20% of the causes. Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. It is a common rule of thumb in business; e.g., "80% of your sales comes from 20% of your clients."

When applying this to sales, 80% of your revenue comes from 20% of a business customers. Also, 80% of sales are made by 20% of your sales force. Of course the real question is "do 80% of the profits come from 20% of the sales?"

STOP THE NONSENSE!!!

You don't need statistics to know that if you do not allocate your business resources to the high profit activities and customers, the net of your business declines.

Here are a few rules to increase your revenues:

  • Do Important Activities for Important Customers First.
  • Get rid of the problem customers. They take the most time and end up being the least profitable. Even if they are profitable, is life worth it?
  • Focus on the core areas of your business.
  • Target marketing and advertising to your core customers.

Remember, 80% of your results come from 20% of your effort! Call me at (856) 665-2121 today!