Why Do So Many Business People Ignore The 80:20 Rule??

Ray Stewart General, Marketing 1 Comment

I was discussing Richard Koch’s book “The 80/20 Principle: The Secret of Achieving More with Less!” with a client yesterday and it became apparent that lots of business people are either not aware of this concept, or do not know how to relate it to their business.

Richard says that 80% of our results come from 20% of our activities.  This can be seen to be true in just about any business I have had any involvement with as an Accountant and is something I continually tell people to look out for.

I have seen lots of examples of business people focusing on the small parts of their business that clearly produce exceptional results, and of the phenominal increase in the success of the business when those small core parts are developed and expanded.

If you look into your own business you will see many things you do as part of your daily routine that have little or no impact on the business turnover.

For example, let’s look at a one person business making and selling candles on the internet.  They will normally have to make the candles – a drawn out process for a specialist candle maker.  Market the candles, handle the orders for the candles, package the candles, weigh the packages, take the packages to the post office, buy the packaging materials, buy the candle materials, deal with customers and suppliers on the phone, by post or email, update the website and/or adverts,  design new candles regularly, keep in touch with existing customers to show new designs, contiually look at new ways of finding new business and raise awareness of the candles…and so on.

All of these activities are important for the success of the business, but look closely and you will see lots of the things needing to be done do not immediately produce financial results.  If you were that candle maker, which of the activities listed would you consider to be the 20% core activities that produce most of the income??  Would you think it was the selling?  the manufacturing? the packaging? keeping old customers aware of new designs?

I am not going to tell you now!!  That would be too easy. 

All I want is for you to look at your own business and see if you can see the 80:20 principle at work.  If you can see it, what should you do??

If you want astonishing success, you offload all the subsidiary activities that make up the 80% which do not directly affect your success immediately and focus on your core expertise.

Employ staff or outsource every single task you can that distracts you from your main objective and leave your mind clear to focus on developing the small part of your business that gives you 80% of your income.  Just think of the growth you can easily achieve by shedding work that other people can easily do for you.  If you can increase that core 20% of your business to just 30% initially, your business overall will grow by 40% – more than enough to pay for the staff, or outsource help that you need.  If you can increase that core 20% activity up to 50%, your growth overall will be 200% or more.

It sounds good in theory, but does it actually work?

YES.  Any business that has offloaded it’s bookkeeping to a dedicated bookkeeper, or bureau like mine, will tell you what a difference it has made to their growth.

Go on – have a look into your business and find just one task to offload to someone else for a week – and see for yourself.  Then find another, and another…..

You will never look back!!


Ray Stewart
I am a qualified Certified Practising Accountant having passed my final exams way back in 1981. I actually can’t believe that was 37 years ago!! Anyway, I am now in my 60’s and I have been running my own business since May 1983. And before you ask, no, I have never regretted a moment of it! Part of the membership requirements of my professional body now dictate that I spend quite a lot of time on “CPD” - continuing professional education (one of their better ideas) - and over the last two years I decided to study business growth and marketing. I have learnt such a lot and that knowledge has radically changed my old “accountants” approach to business. It has made such a difference to the way I work and operate I feel that I just have to pass on this knowledge. It is simply too powerful to hold back!! - but I will try and do it in simple terms rather than expecting you to spend hours, as I had to, working through the difficult language that trainers seem to use to pass on their concepts. I hope you find the blog a useful resource and interesting place to visit as the months pass. I will do my best to keep up the flow - but if there are any topics you would like me to cover, then please let me know. Ray Stewart
Ray Stewart
Ray Stewart

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