Forums: Discussions for entrepreneurs and small business.

I am looking for insights and pratical applications in business of the Pareto Principle (80-20 Rule). Thanks!

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Mike Michalowicz
Author of The Toilet Paper Entrepreneur

80% of your profits comes from 20% of your customers.

drop the other 80% of your customers and use that extra time to find more customers like the 20% that give you 80% of your profits

Where I work, it`s applied thusly:

20% of the people are doing 80% of the work.

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"Opportunity is missed by most people because it is dressed in overalls and looks like work." Thomas Edison

The 80-20 rule is like biorhythms.  It is only discussed as fact when it works out that way.  All other times when things don’t come out 80-20, the rule is never discussed.  It does not make mathematical sense in my opinion.

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Bert at Harvey Software, Inc.
Multi-Carrier Shipping Software and Supply Chain Solutions for Internet Retailers

Also a provider of free shipping information and resources at Harvey Software`s Parcel Shipping Blog along with free tracking solutions at TrackingPage.com...

Back when I read "The Bell Curve," there was a fascinating supplement at the end about statistics. This was (is) a book about IQ, what it means, and how it`s handled in western culture.

In any random selection of people, 1 person will have an IQ over 140. We know that as pretty much for sure. Better, in a randomly selected kindergarten, 1 child will definitely have a high IQ. Again, we can almost take that to the bank.

But we can`t point to which specific kid in that class, or which particular person in the selected crowd, and know with any kind of certainty if they`re "the one."

Statistics are a great tool in their context. But you can`t run your life on statistics. If we could know directly which 20% of customers were going to be our big market, or if we could know which 5% would do most of the creative work, that`d be terrific. It`d be like reading the future.

The thing is, we can usually only know this in retrospect. And as you know, hindsight is always 20-20.

You know Craig... I always enjoy reading your post.

Cartess

:-) I just needed a good way to work in the 20-20 thing.... 

CraigL... 

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Vincent Wilcox (a.k.a. KRAKR)
Drummer
My band: Letters Make Words

:-) I was gonna go 50-50, but figured I`d start low and negotiate upward if necessary. 

We used the 80:20 rule when it came to reviewing our product assortment -  20% of the products represented 80% of the dollar sales. We culled the bottom 20% of the list each year and added new items to replace them.

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