As an entrepreneur, you always strive for efficient use of your resources to achieve success. This is where the 80/20 rule can help you work smarter, not harder. This rule, also known as the Pareto Principle, suggests that about 80% of your results comes from 20% of your efforts.
Here’s how you can apply this principle to your business to optimise efficiency and maximise results:
1. The Golden 20%
The 80/20 rule implies that 80% of your company’s profit most likely comes from 20% of its activities. This means you need to identify the golden 20%. It could be from your customers, products or services. You then need to focus your resources and efforts on this group to maximise your profits.
2. Segmentation
Analysing your customer base or products/services sales can help you identify the top 20% within the group that is contributing the most to your profit. You can tailor your marketing efforts to attract more high-value customers. Similarly, you can allocate more resources to promote and improve on the higher profit margin products or services to increase revenue.
3. Time Management
If you feel like you always do not have enough time to run your business, the 80/20 rule is your life-saver. Start by focusing your efforts on the activities that contribute the most to your business success. You can also free up some time by delegating the less critical activities.
4. Cost Efficiency
This principle can help you optimise your cost efficiency. Study your expenses to identify the top 20% of your business costs. You can then find ways to reduce or optimise these costs while maintaining the quality and efficiency of your business operation. Let’s take the case of a coin laundry business. The top 20% of costs would mostly like be energy and water. Laundry business owners can focus on reducing such costs for the long term with energy-efficient machines.
5. Core Strengths
You can identify the top 20% of your business core competencies that significantly contribute to your competitive advantage. It could be your talented employees, product features or service excellence. The key is to continuously develop and leverage on these strengths to stay ahead of your competition.
Effectively applying the 80/20 rule is about focusing your efforts on the most crucial aspects of your business for maximum results. PLE Laundry Equipment Sdn. Bhd. offers high performing, cutting-edge commercial laundry equipment to help laundry business owner save on energy while delivering the best cleaning outcome for their customers. Contact us at 016-262 2965 or 03-5633 6405 for more information today.
