Ah, the good
old 80-20 Rule… The saying “Rules were meant to be broken,” certainly applies
here. It’s one of those things that can seem like a positive or a negative
depending how you look at it. Similar to the, “Is the glass half empty or half
full?” question, your view of The 80-20 Rule is all about perspective and
making sure yours is aligned with the goals of your business.
Perhaps it’s
frustrating that 80 percent of your efforts account for only 20 percent of your
bottom line. But, it’s also pretty cool that just 20 percent of your customers
and products produce 80 percent of your profits.
It’s all about balance. And, as you find that equilibrium, you need to know when to reconsider The 80-20 Rule:
1.When More Selection is Required
There are times when one size does not fit all. You may provide the best
gosh darn spicy mustard the world has ever tasted, but sometimes a spicy
mustard isn’t the right mustard choice. There are circumstances when a classic
yellow mustard is preferable. Or maybe there’s a recipe that calls for a Dijon
mustard…
The point being: There are complexities that require consideration and adjustment on your end. That might manifest in a variance in investment strategies, production process, or product offering. Small tweaks to your 20 percent can result in a major boost in profit.
2.When The Present Does Not Reflect The Future
While a company’s best product and most loyal customers will consistently
account for a higher percentage of sales and profits, there are instances when
those factors are not reliable in the long run. Sales may drop as necessity
decreases and/or newer products/services become available. Competition is
always a factor and, during a time when technology constantly and rapidly
changes, your current best seller may not always be in high demand.
If you only focus on what’s doing well now, you’re bound to experience adversity in the future. If you rely to heavily on one thing, you inhibit potential growth. There is a simple need to develop and test new products to advance and survive.
3.When Expansion Creates Opportunity
Opportunities to expand your market will arise and the investment may not
be a part of your current 80 percent. These instances are worth serious
consideration—especially when the investment is minor. You may open up the door
to a broader 20 percent. For example, babies’ diapers are still the major
market segment, but adult diapers are the fastest growing segment. Expanding
your offering (this may include accessories, convenience items, or new market
segments) can draw in a wider customer base and that is never a bad thing.
One last
thing to consider: Diversity Requires Variation
Many markets
rely on analysis, which is based around the assumption of a bell curve where
the bulk of a population is around a center number and then distributed evenly
around that number. For example, the average U.S. adult male is about 5 foot 9
inches and 75% are between 5 feet 4 inches and 6 feet. However, if you start
segmenting by age, race, ethnicity, and country of origin the distribution
becomes much more complex. The average Danish man is almost 6 feet tall while
the average male from India is 5 feet 5 inches. In both cases using an average
of 5 foot 9 inches would miss much of the population.
Therefore,
it is beneficial to dissect your target consumer and consider multiple
offerings based on the possible variations that exist within that group.
In the end, The 80-20 Rule is still a reliable
tool in most cases, especially when trying to eliminate excess product or hone
in on top buyers. However, as always, exceptions to rules always seem to be
where the fun happens—the chance to maximize growth as you reassess opportunities,
trends, and market segmentation.
We’d love to hear about your
experience improving business performance by adding or reducing offerings.
Have questions? Call (at 914-632-6977) or email us for a FREE analysis and discussion regarding your offerings. We’d love to help you design a personalized solution.
A customized approach that caters to each of his clients’ specific needs is what sets Dr. Bert Shlensky apart. With a PhD from the Sloan School of Management at M.I.T., he focuses on implementing individualized strategies that have helped countless businesses increase sales and profit. He knows what works and has the experience and expertise to help you take the steps necessary to achieve your business goals. Visit StartupConnection.net today!
At StartupConnection, we’re all about delivering blogs that are not just informative but also packed with actionable insights. We understand that information overload is real. So, we’re testing a new approach – a blog solely dedicated to parameters, giving you the space to prioritize what truly matters. We’d love to hear your thoughts on this, so feel free to drop us some feedback! In this post, we will be discussing optimizing strategies regarding making decisions and taking action.
Developing Programs with Precision
Sometimes, we’re so engrossed in creating programs that we forget about the parameters needed for optimizing strategies. Let’s simplify it. Here are some straightforward tips to consider parameters effectively:
Crafting Your Money-Making Plan
The “Pro Forma Income Statement”
This may sound a bit grand, but it’s your roadmap to cash flow.
Consider how a big marketing budget can affect your income. It may seem counter-intuitive but spending more on marketing might just boost those unit sales.
Investor-Worthy Plans
Investors crave plans but hate wild guesses. Be the entrepreneur who delivers realistic projections using templates. Specific numbers matter, even if they’re just a start. Remember that sales volume goals and pricing strategies are the building blocks of any plan.
Holistic Planning
Comprehensive Considerations
Levels of marketing, overhead, and administrative costs – they all play a role. Analytical, social, and intuitive considerations should also blend seamlessly into your plan.
Adaptability is Key
The world changes fast, and so should your strategy. Regularly review parameters like population, economy, and social values. Stay updated as the latest variables might just be the game-changer.
Navigating Cause and Effect
Decoding Relationships
Cause and effect can be spurious. Relationships involve a mix of factors. Analytics is critical, but don’t ignore intuition, risk, and low probabilities. Just like Gates, Bezos, and Jobs – master the art of thinking outside the box. It is the outliers and risktakers who create much of the innovation, excitement and change in our society.
Managing Bias and Embracing Risk
Navigating the Bias Maze
Bias, especially in small businesses, is human. Be mindful; assumptions, analysis, and data can sway your decisions. Consider different age groups without falling into bias traps.
Risk and Outcomes
Predicting results with historical data is straightforward. However, for new programs or inconsistent data, it’s about educated estimates. Embrace risk as it’s where innovation thrives.
Commit to Action
Nike’s Wisdom: JUST DO IT!
Not making a decision is a decision in itself. Recognize the importance of parameters in your decision processes.
Balancing the 80-20 Rule
Strategic Account Maximization
The 80-20 rule suggests maximizing old accounts with increased potential before reaching out to new accounts. Balance critique with support, collaboration, and teamwork.
The Expertise Quotient
Seeking and using expertise might be the missing link in your strategy. Collaboration enhances effectiveness, so let’s focus on teamwork as well as obtaining expert support.
In summary, understanding and incorporating parameters into your decision-making process is the secret sauce for success. So, let’s navigate these parameters together and remember that optimizing strategies will help to pave the way for effective and strategic decision-making.
Contact us for a FREE evaluation and get an alternative perspective on your business. We’d love to help you identify ways to adapt to current trends. No one has time for BS—so we’ll cut straight to the point and answer any questions you have. Reach us at:
Dr. Bert Shlensky, President of StartupConnection.net, has an MBA and PhD from the Sloan School of Management at M.I.T. He served as the President of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. More than 2,000 clients have benefitted from his business acumen over the course of his long career. He now focuses on working with select startups and small businesses. Please visit our website: https://www.startupconnection.net/ for more information.
To effectively gauge opportunities and tackle challenges, take charge – a handy tool is reviewing your past results, current challenges, and potential opportunities down the road. While a bit of analysis and number-crunching can be beneficial, my advice is to keep things informal and swift. The key here is to concentrate on spotting opportunities and embracing change, steering clear of getting bogged down in the intricacies of the review process. Let’s shift the focus to identifying and assessing alternatives instead of merely singing your own praises.
Building on Success
The best opportunities are frequently found by building on success rather than repeating disappointments. Take health, for instance. There’s a world of opportunities to boost your well-being beyond the obvious options of exercise, a balanced diet and annual checkups. In the ever-evolving health scene, there’s a constant flow of new medications to prevent problems that we can take charge of if we stay informed.
Financial Snapshot
Now, let’s ask ourselves the big questions: How are you doing right now, and what do you want to achieve? Get a snapshot of your financial landscape, factoring in your growth, age, wealth, and goals. If retirement is here or peeking around the corner, consider your goals, wealth, income, and maybe leaving a little something for the next generation. Here’s my two cents: take a bit of risk, understand your investments, as well as your financial advisor’s recommendations.
Reality Check
After gathering your data, give your findings a reality check by going over them with someone – a professional, an expert, or a colleague. Trust is key here, so the person you consult with needs to be knowledgeable enough that you can trust their feedback.
Mapping Your Journey
Now let’s talk about career and life. What’s on the horizon for next year? Can you hit your job goals, or is it time to re-evaluate them? Do you need to tweak your work-life balance, maybe dive into some new activities or maybe let go of ones you simply don’t enjoy anymore? This is the time to take charge mapping out your personal GPS for the next leg of your journey.
Communication and Cooperation
When it comes to communication, how do we go about cooperating to create a win-win situation?It is well proven that tactics like collaboration, trust, and listening work better in decision making than dictating, lecturing, and proclaiming false expertise. There’s extensive research supporting the idea that people resist change unless they can see what’s in it for them. When given the opportunity to argue your case, try to emphasize the benefits for the other party. If you can make them, see the positives they’ll reap in the compromise, you’re much more likely to convert them.
Risk and Creativity
Let’s talk risk. Consider when it would be beneficial to break free from the predictable and try something more creative. Making decisions and taking risks are a dance between probability and information. Predicting outcomes with solid data is one thing, but it’s a different ball game when it comes to new ideas. Help take charge of your future. And remember that sharing information often maximizes benefits for everyone.
Fresh Ideas and Strategies for Growth
Below you’ll find links to some recent blogs to help take charge of improvement in all areas. Hopefully, reviewing some of the suggestions from this list inspires you to incorporate some fresh ideas and explore various strategies. We also recommend using the content to develop and test new alternatives and solutions. In your efforts, don’t be afraid of some failures along the way—it’s the best way to learn and grow.
And remember, as the year comes to a close and stress levels tend to increase, be kind to yourself and others, find ways to relax, enjoy time with family, but also make time for yourself. Take deep breaths, cut yourself some slack, and know that your best is enough. Prioritizing can dramatically improve results. Focus on what you are good at and don’t sweat the small stuff. Think about it this way – most sports analytics are based on getting players to focus on the efforts with the greatest probability of success.
In a nutshell, taking stock of your current status can add to the excitement and potential of your efforts. Aim for accomplishment and satisfaction. Prioritize tasks and set realistic goals. Remember that accepting risk and managing change allows you to maximize your efficiency and accomplish more. Don’t shy away from those out-of-the-box opportunities either. And who knows, your next move might be a game-changer in making next year your year.
Dr. Bert Shlensky, president of Startup Connection, prides himself on his ability to define what is unique about each and every business. He works closely with individuals to develop a personalized approach that targets specific areas of concern and offers solutions based on his 40+ years of experience. His expert team will address your particular needs while working to save you time and money.
In many discussions of decision-making for a business, multiple contradictory approaches are frequently presented. The most common approach to improve profits is using analytics versus intuition. We prefer the use of complimentary rather than contradictory approaches to improve profitability at an organization. Here are several examples of multiple approaches that also illustrate some key decision-making tools. The analytics versus intuition comparison is well shown in this video of ours on Passion and Reality.
As an entrepreneur, do you know how do you balance analytics and intuition? If facts and certainty are readily available at your fingertips, then using the theory of analysis is preferred. However, decisions should not be avoided because information at the time you need to make the decision is not certain. In these cases, using and relying on your intuition is essential and albeit fundamental. Steve Jobs says this is true, because the people who are crazy enough to think they can change the world, are often the ones who do make those changes and on a grand scale.
Plans and budgets that explain goals, programs, and components are essential but need to be flexible, client navigable and interactive, and part of a definite business process. Many traditional plans are beautiful, skilled and professional presentations that sit on shelves for years as soon as one key variable change in that plan. We offer that in contrast, you can develop flexible programs that are designed to include alternatives, interaction among factors, and discussions of parameters and assumptions. These are designed to be reviewed, compared and encouraged to be used for pivoting as the company, the parameters, the environment, challenges and any current opportunities for change. For example, the nature and impact of A.I. are uncertain for many businesses that do not use that technology yet today. However, as a business owner you can still plan for different benefits and the impacts of A.I for the future of your business as you expand.
We frequently view risk and probability without understanding the situation or environment. Venture capital firms only expect a fraction of their investments to show good returns. Despite this, they expect high returns as the end goal anyway, and frequently focus on growth rather than profits. Conversely, small business entrepreneurs frequently focus on profits and cash flow in order to ensure their viability.
As a new business owner or startup, you might be in a position to afford more risk, in order to get more profits now. Overall, it is human nature that people are more averse to risk than they are analytical. In that way, we always need to evaluate results and consider alternatives. We need to consider that the upside of many risks is much greater than limited downside. We need to understand outcomes and accept failure as part of the process. But there is a bit more than this going on, and you can sit back and let us help you do the heavy lifting on this one, once you contact us for your consultation.
Cultural and organizational bias is inevitable, but can be understood and worked on to take it out of the equation for good. Our enthusiasm, information, focus or mindset frequently cause us to overestimate markets, ignore competition and not consider the issues affecting decisions for the clients and customers. Here we can argue that one of the key causes of bias and inhibitors of success are naysayers and enablers at an organization. While experience and expertise can improve results, one of the worst limiting beliefs in our changing environment is when workers say, “We have always done it this way,” meaning that they do not embrace new and necessary changes at the organization. You cannot get to the top of Mount Everest with your hands in your pocket, and this type of small thinking simply ignores change, alternatives and better processes that exist to allow profits for your business. This type of thinking is also frequently fueled by proponents who fear change, alternatives on the job and who hate any level of discomfort, and we all know this is not going to work for long at your company.
Quantitative analysis does not automatically solve bias in or at a business operation. Quantitative measures are simpler to document, measure, make an objective analysis and determine how it is comparable to what you are already doing at your organization. However, we must ensure we here to help you navigate how to best use quantitative data, which can assist your business to measure issues we do not always consider, and allow you the opportunity to take your business to the next level by trusting your intuition. How can this be done? We are here to walk you through the steps to determining the reality of your business and find real-time solutions to the issues plaguing your business right now.
It is generally accepted that the 80-20 rule, which is based on a centuries old mathematical law, is one of the best guidelines for setting priorities and making solid business decisions. Specifically, this rule works because it argues that 80% of your sales and results, will come from 20% of your efforts. This is currently being confirmed in the stock market, where 7 popular stocks represent the majority of current gains as noted in 2023. While the rule should probably be followed more than it is, and we’d like to point out that there are exceptions. We are here to help you find out how these tried and true rules can help you improve your bottom line, and we can answer any questions that you have on how to become more profitable right now.
Fine tuning parameters and the environment need more consideration than basic plans and strategies. This theory means that your identification of issues today will go a long way in developing programs and making decisions that will propel your business forward tomorrow. The most obvious example, is that it is easier to compete in large, growing profitable markets, than to work exclusively in small marginal contracting markets. Office real estate investment venues right now, are currently far less attractive than vacation rentals. Why this is so, is because the realities and changes in parameters for real estate, like populations, the economy, political environment, and social values, should all be reviewed and considered regularly to understand critical changes. The most important idea to keep in mind is that many variables are changing faster and more often than ever before. For this reason, not only do you need to understand parameters, you need to keep up with the latest ones, and know when to take a hard right turn on a new trend that you’ve seen already working for other companies in your business industry.
Replace your current hierarchy. Most organizations are based on a power or management hierarchy, but we know now that a flatter and more collaborative organizational culture have proven to be more effective in getting buy-in from the staff and workers. A more open management style can encourage more diverse worker input, reward competence among peers, encourage innovations in technology, and are generally found to be more flexible to react to change when needed [hint: it is nearly always needed].
Through collaboration and analysis, businesses can develop more efficient structures that rely on expertise via the use of a variety of resources. Even successful tragedy solutions all praise the importance of cooperative efforts among agencies. For this reason, adding new positions and creating functional groups (where individuals or departments are accountable for the results of customer success in their own specialty) will encourage more educated decisions and reactive change to keep you as an industry leader, when other competitors are stuck in first gear. Let us help you review new ideas on how to apply leadership and management at your organization. It will not hurt, we promise, but you will feel differently afterwards about the hierarchy that you currently have but have never updated until now.
Operations and logistics are frequently viewed as secondary functions that can be handled by someone else, but that is not the best course of action for a small business. However in reality, your operations and logistics can present a huge opportunity for a business to become more efficient and to differentiate itself from the local competition. We can help you understand what you need to do to be better at the business process you have in place, to get out your product or services to the community. Don’t worry, we can make that review process as painless as possible, and all that you need to do to get this going is to contact us today.
Customer and Client Demographics all depend on a wide range of variables, which can affect how you engage these individuals: including age, location, income, etc. We know that it can be confusing and complicated to finding the right target audience for your brand or product. Marketing can be complicated, but we are here to help you sort it out ship shape and Bristol fashion! For example, the Hispanic market represents 16% of the population in 2022, as compared to 13% in 2010. However, the penetration that a business will find using these statistics is quite varied. The Hispanic demographic for instance represents over 59% of the under 18 population in Texas, and only 3% of the over 65 population in Maine. Why is this designation important? Because many businesses think everyone needs their product when, in reality, most people don’t need any product at all. You have to be able to resolve a need that a client has before you can offer that solution to them, it doesn’t work the other way around. Making the most of demographic information is what we do best, and we can help you to understand who you need to be marketing your products or services to best. All that it takes is making that first contact with us, this will help to start the ball rolling on getting more profits in hand for your business.
What you will get out of this blog is that if we spend more time reviewing the processes of change versus excellence, you will have a clearer guideline of what you can improve today. Clearly companies like Kodak and Blockbuster are examples of sticking with a formula too long, whereby they didn’t change their process of customer servicing in time to be pushed out of the market by a competitor who just did what they offered the customers better! In contrast, it can happen that companies frequently change executives, sell, and make investments with little or no outcome. The debate of pursuing improved excellence versus change is affected by a number of issues, and we are here to help you understand these theories. We can show you how to understand which problems that you have are affected by your bottom line or goals, versus reviewing the business tactics that you are currently using to help you to acquire different and more positive solutions. These priorities will include: reviewing business details, priorities, and communication both internal and external to your company.
We understand that being an entrepreneur and managing your own business is what juices you up right now, but after you get started on the basics, you need to keep several key factors in mind. As an entrepreneur, you need to allow your passion to drive you and at the same time understand the gaps in knowledge you need to fill in order to be successful at your current business. We can help you organize your business to optimize basic tools such as: planning and operations, the competitive environment, cultural biases, business structure and demographics and other key components of your business. This will keep you on track and allow you to better facilitate solutions and reduce challenges, to stay vigilant and in touch with reality for your business operations. Your business process may be basically on point, but we can help you to tune up the organizational protocols, in order to help you better manage and understand factors that can affect your bottom line, such as the current overall business environment, cultural biases, overall business competition, your business structures and the demographics of your client base. Contact us today, and we can work with you to jump start and facilitate better solutions for your business. This will leave you free to concentrate on your clients and customers, to resolve their issues showcasing all your business acumen and expertise.
Dr. Bert Shlensky, President of www.startupconnection.net, offers experience, skills, and a team devoted to developing and executing winning strategies for your new or established business. Our strategies help you increase your bottom line, and includes clear steps, with access to over 150 free articles and templates, to help facilitate your efforts and guide your process to profitability today. We are here to help you get on track and stay there as you move forward with your business. It’s easy to get started, email us below and also check out our quick video.
Email us today and tell us what you need to be more successful in your new or established business at: bshlensky@startupconnection.net or call at 914-632-6977 (land line no texts).
Use These Quick and Simple Ideas to Improve Your Business
With the end of the year quickly approaching, it’s a great time to reflect on where we are and where we’d like to be. But, since it’s that time of year when everyone’s schedules are impossibly full, we’ll keep this quick, simple, and practical.
Below you’ll find several resources to help improve your business. I suggest picking one or two posts, and committing to incorporating one or two suggestions from each. My personal recommendation is the 80-20 post, which is simple and almost guaranteed to produce results.
I also encourage you to provide feedback and let us know which suggestions you found the most useful.
And remember, as the end of the year approaches and stress levels tend to increase, be kind to yourself and others, find ways to relax, enjoy time with family, but also make time for yourself. Take deep breaths, cut yourself some slack, and know that your best is enough.
Hopefully this end of the year list inspires you to incorporate some fresh ideas into your business and explore various strategies. I also recommend using the content to develop and test new alternatives and solutions. In your efforts, don’t be afraid of some failures along the way—it’s the best way to learn and grow. Good luck!
Dr. Bert Shlensky, president of Startup Connection, prides himself on his ability to define what is unique about each and every business. He works closely with individuals to develop a personalized approach that targets specific areas of concern and offers solutions based on his 40+ years of experience. His expert team will address your particular needs while working to save you time and money.
When you want to stand out, reach out to Bert for the tools that will build your “sticky” brand. My focus is on understanding and analyzing your dilemmas and challenges, so your company becomes profitable faster.
Call (914) 632-6977 or email me at bshlensky@startupconnection.net. Don’t leave without signing up for our useful free eBook!
Feeling stumped or overwhelmed? Contact Bert at (914) 632-6977 or Email to start the process. Thanks!
