A common issue for small-business owners is having too much to do and too little time.
The small-business owner wears many hats. On any one day, he or she may need to make a major decision on anything from adding a new product line to finding new customers to reviewing and even doing the financial aspects of the business.
So how can the business owner make the best use of his or her time?
The simple answer often is to select those items that will maximize business returns. But the difficulty is in knowing which items offer the greatest reward.
A great place to start for most owners is with the ‘low-hanging fruit.’ Simply put, this is the 20 percent that produces 80 percent of the results for a category of items and, in fact, may even be the 20 percent of all things the business owner has to do where 80 percent of the potential results might be found.
Most of us have heard, and even used, this rule in conversation at some point in our lives. What you may not know is that it is fairly accurate and even has a name, the ‘Pareto Principle.’
This rule can help the business owner find those items offering the greatest chance of reward whether that is increased revenues and profits, decreased expenses or feelings of success. It has been shown to work in terms of which:
products and/or services produce the most revenue
marketing efforts bringing in the most customers
customers buy the most
expenses offer the greatest net results to the bottom line
shelf space produces the most dollars
product defects will produce the most problems
staff will have the greatest production
While the list goes on, spending time on the 20 percent clearly can offer a real opportunity for your small business.
The difficult part of the principle is determining who or what makes up the 20 percent. Solid records can provide much of this information. But even while you are getting your records, owners probably have a good idea of the top items in each category. Good records then confirm those ideas and help complete the list.
Understand that the 80/20 percent rule is a guideline. It may be 75/25 or 90/5. The key point is not to focus on everything but to pick out the items where increased effort can have the greatest impact. It helps business owners get the most out of their efforts. And when you already have too much to do and too little time, using such guidelines can be of great help in business management.
So feeling stretched thin in terms of time in your business? Look for the 80/20 opportunities in your business where an allocation of time offers the greatest potential rewards.
Glenn Muske is the Rural and Agribusiness Enterprise Development Specialist at the North Dakota State University Extension Service – Center for Community Vitality. Follow Glenn on Twitter: @gmuske
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Orlando Rivera says
This is an interesting and useful concept. Sometimes it can be difficult to focus our efforts strategically because of everything that requires attention but it would probably be beneficial to give a little more of our time to specific areas of our business.