Business matters
The 20% Who Read This Article Will Improve Their Business Profit - The 80% Who Don’t, Won’t By Doug Emerson
Most likely the 80% of your students, boarders and training clients who only contribute 20% of your profit are poor listeners, question your knowledge and experience and are slow to pay. Identify and list the traits of the 20% of students and clients who help produce 80% of your profit. Ask yourself where you can find more prospects with these traits. Do the same with the 80% of your students, boarders and training clients who contribute 20% of your profit. Ask yourself how
This story is about an Italian engineer,
What’s important to understand about the
they can contribute more to the profit of
economist and philosopher who discov-
Pareto Principle is that most often, a small
your business as well as determine if that
ered one of the most important rules of
number produces the greatest results.
is even a possibility. Most agreements in the horse business world are short term
business over one hundred years ago. His discovery happened as he studied his vege-
Pareto, and others after him, confirmed the
table garden one day and observed 20 % of
relationship between inputs and outputs is
the pea pods in his garden produced 80% of
not balanced, proving once again that life
If a customer is not a good fit for your busi-
the peas he harvested.
is not fair.
ness model, then help the customer find a
contracts.
more suitable arrangement with another Being an economist, his observation of his
Here are just a few examples of what the
pea pods led him to research and make
Pareto Principle means to you and your
observations about the distribution of
horse business:
horse business. Evaluate the individual team members you
wealth in Italy. He concluded through his
supervise. Which ones are the 20% who
research that 80 % of the wealth in the
crank out 80% of the work? Identify the
country was controlled by just 20% of the population. He was astounded that 80% of the population had only a fractional share of the remaining 20% of the national wealth. The talented economist was Vilfredo Pareto. The concept became known as the 80/20 rule and is also referred to as the Pareto Principle.
• 8 0% of your profits are earned from 20% of your customers • 8 0% of your profit comes from 20% of your time • 8 0% of complaints come from 20% of your customers • 8 0% of work is completed by 20% of employees
personal qualities demonstrated by the productive 20% group. Review the 80% of the remaining team and judge whether they should remain with you or move on to a job more suited to their skill set. Applying the 80/20 to your business analytically is not difficult. You’ll know on paper what you should do. And if you want a more successful and profitable business, you’ll easily see that without change for the better, your business will remain stuck where it is.
Pareto went on to explore other mathematical relationships of 80% and 20% as they applied to both people and wealth. Pareto’s
Think about the 20% of your students,
The difficult part is taking action on what
80/20 observation is not always exact as it’s
boarders and training clients who contrib-
you have discovered through your analysis.
not a mathematical formula. It’s a gener-
ute to 80% of your profit. They typically
alization that gives amazing insight to hu-
listen to what you say and put it to use,
The horse business is relationship based.
man nature. Sometimes the ratio is 70/30
respect your professionalism and pay you
Your students, customers and employees
or 90/10, but the observation holds true.
on time.
think of you as a friend and rely on you.
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Winter 2020/21 | Riding Instructor
