Pareto Principle

12th July 2012

... Comments

Today I would like to remind ourselves of the Pareto Principle The Pareto Principle states that, for many events, roughly 80% of the effect comes from 20% of the causes. Vilfred Pareto who observed in 1906 that 80% of the land in Italy was owned by 20% of the population.It is very common to apply this principle in business as folllows:-

80% of your sales come from 20% of your client.
20% of your stock has 80% of the value.
80% of your sales are made by 20% of your sales staff.
80% of your problems are caused by 20% of your procedures.
20% of your clients produce 80% of your profit etc

So have a look at your businesses and see if this applies and if so try to improve your profitability, efficiency etc by focusing on those 20% events.

]]>

About the Author