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The 80/20 Rule Is Important To The Success Of Your Business

For everything that changes, almost everything stays the same.  The only thing that really is new is technology.  The basic needs of people; their hopes and wishes have never changed since the beginning of time.  That’s why the 80/20 rule is important to the success of your business.

Here’s why:

Certain business principles hold timeless truths including the 80/20 rule.  The 80/20 rule essentially states that 80% of your business comes from 20% of your customers.

As a CEO, president or business owner, think about how much time, expense and energy you spend on the 80% of customers that brings in only 20% of your total business revenue.

As a business leader, you need to evaluate your customer base on a customer by customer basis. Determine whether each customer is a profit center or are you losing money when dealing with that particular customer.

One could argue that even though 80% of the people you do business with are a much smaller volume than the 20% that are profitable; and it would initially hurt your business financially if you didn’t have those customers. Consider about how much time you’d have to go and find new and more profitable business if you eliminated only 10% of your weak customers.  (You may want to reread this paragraph. There is much to think about and evaluate as to how the 80/20 rule applies to your business.)

In your business, volume is important and the size of your client base is important but don’t deceive yourself in thinking just because someone is a customer they bring value to your business.  Carefully look at each and every account.  Eliminate the weak accounts or see how you can increase the dollar volume of these weak or smaller accounts.

In a competitive marketplace many companies are willing to take any dollars in sales volume they can get.  But it may be a mistake not to eliminate, at some point, your weakest customers.

As a CEO, president or business owner, ask yourself:

  • How much is it costing the company?
  • Is it worth it? Why? Why not?


Remember: Dollar volume is important.  But sales efforts are the most important aspect in any economy. Always be prospecting for the next GREAT customer. Spending time selling to the right customers is more valuable than spending time selling customers that will never really add to the bottom line and the growth of your business.


To your success!


Ready to improve and grow your business? Want to talk strategy about business decisions? Talk with Howard! – 888-738-1855 – Howard Lewinter guides – focuses – advises CEOs, presidents and business owners to MORE success – MORE profit – less stress. Get MORE from your business. Talk with Howard: 888-738-1855

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