Last year a friend told me about a book I should read.  It’s titled “The 80/20 Principle: The Secret to Success by Achieving More with Less”.  The author, Richard Koch, states that, when applied to business, the key theme is to generate the most money with the least expenditure of assets and effort.                

The 80/20 principle states that there is an built-in imbalance between causes and results, inputs and outputs, and effort and reward.  For example:

• 20% of products account for 80% of dollar sales.
• 20% of customers account for 80% of dollar sales.
• 20% of products or customers account for 80% of profits.
• You can eliminate 80% of waste by spending 20% of what it would cost you to eliminate 100% of waste.

The idea is to use the 80/20 analysis to change those relationships or to make better use of them.  If the top 20% of customers buy 80% of the product, you should concentrate on keeping them happy and try to increase that share of your business.  Or, if 20% of your products account for 80% of your profits, try to sell more of that product.                    

After reading the book, I started thinking about how to apply the principle to my flower business.  I sat down and divided my sales into categories, and what I was getting for 10 stems per category.  I was very surprised by the results.

                                   Average for 10 stems
    Farmers’ market                   $1.41
    Restaurant sales                   $6.69
    Bouquet club                        $6.10
    Florist sales                          $5.75

    For my farmers’ market flowers, I was putting in 80% of effort for even less than 20% of my sales.  Obviously I’m not giving up my farmers’ market, but I should try something else, to make more money.  Now is the time to stop making bouquets and start making my life easier by selling single stems and just straight bunches.  Stems in a bouquet that I was getting maybe $.25 for were now selling for $1.00 each, or $.50 each in a bunch for filler flowers.  So that $1.41 for 10 stems increased to an average of $7.50 and my life got a whole lot easier.        Also, I concentrated on increasing my bouquet club sales because making bouquets and advertising are such easy aspects of my business.
    Another area I tried to apply the 80/20 principle to was figuring how many bunches of each variety I was selling to my florists and whether it was even worth my time to cut some of them, much less grow them!  Again, I was very surprised at what I thought were my top sellers and how few bunches of some varieties I sold.                            

The point is to keep track and really know what you’re selling, how much you’re getting for it, and where you’re wasting effort that could be used elsewhere more wisely.                

I’m certainly not doing the book justice in this report, as it goes into many, many details and gives many examples of ways to use the principle not only in your business but in your personal life as well.  Definitely well worth reading.    


                    

• 20% of carpets get 80% of wear.
• 20% of book titles comprise 80% of books sold.
• 20% of criminals account for 80% of the value of all crime.
• 20% of motorists cause 80% of accidents.
• 20% of the pea pods produce 80% of the peas.
• 20% of your clothes will be worn 80% of the time.
• 20% of your employees cause 80% of your staff
   headaches.
    
I hope to see many of you in Kentucky July 2-3 for the Midwest/Southeast Regional Meeting.  Robert McNiel has done an excellent job of putting together a nice variety of interesting places for us to see.

Moving a flower business is not easy or quick, so this year I’m concentrating on just getting re-established on my new farm.  It’s a good time to re-think and try to start again, only hopefully a little wiser.  My new address is 6137 Waverly Road, Cedar Falls, Iowa, 50613. My new phone is (319) 268-7264.