Wednesday, January 16, 2013

Pareto's Principle ~ The 80/20 Rule

I'm shopping for a new planner. I had one that I LOVE but they are no longer offering it. While in the search process, I got side tracked (go figure). I stumbled across different theories for time management, and anyone who knows me, knows I struggle with this constantly so my curiosity was peaked.

Leather Planner 2013
by My Hand Bound Books
The theory that caught the most of my attention is "Pareto's Principle" also called the 80/20 Rule. In a nutshell, "The 80/20 Rule means that in any instance a few (20 percent) are vital and many (80 percent) are trivial." The more I read the more intrigued I became and I started to look at how it applies to my life and business.

Looking at any day, I quickly determined that approximately 20 percent of my day is dedicated to the things that matter for that day. Many times the other 80 percent could be pushed off to another day and aren't vital to mine or my family's well being. Instead of feeling pressured to get it all done NOW, I am looking at what could be either delegated to another family member or put on the back burner. I'm hoping to have less stress and more time to just enjoy the gifts I've been given.
Fleur de Lis Keepsake Box
by GrapeVine Ceramics & Gifts

In applying it to my business, it gets a little trickier. I analyzed my inventory and determined that yes the majority of my sales were from 20 percent of my designs. Which brings up the questions: Should I quit making the other 80 percent and specialize? If I do that will my shop become stagnant because I'm not producing new designs? The more I researched the more I decided that I shouldn't stop making the other 80 percent. The other 80 percent are necessary for helping to build SEO to my site, they keep my creativity fresh and make me happy. What is does show me though is where to focus the most of my attention. I need to increase my inventory and offerings in Keepsake Boxes and Ornaments and maintain my current inventory on the other categories at a lower level. It also shows me that I need to limit the inventory on new releases until they are a proven product, no more making 20 of one item to see what kind of reception they receive. Maybe six of a new design is a better number. If four of the six fly out of my inventory, then I better get cracking.

Cup of Christmas Tea
by GrapeVine Ceramics & Gifts
Now that I know where to apply my focus, my next couple months in the studio will be spent rebuilding my inventory and adding to the proven lines. That way when Art and I are done with research and development I can focus on a new line for a couple months before our busy time starts. We are in the form and clay development stage right now and I can't wait to show you.

Now back to my planner search....

23 comments:

  1. I was aware of the 80/20 and it has massive implications for businesses as well. The same applies to your visitors, on average, if you check your Google Analytics, you should also see that 20% of your traffic has been to your shop before and 80% is new traffic. If this is not the case, your SEO needs to be looked at closely.

    In regard to your designs, you need to definitely focus on the 20% that sells, however don't give up on the other 80%. As you already stated, it makes you happy & drives new inventory, this is a good thing! Just have a way to clearance or sell those 80% of pieces that will never make it to new homes (Christmas gift giving is always a good idea)!

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    1. I don't think the 80-20 rule applies to Etsy shop traffic. Many Etsy shop sellers belong to teams that do team promotion and team treasuries, which means their shops see a lot of traffic from regular visitors that don't necessarily buy anything, but drive traffic to them through backlinks and treasuries (people, often new to Etsy, often buy items of mine that have recently been in treasuries).

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  2. Thanks Katie - I've been looking at for all the implications. There are some items that aren't in my online presence that only go to shows. They don't sell often but they are often the pieces that bring people in.

    I haven't even started looking at my customer base yet. I need to take baby steps and get my inventory in order, so I can get my storage in order.

    My favorite way to get rid of loved but not sold inventory is to donate it to assisted living centers and old age homes to be used for prizes for Bingo and such.

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  3. Thanks for this post, Michelle. I think that 80-20 rule is going to get me thinking.

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    1. You're welcome. I know it sure has me thinking.

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  4. Great post. I'm going to use this principle as a guide as I build my inventory for the Spring/Summer.

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    1. Thank you - I'd like to hear if you feel it was helpful and on target.

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  5. Great post, Michelle. Very informative, as are the above comments. I am definitely going to look at my inventory and apply this. Thanks!

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  6. Very thought provoking.... I hadn't thought of my inventory this way!

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    1. It is isn't it... I keep trying to look at other aspects, and it's looking like it fits many of them.

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  7. Very wise, m'dear. We need to do the same thing for our product line. It's always tough, when you're trying to walk the line between innovation and maintaining your business!

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    1. Thank you - I've really let so many new ideas go by the wayside. I'm hoping by focusing my attention early in the year I can start some new lines.

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  8. Thank you for this idea - I need to think about this too.

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  9. The 80/20 rule applies so frequently! I've been thinking recently about how to incorporate it into my business. Good luck making it work for you!

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    1. Thank you - I'm really hoping to be more productive and have more space for storing the inventory I have.

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  10. Unique Cozy Treasures- thanks for the info.

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  11. If I could handle better that 80 percent of the day that I mismanage I could also have some time left to build my inventory:D

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    1. You and me both on most days - I have tried to make a point this year to be more focused but life always gets in the way.

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  12. Gorgeous finds and I know how easily it is to lose track on the hope of finding one thing. I am the same. I hope you get to find your ideal planner, the one you love. Wishing you love, happiness and abundance for a very Happy New Year x

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  13. Thank you Ana - I'm still looking - The year may be up before I find it.

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