Apply The 80 20 Rule To Your Bakery Business

Apply The 80 20 Rule To Your Bakery Business

There is a funny ratio that rings true for so many areas of life. It is the 80/20 rule. You may have heard it called the ‘Pareto Principle,’ named after Wilfredo Pareto who discovered and documented it in 1895 when applying it to economics. This post is all about why you should Apply The 80 20 Rule To Your Bakery Business.

The 80/20 Rule 

I first came across the idea when reading a book called ‘Goals’ by Brian Tracy. The rule says that 20% of effort brings about 80% of results. You can apply to most things but in business, it is most common with the following:

20% of staff will do 80% of the work

20% of staff will sell 80% of product or service

20% of customers will give 80% of your revenue

20% of your products account for 80% of your sales

20% of your time accounts for 80% of your results

It obviously works backward too. So why do we spend 80% of our time on tasks that only achieve 20% of our results? How do we identify the most important tasks and focus on the tasks that give us the best results?

Find Your 20% 

Taking the time to evaluate your business will transform it. If you look at all your products and work out how much profit each one makes you, then work out how much time and resources are used to make it, you will probably be shocked to see you are spending most of your time on the things that don’t give you the biggest reward.

If you don’t take the time to find your 20%, then you could find yourself working many hours for little results. You will overstretch yourself and drag your focus away from the products and services that make you money. You will be a ‘busy fool,’ just like I was.

Time To Plan 

All you have to do is take a step back from the day to day running of your bakery business and set a little time to plan. Really evaluate every single product or service and then list them all in a scale from the lowest profit earner to the highest profit earner. Take into account the ingredients, staff time, packaging, and basically everything that goes into making the actual product or delivering the actual service. Don’t include things like rent and business rates as they are fixed costs and don’t necessarily affect the individual product costs.

Next, make another list and calculate how much of YOUR time is spent on each product or service. One product might make less profit but only take a fraction of the time to make. One might make a profit whilst not involve you, so you could scale up with staff and not be needed in the process. Another might involve only you and your time is valuable.

When you have done this, it should be clear which products or services you should be focussing on. Often, one product will jump out in front of you, and it might not be the obvious one.

It Worked For Me 

I did this with my business and found that if I changed to bespoke, unique novelty cakes, I could eliminate many products and services that didn’t make any profit. It also meant I needed less staff. With less staff, my overheads were greatly reduced. I also found that as I became more involved on the shop floor, my sales increased, I needed fewer suppliers, less ingredients, and fewer resources in general. In short, I focussed on the 20% and my profits increased dramatically and my business and my life changed for the better.

My business went from 20 products and services, down to 5, and then down to 2. I developed a laser-like focus and made my business super streamlined and efficient. In 2 years, my business was making much more profit and the hours I worked went from a ridiculous 100 hours per week, down to 40. This gave me time to work on other projects like our social enterprise and eventually make the switch from making cakes to helping other people start, manage, market, and grow their own bakery business.

Apply The 80 20 Rule To Your Bakery Business 

I can’t stress enough how important this 80/20 rule is for your business. It doesn’t take long to plan and implement it and the results you will see will transform your business faster than you ever thought possible.

Do this alongside a few other strategies and you will be on the fast track to bakery business success!

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Lee Fox-Smith

Dad, Husband, Animal Activist, Author, Social Entrepreneur, Pro. Chef, & Artist. Don't dream your life, Live your dream!

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