80/20 Your Business Part 3

You can apply the 80/20 rule to your work functions too. As I
said earlier, I studied which services at advertising agency delivered the most revenue.The result was that over 80% of our turnover and profit is derived from just two activities, media placement and media production. Everything else we do takes up time but produces comparatively small returns.

Knowing this allows me to set priorities with my team and continue to shape the agency to play to these strengths. It helps with decision making, hiring, equipment purchases and even the planning of workspace.

Twelve months ago I was on the verge of hiring a second artist. Our art depatment was buried in work and our new approach to media production meant that she was being called on increasingly to assist with TV graphics. I decided to ride it out suspecting that the art demand would settle down and unsure that it was financially wise move. Sure enough things did settle down, and now that we realise what our priorities are in the agency we are spending less time on unprofitable labor-intensive work, such as graphic design. We now have no plans to hire a second artist.

Six months ago, the agency had just had another burst of strong growth and my account manager and I were stretched. I started formulating plans for another senior account manager. This would be an expensive hire and be a difficult decision to make. We would have to acquire significant new business just to cover the cost of employing this person, let alone make it profitable.

It was at this stage I seriously began applying 80/20 to the business. I suspected the agency had a lot of growth potential with the existing team, but I had to make sure we were allocating our resources correctly. The results (mentioned in last 3 posts) changed my whole perspective about the agency and human resources. There would be no more hiring for quite a while.

Knowing the services that we will be focussing on is now helping me plan the size of new premises (much smalle than previously envisaged), the number of employees we will need (much less than expected) an the equipment we need to purchase.  When new business, problems or opportunities arise we can now ask ourselves whether they suit our core services and efficiencies and do they match the profile of our Top 20% clients.

I can now focus my team on the things we do well and that are the most profitable for the agency. This takes them less time and allows them the time to really concentrate on the jobs that matter. It makes for a happier, less stressed office.

By applying 80/20 to my business I am personally able to free up vast amounts of time. Assuming I only need 20% of the time now to service 80% of our revenues (and assuming I worked a 40 hour week...it used to nealy double that), I really only require 8 hours per week to get the job done. Admittedly the work hours equation is still a theory as I have only just finished applying the 80/20 rule to all of the business. I am now beginning the process of winding down my office time accordingly.... all part of my plan for a Perfect Life.