Pareto Principle or the 80/20 Rule

The 80/20 rule, also known as the Pareto Principle, suggests that in many situations, roughly 80% of effects come from 20% of causes. This principle can be applied to various aspects of life and work, from business and productivity to personal relationships and even health.

Here's a breakdown of the concept and its applications:

What it means:

The 80/20 rule isn't a strict mathematical formula, but rather a general guideline that highlights an uneven distribution of resources, effort, or impact.

It suggests that focusing your energy on the most impactful 20% of activities will yield the greatest results.

For example, 80% of your sales might come from 20% of your customers, or 80% of your work output might be generated by 20% of your work hours.

Examples of application:

Business:

Identifying the most profitable products or services, focusing on the top 20% of customers, or streamlining the most frequently used features of a product.

Productivity:

Prioritizing tasks that will have the biggest impact on your goals, or identifying time-wasting activities to eliminate.

Personal Life:

Focusing on building stronger relationships with the people who bring you the most joy and support, or decluttering your space by focusing on the items you actually use.

Healthcare:

In the US, the 80/20 rule (also known as Medical Loss Ratio or MLR) generally requires insurance companies to spend at least 80% of premiums on healthcare costs and quality improvements.

How to use the 80/20 rule:

Identify your goals: Determine what you want to achieve in a specific area.

Analyze your inputs: Examine the activities, resources, or factors that contribute to your goals.

Identify the vital few: Pinpoint the 20% of inputs that are producing the majority (80%) of your results.

Focus your efforts: Prioritize and allocate your time, energy, and resources to the vital few inputs.

Adjust as needed: Continuously evaluate and refine your approach based on your results

How To Support Local Businesses In The New Normal After COVID-19

With the onset of COVID-19, all businesses are severely affected. Non-essential businesses are forced to cease their operation. Almost every company bled with fixed overhead but plummeted productivity.

After COVID-19 there will be a NEW NORMAL of doing businesses. There will be fewer customers interacting with you face to face. Your shop will receive fewer visits. Your training program will no longer able to accept mass participants. Your restaurant will no longer be able to host large number of diners. The hotel will receive fewer international tourists. Cinema cannot be a full house anymore. And the list goes on. All this is due to the Social Distancing to minimize the risk of COVID-19 transmission.

Back to the local front. Social Distancing will definitely affect the local SMEs especially those rely on human interaction. Below are 6 Ways To Support Local Businesses While Social Distancing.

SHOP ONLINE OR BY PHONE
Since most businesses can no longer rely on foot traffic to be successful, many are changing the structure of their stores. Retailers and boutiques are turning to social media to highlight their products, so like and follow their pages to stay updated. Send them a direct message or give them a call to see how you can make a purchase. They’ll be excited to hear your voice. Restaurants are shifting to carry-out or delivery services, so give them a call or check their website for menu availability.

PURCHASE GIFT CARDS
Even if you don’t need something right away, purchase a gift card now so you can treat yourself when this is all over – you’ll have earned it. Keep local businesses that you utilize frequently throughout the year in mind when deciding on gift card purchases – salons, restaurants, gyms, and retailers are all great options.

ORDER CARRY-OUT, CURBSIDE PICKUP, OR DELIVERY
Many local restaurants have worked hard to shift their menu and operations to carry-out and delivery. When you grab your food, don’t forget to tip!

ENGAGE ON SOCIAL
A lot of businesses are shifting their communication strategy to social media. This is the quickest and most efficient way for them to reach a large portion of their audience and their staff organically. Let them know you’re there by engaging with their posts. Have something in mind you’d like to see from them? Tell them. They’re listening.

FOLLOW THER PAGE, SIGN UP FOR BLOG & E-NEWSLETTER UPDATES
You might just learn something new. You might make new friends. As businesses make the shift to social media and mass communication, you can expect to see more tutorials, demonstrations, and informative information.

TELL YOUR PEERS
Much like online reviews, peer to peer reviews is a great way to keep local businesses top of mind right now (and always!). Order delivery and tell your friends about your great experience – share a photo on your Instagram story and tag the restaurant. Get expert styling tips for free via Facetime from your favorite boutique – share the details on Facebook! Did your hairstylist save you from cutting your own bangs – you better give them a shout out!

Encourage friends and loved ones to support local businesses by sharing these ideas on your social media.

Use #SupportLocal

---------------------------------------------------------------------
Dengan bermulanya COVID-19, semua perniagaan terjejas teruk. Perniagaan yang tidak penting terpaksa berhenti beroperasi. Hampir setiap syarikat mengalami overhead tetap tetapi produktiviti merosot.

Selepas COVID-19 akan ada NORMAL BARU untuk menjalankan perniagaan. Akan ada kekurangan pelanggan yang berinteraksi dengan anda secara bersemuka. Kedai anda akan menerima sedikit lawatan. Program latihan anda tidak lagi dapat menerima peserta secara besar-besaran. Restoran anda tidak lagi dapat menampung sejumlah besar pengunjung. Hotel akan menerima kurang pelancong antarabangsa. Pawagam tidak boleh penuh lagi. Dan senarai itu berterusan. Semua ini disebabkan oleh Jarak Sosial untuk meminimumkan risiko penularan COVID-19.

Kembali ke arena tempatan. Jarak Sosial pasti akan mempengaruhi SMEs tempatan terutama yang bergantung pada interaksi manusia. Berikut adalah 6 Cara Untuk Menyokong Perniagaan Tempatan Semasa Menjauhkan Sosial

KEDAI ONLINE
Oleh kerana kebanyakan perniagaan tidak lagi bergantung pada lalu lintas penjalan kaki untuk berjaya, banyak yang mengubah struktur kedai mereka. Peruncit dan butik beralih ke media sosial untuk menonjolkan produk mereka, jadi ikuti halaman mereka untuk mendapat informasi yang terkini. Hantarkan mesej terus kepada mereka atau hubungi mereka untuk melihat bagaimana anda dapat melakukan pembelian. Mereka akan teruja mendengar suara anda. Restoran beralih ke perkhidmatan pelaksanaan atau penghantaran, jadi hubungi mereka atau periksa laman web mereka untuk ketersediaan menu.

KAD HADIAH MEMBELI
Walaupun anda tidak memerlukan sesuatu dengan segera, beli kad hadiah sekarang supaya anda dapat memanjakan diri anda apabila ini selesai. Ingatlah perniagaan tempatan yang sering anda gunakan sepanjang tahun ketika memutuskan pembelian kad hadiah - salon, restoran, gimnasium dan peruncit semuanya adalah pilihan hebat.

PENGAMBILAN ATAU PENGHANTARAN
Banyak restoran tempatan telah bekerja keras untuk mengalihkan menu dan operasi mereka untuk melaksanakan dan penghantaran. Apabila anda mengambil makanan, jangan lupa memberi petua!

MENYERTAI SOSIAL
Banyak perniagaan mengalihkan strategi komunikasi mereka ke media sosial. Ini adalah cara tercepat dan paling berkesan bagi mereka untuk menjangkau sebahagian besar penonton secara organik. Beritahu mereka bahawa anda berada di sana dengan terlibat dengan siaran mereka. Ada sesuatu yang anda mahu lihat dari mereka? Beritahu mereka. Mereka mendengar.

IKUTI HALAMAN MEREKA, DAFTAR UNTUK KEMASKINI BLOG & E-NEWSLETTER
Anda mungkin belajar sesuatu yang baru. Anda mungkin mendapat rakan baru. Semasa perniagaan beralih ke media sosial dan komunikasi massa, anda dapat melihat lebih banyak tutorial, demonstrasi, dan maklumat yang tepat.

HEBOHKAN
Seperti ulasan dalam talian, ulasan rakan sebaya adalah kaedah terbaik untuk memastikan perniagaan tempatan sentiasa diingat sekarang (dan selalu!). Pesan penghantaran dan beritahu rakan anda tentang pengalaman hebat anda - kongsi foto di kisah Instagram anda dan tandakan restoran. Dapatkan petua gaya pakar secara percuma melalui Facetime dari butik kegemaran anda - kongsi perinciannya di Facebook! Adakah penata rambut anda menyelamatkan anda dari memotong poni anda sendiri - lebih baik anda menjerit!

Galakkan rakan dan orang tersayang untuk menyokong perniagaan tempatan dengan berkongsi idea ini di media sosial anda.

Gunakan #SupportLocal

Building a More Profitable Construction Business

The objective of this article is to illustrate that the goal in a Construction Business is not to work more, but to work more effectively, and improve your company's bottom line as you go. There is also some points to learn and applied it to an IT company like ours.

Estimating Profit

Creating a detailed, accurate estimate for work you propose to do is the first step toward achieving real profitability.

Overhead. Understanding overhead is important. Think of overhead as costs that would remain even if your crew didn;t do any work for a week. you would still need to pay your Account staff, telephone, insurance, rental, and utilities - as an example.

Risk. It is important to include risk factors in each estimate - contingency line - rather than just a padding here and there.

Job Costs. Labour can be the riskiest and most difficult part of the estimating process. IIn order to prepare an accurate estimate, you must know how long each task will take and how much each task will cost - and that depends on the relative efficiency of your personnel. Without understanding the true productivity of your field staff, you cannot create accurate and reliable estimates.

Managing Job Production for Profit

Once you're awarded a job, it's crucial to perform the work in the most cost-effective way possible if you expect to make a profit. While that may be easy in theory, it can be another matter altogether in practice. To effectively manage a job, keep these important factors in mind;

Change Order. Too many contractors lose money on change orders because they don't systematically track costs and don't take the time to bill for the change work they perform. Ironically, change orders can be an excellent source of additional profit because you have no competition for the work. In order to better track and manage change orders, you must create procedures to record changes in the field, turn those changes into work orders, and obtain sign-off on approved work for billing purpose.

People productivity. As Ben Franklin said, "time is money", and it's especially true in construction. For example, if you run a job exactly as budgeted, but it took two weeks less to complete than expected, you have added profit directly to your bottom line.

Keep everyone informed. Both employees and subcontractors need to know the job schedule. Subcontractors appreciate early notice of schedule changes and will be more willing to help you out.

Accounting for Profit

True job cost accounting can increase your profitability by helping you understand the actual costs associated with each job. A proper accounting system needs to accomplish two things:

One, effectively meet your daily accounting and bookkeeping needs and two, meet your specific requirements as a contractor. That means streamlined processing and an effective way to manage workers’ compensation, liability insurance, bonding and other issues of concern to you.

Remember that an accurate construction accounting system must distinguish between overhead costs and direct job costs. You must also be able to systematically compare your budgeted costs to your actual job costs to measure estimating effectiveness, labor productivity and use of materials.

Assigning the right responsibilities to the right people will help make your accounting system work for you. To accurately assign costs to a job, your project manager needs to be the one who codes the bills. If left to your bookkeeping staff, they may assign costs incorrectly since they are not close to the actual construction work being done. The result is that any report that compares actual to budgeted costs by cost code will be inaccurate and therefore meaningless.

Purchase orders can also help keep your costs in order. Using purchase orders will ensure that the project manager codes expenses at the time of order, not the bookkeeper, when the bill is received.

And without using a PO, you could end up paying more than your supply house originally quoted if they make a billing mistake. This could happen because your bookkeeper can’t spot the overcharge without a PO showing what the correct price should have been.

Contractors spend too much time and energy on accounts payable—and without a workable system in place, the quantity of incoming invoices will overwhelm your office. Just as important, if you do not send receivable invoices in a timely fashion and fail to follow up on them, you’ll quickly
find you don’t have the cash to take care of the bills.

Analyze for Profit

Many contractors make the mistake of thinking of each job as an independent project—with a start and a stop. As a result, they rarely take the time to analyze each job and assess the overall success of the business. If you think of your projects as circular rather than linear, you will find effective ways
to reduce costs and increase profits.

Contractors often have trouble ending jobs because they are more focused on starting the next one.

Yet it’s important to remember that you won’t get paid until you successfully complete the project punch list—and the sooner you do, the sooner you’ll receive payment on the final invoice, as well as the retention.

A thorough review should be built into your closing process. Look for unbilled amounts still outstanding from vendors. Look for unbilled change orders.
Another important part of the review process is to compare your actual costs to your budget. Based upon what you learn, you can make needed adjustments, which will help you be more profitable on future jobs.

Understand the Profit cycle

Since we’re half-way through the “Steps” let’s review the construction business profit cycle again. Within the first 4  Steps, there are multiple strategies to pursue. Decide which of them would provide the most ROI (return on investment) for your company and implement these.


Define Goals and Set Expectations 

You may wish to take some time to seriously consider and define your goals for your business. This will be your roadmap to follow. Once you’ve defined your own goals, then you’re in a good position to guide your employees’ and clients’ expectations and behavior to serve your vision and theirs.

Define Goals. Really take some time to consider what you want to achieve in your business. Do you define success by your bottom line? By company growth? Spending more time with family?

Here are some important things to keep in mind as you define success.

Too many companies define success in the short-term—an error that may ultimately damage your business. An emphasis on long-term planning and relationships over short-term gains will help ensure the ongoing success of your company.

We recommend some practical ways to define your goals that include use of a mission statement and complete business plans. Crafting a mission statement will help you systematically identify your values, your focus and what you hope to achieve. Business plans, on the other hand, require you to set realistic, detailed long-term management, financial and marketing goals and enable you to measure your success against them.

Set Expectations. Setting expectations will influence the behavior of your clients and your employees and result in more productive, long-term relationships. Consequently, you will be in a better position to achieve your own goals.

Clients. Repeat clients and referrals not only reduce your marketing expenses, but can dramatically increase your business volume and profitability. That’s why it’s so important to set expectations to influence your customer’s view of your work.

Here are some important tips for setting expectations:
• Your clients need to know in advance that it’s typical to have additional costs 10% to 25% more than the original contract from change orders. A client who has a realistic expectation of change orders and resulting costs will be far more willing to work with you during the job—and pay for the additional work you do.

• Don’t forget to ask for referrals. Use your company signs at each job. Inform the neighbors that you’ll be working in the area. Use each contact as an opportunity to do direct marketing for your business.

• Sometimes, as difficult as it is, you may need to fire a bad client. Miserable clients, who have unrealistic expectations, make for unsatisfactory and highly unprofitable jobs.

Employees. Your employees also need to know your goals and expectations. Employees who have shared goals will be more effective in performing their jobs. Sharing profits can go a long way toward creating shared vision and goals. Find out what makes each of your employees happy—better wages? increased responsibilities? fewer work hours?—and use that information
as you work with them. Some employees are content to do the same job year in and year out.

Others look for additional responsibility. Let your employees know what advancement path is available to them—and encourage them to succeed at it.
Employees are far more satisfied when they are held accountable for tasks they can control. Be clear about who is responsible for what, and then hold those individuals accountable. For example, it is difficult to make the bookkeeper responsible for coding invoices to the correct cost codes if he
or she is not the project manager.

Create Performance Rewards

Money isn’t the be-all and end-all of motivation…but it certainly helps!
Creating performance rewards for your employees will motivate them to watch out for the bottom line. Here are three good ways to get started:

Setting profit-sharing goals based upon job responsibilities will help your employees feel in control over their contribution. Field personnel, for example, could be measured on job costs against budget, while office staff could be rewarded for decreased overhead costs.

Establish a range for bonuses. Setting a pre-determined percentage for all employees does not allow you to reward exemplary behavior. Employees will then have pocketbook feedback on how their work is viewed and evaluated.
Just because someone works really hard doesn’t mean they are working well. We all know the person who stays late every night and works every weekend, yet never seems to get all the work done. Don’t be fooled by effort—instead, look at each employee’s results.

Train Good Staff

Good training can improve process and profitability, which is why it’s crucial to remember that the right training is an investment, not an expense.

Why? Because replacing employees is expensive. Studies show that the costs associated with advertising, interviewing time and training can add up to almost half of that employee’s annual wages. The bottom line? You want to keep good employees right where they are—working for you.

Education helps everyone. Encourage your employees to look for sources of training and learning opportunities.

Create Written Procedures

Written procedures within a company are key to business profitability. Typically, companies create written procedures only after they lose money because something wasn’t done right. The better way is to create written procedures ahead of time and avoid the failures altogether.

Written procedures will provide a roadmap to new employees on how and when to do their work.

Defined procedures will save you time and money and will increase your profitability—not to mention save you training dollars. Consider these examples:

It only takes one instance of an incomplete lien release to understand how much money you can lose. Each state has different laws, and you must know the laws that affect you so that you can pass the knowledge along to your employees.

“Internal controls” is an accounting practice that can limit the risk of embezzlement. The bank statement must be opened by the owner. And someone other than the bookkeeper should reconcile the statement each month.

Since so much money is at risk on change orders, it is essential to have a good change order management procedure to ensure change orders are as profitable as they should be. Have written procedures for how each change order is started, completed and billed. Collecting time cards daily is essential to measuring your employees’ productivity. Remember that a weekly time card due on Monday morning will typically be filled out all at once on Monday morning—and will probably not be accurate.

Create a system that tracks the expiration of your subcontractors’ workers’ compensation. Why? Because if you pay a sub without it, you will be held liable for those dollars. Consider the story of the contractor who verified liability coverage before the subcontractor started the job, but by the time it
came to paying the sub, the policy had expired. The result: the contractor had to pay large sums of money to cover the sub.

Communicate

On most projects, there are several groups with whom you need to maintain regular contact.

Depending upon which group you fall into, these might be clients, general contractors or builders, subcontractors, employees, bonding agents, architects, engineers and inspectors. When you make communication with the various groups involved with your projects your top priority, you greatly increase the likelihood of having successful and profitable projects.

Communication with your employees, for example, is both valuable and necessary. Having regular staff meetings and recognizing and rewarding good work will help keep the lines of communication open. But be careful—you must also value your employees’ time by making staff meetings both short and powerful. Remember, too, that employees will often assume the worst when they are not informed. Job security creates commitment among your employees, which in turn, can lead to greater profitability.

To improve communications with various parties outside of your company, you should develop a system for producing and documenting professional-looking reports and notices. Providing documented reports, including approved change orders, bonding reports, job cost summaries, subcontractor notices, and lien releases will provide clear communication and prevent against any misunderstandings long after the job is completed.

Source: L Shiner

.

Overbook situation

Several disturbing videos posted to social media Sunday show a man being violently dragged off a United Airlines plane out of Chicago after the company overbooked the flight.

Not only United Airlines allowed overbooking, it also allowed overboarding. Is this incident caused by a flawed or poorly designed computer system or a weak SOP ? I guess both.

When designing and developing a computer system, knowing the capacity of an object is crucial. These capacities also referred to other terms such as limit, maximum value or constraints.

The designer of United Airlines ticketing system should know the plane capacity and should not allowed more passengers than it can take. This can be prevented during the booking stage and check-in process.

Their SOP might suggest that the Airlines can accept more bookings but after a cut-off time, unconfirmed or unpaid booking must be automatically closed. Hence, confirming the booking will trigger the counting process of reducing the seat vacancy or increase the seat occupancy. A booking cannot be confirmed once the flight is full.

If that doesn't work, during the check-in process, there can be another counting process. The system should not allowed further check-in once the flight is full.

Michael Del Moro, the CEO of United Airlines emailed to his employees with this message "there are lessons we can learn from this experience". Well, Michael, the first lesson is to overhual your customer service SOP and methodology and then change your Airlines computer system.

SME Market to be launch mid 2017

SME Corp Malaysia is working with Bursa Malaysia to identify potential Small and Medium Enterprises (SMEs) to be listed on the SME Market, which will be launched either in June or July 2017.

The proposed new SME Market hoped to facilitate greater access to capital market financing for the SMEs to support their developmental and lifecycle needs.

SME Corp chief executive officer Datuk Hafsah Hashim said a few companies have been identified and are undergoing the evaluation process.

"At the moment, we have identified our Four and Five Stars companies (under SME Competitiveness Rating for Enhancement concept). We are looking into the data base of close to 600 companies that have been identified as having potential to be on the new SME Market," she said.

"Once investors or equity funders take up the company, they will raise up the level of capitalisation before (the companies) are listed on the ACE Market," she added.

The new SME Market is meant for investors or equity funders to look through this catalyst and find ways to facilitate these companies in terms of pumping in capital.

Hafsah said SMEs' accounts would be made public and their management practices would also be made known to potential investors, equity funders and venture capitalists.

The SME sector's contribution to the gross domestic product (GDP) currently stands at 36.3%.

Source: Bernama

Customs Blue Operations Strategy

The Royal Malaysian Customs Department has launched its latest compliance drive, seeking to collect RM3bil in unpaid Goods and Services Tax (GST) and it's called Customs Blue Operations Strategy (CBOS) 3.0, aims to collect twice the amount collected in its second operation conducted last year. The previous CBOS 2.0 was launched in Sep 2016.

CBOS 3.0 will see the department taking a friendlier approach, by educating companies on “Informed Compliance” instead of punishing them through “Enforced Compliance”.

About 600 officers from the Customs Department's GST, Compliance and Enforcement divisions would take part in the door-to-door operations.

They are expected to visit 200,000 of the 434,000 GST-registered premises during CBOS 3.0 that runs until Dec 31.

Companies found behind in their payments or paperwork will be given one month, from the date of the visit, to comply.

Those that fail to comply could face legal action and be fined for up to 40% of their unpaid dues.

It was reported that Customs targets to collect up to RM42bil in GST this year, compared with RM41.2bil in 2016.

The government coffer is getting drier much faster than it can be top-up.

If you're a abiding business that yet to use a GST accounting system, you can subscribe to Datapuri Financial System (details at www.datapuri.com). It better later than never and save that 40% fine.