Start Up Blog

the 5% rule

Posted in entrepreneurship by Steve Sammartino on October 2, 2009

5% of our customers wont pay on time

5% of our customers wont pay at all

5% of our employees wont deliver what they are paid to

5% of our employees will steal and or damage company property

5% of business partners will break contracts and even worse, not keep their word

5% the people we meet will be genuinly dishonest and painful to deal with

It’s the 5% rule. In fact quite often business discussion are too often focused on the 5% of times the business model will break down and we will get cheated in some way. The amount of strategy, board room and agency discussions I’ve had about the 5% of people who make business models and ideas imperfect are countless. The point for startups, no less any business, is to accept the fact that all models have gaps. And more often than not these gaps the doing of the 5% rule.

the 5% rule

The problems with trying to remove the 5% is that we build gates and protections which often stuff up the 95% which is working. We create unnecessary friction. What we are better off doing is thinking about the problem like water evaporation. It’s going to happening, no matter what we try. But we must remember that the very large majority of people are good.

My advice is simple. Know that it exists, and forge ahead anyway.

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3 Responses

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  1. Luke said, on October 2, 2009 at 2:41 pm

    Love the picture, LOL!

    This is similar to the pareto rule – 80% of effects come from 20% of causes. http://en.wikipedia.org/wiki/Pareto_principle

  2. Be Szpilman said, on October 10, 2009 at 12:40 pm

    Steve, I have to agree with you 95%! (sorry 5% of me is such a prick!)
    I really do feel that learning to live with those 5% is the best solution. Too often I see businessmen forgoing good opportunities because they feel someone will cheat, steal or sabotage the plan. Well, too bad, cause they kill it themselves instead of letting the pricks have a go at it :D

  3. therulesofacquisition said, on July 12, 2011 at 12:07 am

    5% of anything is always better that 5% of nothing.


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