Houston Rockets owner, business mogul Tilman Fertitta: Why I live by the 95:5 rule

Being in business can involve all sorts of formulas. But when it comes to what can make your business either a success or an ongoing struggle, I always use a simple ratio to make sure I’m paying attention to what really matters. I call it the 95:5 rule. The breakdown is simple. Most moderately successful businesses are good at about 95 percent of what they do. It’s the remaining 5 percent that can determine whether the business excels or not.

I’ve seen businesses wrestle with this over and over. Often, they haven’t identified that critical 5 percent. Sometimes, they’re needlessly worried about the 95 percent that is working. Other times they know the 5 percent that isn’t working but don’t know what they can do to change that. Maybe they refuse to believe that particular 5 percent is all that important.

That 5 percent isn’t just important—it’s absolutely essential. And that 5 percent can appear in all sorts of ways. On the surface, the 95:5 ratio may seem completely out of balance. I’ve heard it from all sorts of entrepreneurs: How can a measly 5 percent help or hurt my business so much? How can such a small part matter, especially when most everything else is working so well?

Believe me, it can.

Let’s break down what we’re discussing. By the 95 percent, I’m talking about the portion of your business that functions well. It can refer to the core competence of your business, be that food service, landscaping, or any other activity.

For instance, in the case of my network of restaurants, the 95 percent refers to the consistent quality of the food, the cleanliness of the facilities, and the performance of the restaurant staff—in other words, the basics. I know that our staff is properly trained, our menus are up to date and accurate, and point-of-sale systems and other types of technology are functioning as they should be. That’s our 95 percent because all the necessary systems and procedures are in place.

Most moderately successful businesses are good at about 95 percent of what they do. It’s the remaining 5 percent that can determine whether the business excels or not.

The 5 percent is the real difference driver, the tipping point that, when addressed properly and consistently, moves our restaurants past that 95-percent level.

Unfortunately, that critical 5 percent can suffer in all sorts of ways: A server brings a drink without a napkin; a perfectly prepared meal is served on the wrong type of plate; or a four-person table has one chair that doesn’t match the other three.

But the 5 percent doesn’t always have to be negative: It can mean knowing the names of repeat customers; It can mean knowing where a particular customer prefers to sit; or it can mean escorting a customer to the restroom if he or she doesn’t know where it is.

Those and other things are what I mean by that 5 percent, those elements that, when executed well, can set your business apart and help propel it to the next level—or, at the same time, hinder your growth if they’re not done right or ignored altogether.

But there are issues beyond the obvious. Stories have been written about me saying that I can see a burned-out light bulb forty thousand feet in the sky. Why is that? Because when I go into my businesses, I pay attention and look for what’s wrong. I’ve trained myself to see little things that matter. It drives some of my colleagues crazy, but I take their complaints as compliments. Little things truly matter in taking a business from good to extraordinary.

Sometimes the 5 percent stems from complacency—an attitude that 95 percent is good enough. Well, it may be good enough, but that 5 percent you choose to ignore can mean the difference between business as usual and a business that truly excels—a business that blossoms into a regional or national player versus one that’s small and bound to remain that way.

This culture must permeate your business. Show the people with whom you work that the 95 percent smoothly humming along isn’t what truly matters when it comes to separating yourself from everyone else—it’s the 5 percent. You’re always watching for the 5 percent, and they should be as well. Five percent is the attention to potentially small details that a great business owner and staff might miss but a great team would rarely overlook.

Apply that concept to your business. If you make just a 1 percent improvement in the 5 percent that needs attention, think about the results you can achieve—like the room that becomes comfortable because of the slightest temperature adjustment. So, too, with your business—a seemingly small change can have a big impact.

It’s also essential to remember that you have complete control over that 5 percent. The weather or a power outage is out of your hands, but that important 5 percent is something you can wake up to every day and address.

A culture of always being on the lookout for the 5 percent is something that I’ve built in each and every one of my businesses. I urge you to do the same. You should aim for a culture that puts the 5 percent at the forefront of your thoughts, decisions, and actions. Don’t be shy or bashful about letting others know just how critical that is.


Tilman Fertitta will join FOX Business’ Neil Cavuto Wednesday on 'Cavuto Coast to Coast’ during the 1PM ET hour. Tune in for the full interview.