An economist named Vilfreto Pareto came up with the formula when he discovered that 20% of the people owned 80% of the wealth in Italy back in 1906. Since then, many other people have also discovered that this same 20/80 ratio applies to many other areas of life as well. 20% of something is always responsible for 80% of the results – and this has come to be known as the 20/80 rule, or the 80/20 principle.
How The 20/80 Rule Applies To Business.
The 20/80 rule basically reminds you to focus only on the 20 percent that matters. To improve your business you should first determine what your 20% is, and only focus on these tasks each day.What is the 20% of what you do each day, which produces 80% of your results? I really recommend spending a lot of time thinking about what your 20% is, and getting these activities done FIRST every day! You will see an immediate boost in your profits.
If something IS NOT GOING TO GET DONE today (which is quite often the case in life) make sure it IS NOT IN THAT 20%. The 20 80 rule, or Pareto rule is a brilliant guide to always refer to.
To help you further understand the Pareto rule here are some examples of how it can work against you…
80% of your efforts will give you 20% of your results.
80% of your projects will give you 20% of your revenue.
80% of your projects will give you 20% of your problems.
80% of your people will give you 20% of your work.
80% of your customers will give you 20% of your revenue.
80% of your customers will give you 20% of your headaches.
Best to stay out of that 80%! These examples help you to see how the 20/80 rule really can apply to almost anything. This realization will quite often radically change how business owners spend their time.
Time is the most valuable commodity of the entrepreneur. Any successful person in business completely understands this – and understands the 20/80 rule.
Are You Using The 20/80 Rule In Your Business?
In my online direct sales business the 20% of tasks that produce the most results for me are (in this order):- Picking up the phone, speaking to prospects and closing them (connecting and building relationships).
- Sharing tips and adding value to the community (to establish more rapport, build posture and generate more prospects).
THAT’S IT!! At the very least this is what I aim to do every single day. Some examples of the 80% of tasks which would help me to fail are:
- Trying the latest ‘magic pill’ traffic strategy and spending hours trying to ‘work it out’.
- Spending too much time on Facebook rather than just adding new prospects.
- Checking emails (HUGE time waster for most people).
How The 20/80 Rule Directly Applies To Your Organization.
In terms of looking at your actual organization the 20/80 rule applies like this:20% of your people will make you 80% of your money. These are your leaders!
Put as much time and effort into your 20% as you can. Don’t necessarily ignore the other 80%, but just limit your time with them.
Always allow as much time for your leaders as they need. I mentioned in my last post that attrition rates of most million dollar organizations is often as high as 80%!! (again the 20 80 rule!) The 20% that do remain and build you a solid organization are your leaders.
Nurture them, and give them help when they need it (chances are they won’t need much from you though).
So are you having busy time putting out fires all day, or are you focusing on your money time? Seriously… What have you done today? Have you narrowed down your own income generating tasks?
If you have never looked at this, PLEASE spend 10 minutes now just writing down what you KNOW are the 20% of tasks you do each day that give you the most results.
The 20/80 rule is a brilliant guide for anyone in business to use, and in today’s competitive marketplace it is almost a necessity.
