You’ve probably heard of the 80/20 rule before, but never really had the chance to look into it. It has its foundation in economics and in some ways it has a lot to do with statistics as well. But it’s not exclusive to either one of these fields. In fact, it can be applied to almost any situation in life, which is why it’s so popular. Especially among entrepreneurs!
So, what does this 80/20 rule entail?
The Pareto principal (aka 80/20 rule), named after the Italian economist Vilfredo Pareto, explains that 80% of your results are produced from employing 20% of your efforts. This tactic was invented for you to evaluate your personal economy and actions so you can see where the maximum amount of your efforts take place. The purpose of identifying these actions and areas is to hone in on them and enhance them.
As an example, let’s say you have a to-do list and there are about 10 tasks you need to get through for the day. Chances are that two of these items are a lot more valuable than the other eight items combined. What happens is that if you don’t identify the most essential tasks, you tend to lose valuable time and effort focusing on the most trivial ones. By the time you realize this, the day’s already gone and you still have the most important tasks left undone.
One of the easiest ways to identify the important areas is by simply asking yourself: Out of everything I need to get done today, what is the one goal that will bear the greatest positive impact? By setting clear goals for yourself, you make the whole process of planning and accomplishing them that much easier.
When it comes to your work, you can apply this 80/20 rule to get a lot more done in a lot less time and make much more money. You have to wonder: Do you have a client who pays you the most money for the least amount of work? Is one of your products selling at a better rate than the rest because of the time you put in beforehand?
To answer these questions you have to really look into your work and how you’ve been handling your business so far. A way to do this is by going through your business income, client lists, and projects to see where most of your efforts go and really think about whether they’re paying off or not. Then proceed to invest more of your time into maximizing a lot more all of those valuable areas that you identified.
If you spend your whole day doing things and then you realize you barely got anything of value done, then it’s time to sit down and get your affairs in order. This is very common because people tend to spend a lot more time focusing on so many things at once, but at the end of the day they end up noticing that they produced very little results. I’m sure we’ve all been in that spot!
Those are the actions you really need to analyze. Put a pin on the things that take you a lot of time but don’t produce much value. Focus instead on the things that allow you to be more productive! If you focus your competence into that 20% of the tasks that contribute to 80% of results, you’ll never stop growing.