Pareto Principle: How to Make the 80/20 Rule Work for You

Pareto, in 1906, noticed that 80% of the land in Italy was owned by 20% of the population.  He also noticed that the same distribution of land was the same in other countries.  His observations did not stop at land distribution.  He actually developed the 80/20 rule after noticing that 20% of the pea pods in his garden contained 80% of the peas.

80/20 Rule and Your Efforts

The Pareto principle, aka the 80/20 rule, states that 80% of your results come from 20% of your effort.  This rule basically means that there are a handful of activities that you do each week that produces the majority amount of your income.

There are other places where you can notice the 80/20 rule.  Take a look at any business and you will see that the majority of the revenue comes from a minority of the clients.  These are usually long term clients who are repeat customers.  The rule does not just apply to business.  Notice that only approximately 20% of starving artist actually become discovered and make a name for themselves.

Majority of Outputs come from Minority of Inputs

Now, keep in mind, that the 80-20 rule is not hard and fast in every aspect of your life.  You might find out that sometimes the ratio is 95-5 or 90-10.  Whichever it is, the pattern will remain that the majority of the output will come from the minority of the inputs.

Manage More Effectively Using the 80/20 Rule

How does the 80/20 rule help you to manage more effectively?  It reminds you to focus on the 20% that actually makes a difference.  Make sure that you are able to identify the 20% of the activities, work staff, etc. that is actually responsible for 80% of the productivity.  Begin to spend 80% of your time on that 20% of activities.

Conclusion

As an entrepreneur you need to begin to focus on the 20% of your activities that actually pays the bills.  It might be tempting to spend time on fixing a leaking pipe or running errands.  You know, the $10 an hour jobs.  You are certainly qualified enough to handle such chores.  However, in doing so, you take away time from nursing the relationships with clients that will pay you hundreds per hour.  Outsource the 80% of the tasks that don’t contribute to the 80% of the income and spend more time on the 20% of activities that will really make a difference in your pay check.

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