As an entrepreneur I know how hard it is to find time to do the things that need to get done.
Time. It waits for no one, and often it feels like there’s less and less of it each and every day. As entrepreneurs time is one of our most important assets. If we’re not using our time in the most efficient way possible we’re doomed for failure from the start.
In today’s post I’m going to share with you the one simple principle that will provide you with more free time while doing less; a principle that is a common trend amongst the world’s best businesses and the world’s most influential people. It’s called – THE PARETO PRINCIPLE (aka the 80/20 rule)
Background
Pareto was a controversial economist and sociologist who lived from 1848-1923. He discovered that 80% of his garden peas were produced by 20% of the pea pods he had planted. After investigating this further he found that this was actually a common trend amongst most of his gardens produce. He then went a step further and found that the world of economics and business also adhered to this new 80/20 principle. And so the 80/20 rule was born!
Since then his principle has been tested and proven across many business models and systems. For example, did you know:
80% of consequences flow from 20% of the causes.
80% of the results come from 20% of the effort and time.
80% of company profits come from 20% of the products and customers.
80% of all stock market gains are realised by 20% of the investors and 20% of an individual’s portfolio.
It’s a principle that can be applied to just about all facets of life, not just business. So today I challenge you to start thinking about your business and life using this principle by asking the following questions:
Which 20% of sources are causing 80% of my problems and unhappiness?
Which 20% of sources are resulting in 80% of my desired outcomes, goals, milestones and happiness?
As I’m sure you’re aware, as entrepreneurs we’re often caught up in trying to make ends meet, grinding and hustling in our businesses day-in day-out with the hope that we’ll somehow strike gold.
The issue with this is that even if we’re the world’s most efficient human being , if you’re not working on the right things you still can’t get very far. So while hustling and ‘being busy’ is an important factor in the entrepreneurial journey, it’s important that we’re working on the 20% of the things that produce 80% of the results. By applying the 80/20 principle you’re creating a simpler way to take stock of your business (and life) to ensure you’re getting the most out of each and every day, every customer interaction, every client, every meeting and everything else inbetween.
The 80/20 principle is something that you should be applying to just about every area of your business and life regularly.
Here are some situations this principle can be applied to:
A) Advertising: What advertising is generating 80% of your business leads and sales?
B) Partnerships: What partnerships are generating the majority of your leads and sales?
C) Revenue: Identify a list of clients that generate 80% of your revenue. (Note: This is a great way to identify your market sweet spot to drive more business.)
D) Marketing: What marketing channels (email, Facebook, Twitter, Instagram, Youtube etc) are generating 80% of your leads and sales?
E) Personal: Who are the 20% of people who produce 80% of your enjoyment and propel you forward and which 20% cause 80% of your depression, anger and second-guessing?
The concept is extremely simple, however the execution can be challenging. If you can grasp the power of this principle you can essentially free up more of your time to ensure you’re working on the most important aspects of your business in order to drive it forward.
Action Steps:
Set aside some time this week to do a quick analysis of your business using the 80/20 principle and see what you find. It will take a little time, but I can guarantee it will be hugely beneficial to accelerating your business to the next level.
Share:
Where have you used the 80/20 rule before and what was the outcome? Share in the comments below…
*Source: You can read up on more of this in the book 4 Hour Work Week by Tim Ferris