The principle I'm talking about is the Pareto Principle, or 80/20 rule. Invented by Italian economist Pareto in 1906 it still holds true. The Pareto Principle says that there is unequal distribution in every part of the world. Not only meaning population, expertise, goods or money. But also productivity, results and profits.
Let me share with you the implications of using the 80/20 rule.
About a year ago my business coach and I were discussing the busyness of modern society. Even we as business owners, who got into business to create a freedom life-style, were busy all day long. The current era is that of the 24-7 economy. We can do business all day long and as a result there of, a lot of business owners do.
My coach then told me about the Pareto Principle. Something I'd heard of in high school and also read about in various economic and marketing related books. But the true meaning never boiled down to me.
He gave me the assignment to 80/20 my business activities every two weeks. After using is successfully, having increased profits by 500% and working less then 10 hours a week on my business - I created this critical question list for my associates, who had the same problems I recovered from:
1. When I can do only one task this day, what would I do?
2. When I can do only one task this week, what would I do?
3. If I do only this task, would my company survive?
4. Does it add the most profits to the bottom-line, from all other activities?
5. What are the implications to not doing those other tasks?
6. Are there any essential, must-do tasks on my list - in order for my company to survive?
7. Can I outsource or somehow get others to do this task, below my own hourly rate?
Answer those questions on a bi-weekly basis. You'll soon discover that many of your activities should be done by others. By doing this you can focus more on the bottom-line and the big overview of your business. You'll see profits soar, you being more productive and less distractions coming between you and your goals.
