80/20 RULE IN BUSINESS

Vilfredo Pareto a  famous Italian economist observed in 1906 the unequal distribution of wealth in his country. He observed that 20% of the people owned 80% of the wealth. After Pareto made his observation he created a formula and many others have since observed similar phenomenas in their own areas of expertise.

Think about it,

• 80% of your company’s growth is related to 20% of your workforce
• 80% of your revenue is made by 20% of your clients
• 80% of your productivity is because of 20% of your hard work
• You spend 80% of your time doing 20% of your tasks

What It Means:

By the numbers it means that 80% of your outcomes come from 20% of your inputs. What we can learn from this principle is to focus on those vital tasks that really matter, which is only about 20%. The trick, is to make everything work in harmony and avoid wasting time on those 80% activities that produce little to no satisfaction for you. When you do this, you reduce your stress levels and increase your productivity.

All the mundane tasks that crowd your everyday life can be easily delegated to a reliable Concierge or to a Virtual Personal Assistant.

As entrepreneurs we are the first to say, “I can do it myself.” Then you spend 6 hours and countless trips to Home Depot trying to fix a leaky toilet. You may be competent to do what you think is a little job but now you’re doing a $20 per hour fix-it job and you’re not doing your main job, which is getting and keeping customers. A job pays $75 to $1000 per hour.

The purpose of delegation is to focus on what’s important, and that as per the rule is only 20%. The goal when using the 80/20 Rule is to maximize the small and powerful 20% and reduce the wasteful 80%.

How to apply the 80/20 rule in your life:

1. Pick an area of your life where you feel there is an imbalance. (money, time, health and possibly even relationships).
2. Try to identify the key 10, 20 or 40 % of inputs that are creating most your results.
3. Find ways to emphasize the key %. Spend more time doing those activities. Place them first in your schedule, make them an appointment that can’t be changed.
4. Find ways to eliminate or delegate the rest. Get rid of activities that don’t have a high payoff. Stop spending time in relationships that don’t create enough value. Stop wasting time on things that you aren’t passionate about and that ultimately drain your creativity and energy.

The message is simple enough – focus on activities that produce the best results for you. To start living 80/20 today, there’s only one thing left to do – focus your time and energy on the things that you are super passionate about.

As always, if you need some help we at Balance InStyle would love to help!