March 22, 2010

80/20 Rule: Simplify Your Life While Increasing Your Results

BY John Paul Narowski IN Productivity 2 Comments

Do you have those few rock star clients that bring in tons of sales compared to everyone else? Do you have those couple of pain in the-you-know-what clients that cause most of your grief? Well my friend you have stumbled upon Pareto’s Principle, also known as the 80/20 Rule.

At the turn of the 20th century a very smart Italian economist named Vilfred Pareto noticed that 80 percent of the wealth in this country was controlled by 20 percent of the population. He developed a theory and mathematic formula that would later be interpreted by Dr. Joseph Juran and simplified in the 1930s as “the vital few and trivial many”.

This principle has applications in almost every aspect of your life if you look closely enough. While it many not always be a perfect 80/20 split the general theory usually holds true. Eighty percent of your outcomes come from 20 percent of your efforts, 80 percent of your sales come from 20 percent of your clients, 80 percent of your frustration comes from 20 percent of your customers, etc,

Applying the 80/20 Rule to Your Business

The greatest use of Pareto’s Principle is identifying where you should be focusing your efforts. Follow these simple steps to maximize your time and effort using the 80/20 rule:

  • Analyze Your Day: Take time to sit down and look at the time you spend doing your routine tasks. Are you constantly checking your email? Do you chat with co-workers often? Activities like these can really waste away your valuable time. Write down what you do, how long it takes you and the value it provides to your bottom line.
  • Cut the Unproductive Out: You will find that a large majority of your time is spent on activities that do not help you in your goal to make more money and succeed. If it’s in your power eliminate or cut down on meetings as these seem to be a giant time suck for most people. Avoid co-workers known to be time bandits. Take things a step further: find the accounts on your book that are taking up time but not paying off in results.
  • Focus on the Winners: After identifying the things, accounts and people that are helping you make more money (or however you gauge success) focus on them. Work with the unproductive accounts and clients to find a system of communication that saves everyone time. They must respect your time
  • Repeat Over and Over: Find the qualities that your top “20 Percenters” have and look for more like them. Continue to bring new accounts in and separate them into the appropriate category. After awhile you will have a roster of all star clients and a long list of steadily producing, low maintenance accounts.

80/20 in Your Life

Don’t stop now; the 80/20 principle is too powerful to not apply to all aspects of your life. Try these simple tips to increase your overall productivity and happiness using Pareto’s Principle:

  • Social Circle: Take a long look at your acquaintances and figure out which ones bring the most stress and satisfaction to your life. Compare that to the energy you are expending to be friends with them and act accordingly. It might seem a little cold but why waste time and energy on a friend that is negative and only brings you stress and unhappiness?
  • Diet: We’re all looking to lose a couple pounds and the 80/20 principle can help. Map out what you eat, the calories involved, the nutritional value and overall happiness it all brings you. Chances are you will find that for the 600 calories you spent on that breakfast burrito you were only mildly happy with the overall outcome.
  • Entertainment: Log all of your TV, DVD, Internet, reading and other time spent on entertainment. Notice how much you gained (either in satisfaction or knowledge) from the activity and cut all of the filler out. With your new found spare time you can explore hobbies you always felt you didn’t have time for, enjoy more of what makes you happy or anything else.

Apply these simple steps to your business and life and you’ll find productivity will come more natural to you while stress and frustration are limited.

I’ve been hacking at various business ideas since I was 16. I’m a full stack developer and love crafting user experiences. I’ve been nose deep in code since I put the legos down, and built several successful businesses in the process. I’ve lost some hair, gained some experience and throughly enjoyed the journey.

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