Tag Archives: pareto principle

The 80/20 Rule – Pareto Principle

Perhaps you don’t know this commonly cited rule by the name Pareto principle, or the law of the vital few, or even the principle of factor sparsity, but I’ll guarantee you’ve heard of the 80/20 rule. This common “rule of thumb” generally refers to business applications where 80% of your results come from 20% of your efforts, or 80% of your sales come from 20% of your customers etc.

This principle is named after Vilfredo Pareto, an Italian economist who discovered in the early 1900′s that 80% of the land in Italy was owned by 20% of the population. Since then, it’s been correlated to so many things that it’s simply known as the 80/20 rule.

What I want to emphasize though, is how to leverage the 80/20 rule. If you know that 20% of your efforts produce 80% of your income wouldn’t you want to figure out how to do more of that 20%? Let’s say your regular income is $5,000/month, and you can attribute that almost entirely to the time you spend giving sales presentations, then it stands to reason if you do more presentations, your income should go up proportionately. I know this is something I work on improving all the time. It’s so easy to get caught up in the “busy” work, that takes me away from the productive work that gets the results.

We all have the same number of hours in a day, and getting in the habit of doing our most productive work first is a great way to ensure results continue to improve. To create more time for your most productive activities find ways to delegate your other non essential tasks to others. Hire a virtual assistant to filter through your email, take calls, do research or a myriad of other routine tasks that take you away from what you do best.

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