Pareto - The man was a genius.

Do you know the most valuable activities you do in your daily life?

Where does the biggest chunk of your sales come from?

Who or what contributes the most to the growth of your business?

Here is how you find out.

The Pareto principle was developed through the observations of Vilfredo Pareto, an Italian economist, who noted that 80% of the wealth in Italy came from only 20% of the population. In fact, he worked out that this principle applies in pretty much everything in life; here are some more examples;

• 20% of plants produced 80% of crops

• 20% of land produces 80% of food

• 20% of clouds will produce 80% of the rain

• 20% of thieves make of with 80% of loot

• 20% of roads (and the carpet in your home) carry 80% of the traffic

How does the Pareto Principle apply directly to me?

The Pareto Principle can be applied to your activities and how you manage time. Applying the 80/20 rule to your daily activities would suggest that 20% of the effort you put in will generate 80% of the output.

If you pick out 5 activities in your day, for example: reading emails, managing your staff, brainstorming, doing paperwork and meeting clients; One of these five activities that you spend time on will generate the most income.

When you know what activities generate the most income then you should capitalise on those activities.

Generally speaking, the 20% tasks on your to do list will be ones that you don’t want to do, you will find great excuses not to do them. Brian Tracey, a wonderful personal development teacher has a principle called “Eat that Frog”.

He says, if the worse thing you had to do everyday was eat a frog, when is the best time to do it?

Most people reply, first thing so that you get it out of the way.

Similarly for those tasks on your to do list, which one is your biggest and ugliest frog? Get it done first, then work on your next ugliest frog and so forth.

How would your day and life look like if you followed this simple principle everyday for the rest of your life?

How 80/20 applies to your business

Here is a summary of some of the areas that this rule can apply in your business.

• 20% of your team produces 80% of work

• 20% of your marketing generates 80% of leads

• 20% of your customers make up 80% of complaints

• 20% of your customers make up 80% of your profits

• 20% of your products or services will produce 80% of your profits

If you know which part of your client base gives you the most income then you should logically tap into that sector and seek opportunities for growth. Spend more time to listen to that sector and find ways to keep them happy.

In business, you cannot leave the 80% behind because 20% sales are still sales, or can you? More often than not, all your headaches will be in this 80%. If you have headache clients that are just not worth it, sack them. The energy you are wasting on them could be going to your top clients who will do more businesses with you and tell more people like them.

So concentrate 80% of your business activities on the 20% of your clients that give you the most profit but also give 20% of your time to the remaining 80% of your clients. This way you give the most attention to the ones that give the most value but still have time for everybody else.

The Pareto Principle is a guide to how you can organise your personal and business activities. The 80/20 rule will force you to identify the activities that give you the most results. By doing so, you gain an insight into what needs the most attention and what can give you the most opportunities. This will eventually streamline your efforts to its most efficient form and give you the best results possible. Growth is always just a matter of organising your priorities.

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