By: First Union
Using The 80/20 Rule For Success
The 80/20 rule is used throughout business, marketing, economics, and so much more. This rule can help you weed out what is unimportant to your success and help you focus on only those things that are making you successful. So, what is it, what does it mean, and how can it help you?
Vilfredo Pareto was an Italian economist in the early 1900s. As he was gardening he realized that 20% of his pea plants yield 80% of his peas! Why is this important? Because, being an economist, he applied it to other things to see if it mattered. He found that 80% of the land in Italy was owned by only 20% of the population. As he kept investigating, he kept finding this rule to be true in other subjects. He found that overall 80% of the result will come from just 20% of the action.
Why does this matter
The 80/20 rule applies to many aspects of business and it has come to be seen as a “universal truth”. 20% of your representatives probably generate 80% of your sales. Around 20% of your clients most likely account for 80% of your sales. If not exactly, it's probably close. Microsoft has reported that 80% of their errors are solved by fixing 20% of bugs. I own around 20 pairs of shoes but only use 4 regularly.
If you can recognize this and apply it to your business you can become more productive. What if you knew where most of your success was coming from and could focus more than 20% of your efforts on it, then increase that method exponentially.
What would happen to your business if you identified your top sellers and top buyers and focused on that group? As entrepreneurs, there is always the draw to try something new, but what if you spend 80% of your time on what you already know works? This can impact your goals and help your business grow. If you continue down this path of optimization you can focus more of your time on the most productive aspects of your business.
The 80/20 rule is not suggesting that you only go to work one day a week to be more productive. It doesn't have anything to do with time. This is about focusing your time, making more of the time that you are working on something matter. Following this rule can help you focus on what is most important.
The flip side of the 80/20 rule is thinking about those things that do not matter so much, or yield fewer results for much more effort. Identify these effort-sucking tasks in your day and decide if they are worth it. Some things may be standing in the way of your path to success. There may be some daily, weekly, monthly, or annual tasks that are not benefiting you when instead you could focus more time on that top 20%. Start thinking about what you can let go of and what you can focus more time on to build on success.
First Union Lending is in the business of helping smaller companies thrive and grow. This is why we offer truly flexible lending solutions. Call today to see how we can help you!