The 80/20 Rule for Business & Time Management

Do you often find that your day has flown by and you haven’t accomplished anything of value or anything that directly brings you income? Do you wonder how you can be more productive and less time poor? Or how you can increase your business efforts without spending more money?

By now the majority of people will have heard of the Pareto Principle or the 80/20 rule. The Pareto Principle is very simple, yet extremely important. It is named after Italian economist Vilfredo Pareto, who, in 1906, found that 80% of the land in Italy was owned by 20% of the population. Importantly, Pareto’s finding found that this 80/20 distribution occurs quite frequently. In business and time management for example, in general, 20% of your customers represent 80% of your sales. And 20% of your time produces 80% of your results. Examining this ratio within your business can help identify where best to spend time, resources, marketing, research, and hiring efforts – not to mention highlight problem areas and those opportunities for improvement.

Ask yourself these questions:

  • Have a product range? Have a look at how much of your profit comes from each item. Put your effort into the 20% that give you 80% of your sales – your winners.
  • Selling products or services? Most likely, 80% of your sales come from 20% of your customers- the ones who make the big purchases and are repeat-buyers. Cherish that 20%.
  • Have a sales force? Have a look at how much of your profit comes from each person. Make sure you reward and retain the 20% that are your winners.
  • Have an affiliate program? Find the top 5-20% who give you 80% of your income, and make sure you support, encourage and reward your winners.
  • Do advertising? Have a look at where the sales come from. Then identify the few ads that really pull, and the few places where you run them that really produce. Then refine your winning ads, and run them in those few places that give you the best results.
  • Check your web traffic logs! Which keywords are bringing you the most traffic? Which search engines? Which websites? You’ll find that a small number of keywords, search engines and websites give you the lion’s share of your traffic. Nurture them, and build on those strengths!

The 80/20 rule can also apply with time management. When you think of your typical work day, how is it broken out? Out of 8 hours, for example, during how much of that time do you feel truly productive? If applying the 80/20 rule, then roughly only 1.5 hours of our day may be really impactful, which can be both insightful and disheartening! But when one adds up all the time spent in meetings, emails, coffee breaks, distractions, phone calls, procrastinating, and lunches, it doesn’t seem so far-fetched, after all. Using the 80/20 rule can help prioritise the most important task for the day and set aside a 20% block of time to complete it. Limit distractions by shutting off your email and avoiding social media time. Focusing that time on your most pressing projects can make a world of difference to your level of productivity and sense of accomplishment each day.

Thinking about and planning how you can apply the 80/20 principle to your time and business can be both meaningful and productive. Of the things you do during your day, only 20 percent really matter. Those 20 percent produce 80 percent of your results. Identify and focus on those things. When the fire drills of the day begin to sap your time, remind yourself of the 20 percent you need to focus on. If something in the schedule has to slip, if something isn’t going to get done, make sure it’s not part of that 20 percent.

If you find the 80/20 principle works for you in time and business management, you can apply it to other areas of your life as well. After all, life is full of unnecessary busy work and distractions. How much better would your life be if you could spend less time doing what needs to be done and more time and energy doing the things that really matter to you?

Sally Hams

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