Use the 80/20 Rule to Grow Your Business

Goal Setting & Achievement Podcast: Business|Productivity

If your business is not growing, you need to get a handle on the way you’re running it. Many business owners tend to spend a great amount of time performing unnecessary tasks that contribute little to the growth of your business. The 80/20 rule, otherwise known as the Pareto Principle, teaches that only 20% of your actions should lead to 80% of your results. Get a handle on your business by putting the 80/20 rule into effect and identifying your high payoff tasks.

The 80/20 Rule (Pareto Principle) Explained

Developed in the early 19th century by Vilfredo Pareto, an Italian economist, the Pareto Principle was used to explain why only 20% of the population was responsible for 80% of the country’s wealth. It was later in the mid-1900s that the theory of the Pareto Principle was modified by Dr. Joseph Duran. When applied to cause and effect, he theorized that 20% of actions (cause) would produce 80% of the end results (effect). Because Duran’s theory expanded on Pareto’s original version of the 80/20 rule, Dr. Duran’s theory soon became known solely as the Pareto Principle.

What the Pareto Principle Means for Your Business

The 80/20 rule can be applied to pretty much any situation, but, it is especially beneficial when applied to a business (especially if you’re currently a one person show). The 80/20 rule isn’t just another ordinary time/business management method; when used effectively, it holds the power to drastically increase your income and free up your very valuable time, allowing your business to grow.

Maybe this means that you can cut down on staff by weeding out tasks that are completely unnecessary by setting up an automated system. Perhaps it means that it is time for you to hire an assistant or virtual assistant to whom you can delegate low-priority tasks. Using the 80/20 rule to identify the high payoff tasks within your business and automate the low-priority or non-income driving tasks will allow you the freedom you need to grow revenue.

To download my Free Sample Prioritized Action List (PAL) that everyone in your office can use, go to https://www.accountabilitycoach.com/pal-sample/.

Identify the High Payoff Tasks

For the purpose of putting Duran’s theory into context, let’s say that 20% of your employees are responsible for driving 80% of your sales, or 20% of your clients make up 80% of your product or services sales revenue.

To grow your business and success, it’s vital that you closely analyze your business model and examine which 20% of your actions are accountable for 80% of your results.

Put the 80/20 rule into action by focusing in on specific tasks that will result in driving sales and revenue. Instead of relentlessly marketing your business to new clients, focus more of your attention on up-selling to your existing clients. It takes as often as ten times the effort to get new clients to purchase from you as it does to up-sell to an existing client.

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