BUSINESS BREAKTHROUGH #5
Vilfredo Pareto, a nineteenth-century Italian economist, wrote a mathematical model describing income distribution in Italy and found that 80 percent of the land was owned by 20 percent of the people. It turns out the Pareto principle applies to just about everything in nature and business, including sales, customers, products, marketing efforts, and your time. If you look closely, you will find that 20 percent of your activities tend to generate 80 percent of the return on your investment of time, energy, and money. Vilfredo Pareto even found this principle to be true in the production of his garden’s peas.
For this reason, understanding which 20 percent of your activities generate 80 percent of your results is critical to your success, both business and personal. More often than not, I find that business owners are working in the 80 percent, not the 20 percent. If time, energy, and money are limited resources (and we know they are), then it is important to learn how to leverage your time, energy, and money to maximize the return on your investment of those resources.
To focus on your 20 percent and achieve the return your looking for, you may need to learn to say no more than you say yes. Think about it: Whenever you say yes to something, you are essentially saying no to something else. Your plate will only hold so much. You cannot do it all.
I spent Thanksgiving last year in Maine with my middle son and his family and friends. The buffet table was loaded with almost endless delicious options. I had to face the facts: My plate could only hold so much before things would start to fall off. Your plate has limits as well. Focus on the 20 percent that will generate the greatest return. Vilfredo Pareto figured it out in the nineteenth century, and it still apples today.
Do you need help understanding how to get intensely focused on the 20 percent that will generate the greatest return of your investment? We are business experts—let us help you.