There’s a powerful business-growing, money-making, time-saving principle I want to introduce you to…
Most people who know of it will agree it can be used to improve our daily lives and make it’s practitioners far more effective (and rich). Perhaps you’ve heard of it — most commonly referred to as “the 80/20 Principle.”
80/20 applies to pretty much everything…
From freeway traffic, to business growth, sports, Hollywood blockbusters, and the distribution of wealth. It was first discovered over a hundred years ago by an Italian Economist named Vilfredo Pareto (which is why you may have also heard it called the “Pareto Principle.”)
Pareto stumbled across this pattern when he realized 80% of the wealth in England was held by 20% of the population. The concept has been brought more recently into the mainstream with the book The 80-20 Principle, by Richard Koch. And even though the book first came out roughly 23 years ago…
A LOT of people have been talking about it lately. So I was already interested in checking this one out. But when I found out the author, Richard Koch, had himself used the 80/20 rule to go from working 60+ hours a week making 6-Figures … to being worth $400 million and working just one hour per day…
Well, let’s just say I was pretty quick to pick it up. I gave the book a read over Christmas and let me tell you…
It is NOT fun to read. The writing is dry and much of it is downright boring (sorry Richard). However… it WAS incredibly valuable. And don’t worry because I read it so that you won’t have to. Now there’s too many insights to share all the important ones in just one email (I’ll be bringing you more in the future)…
But for now I’ll give you some of the best ones … What 80/20 really means is this:
Less is more. 80% of our results come from just 20% of our efforts. There are only a few things that ever produce important results..
These are called “The Vital Few” (the 20%). Likewise.
Most activity is a waste of time and does not contribute significantly to your results.
These are the “Trivial Many” (the other 80%!).
So what does this mean for you?
You can accomplish far more, have more time, less stress, and make more money if you will simply…
Cut out the “Trivial Many”… And focus your intention and energy on the “Vital Few.”
Even though I hadn’t read the book yet…
80/20 is EXACTLY what I used with my client Frank Den Blanken to help him go from $100k per year working 15 hours a day … to now making $100k per month working half that much… simply by focusing on what gets BIG results.
This is also what my mentor Mark Ford was talking about in his book, Ready, Fire, Aim, and when he told me years ago to focus 80% of time in my business on selling. Out of all the activities we “must” do in a business — managing social media, bookkeeping, customer service, sales, and everything else under the sun — it is sales alone that is responsible for 80% of your growth and success. Finding and closing buyers is what brings the money in. That in itself is a powerful 80/20 lesson that you should apply…
But how else might you harness the 80/20 Principle in your business?
I suggest doing an analysis to determine where 80% of the revenue/profits actually come from.
1. Analyze your revenues separated by:
– lead source
– new vs. repeat customers
2. Then do the same thing for your profits.
3. Using this information we can now build a plan to boost sales…
– You might go back to old customers.
– You could make a plan to deliver outrageous service and results to your top 20.
– You can focus on creating happy “Core Customers” to ensure long-term profitability.
On the flip side, you can also 80/20 your costs to cut back and save yourself big bucks…
Simply analyze your expenses with the same exercise and categories as above.
And don’t forget to 80/20 your time… consider the following questions:
– Where are you spending your time?
– How much time do you spend selling?
– Where is your team spending their time?
– What is the division between activities that make you “Money Now” vs activities that will make you “Money Later”?
So there you have it…
A few quick 80/20 hacks to save you time, boost your profits, and get bigger results with less effort this year.
And you didn’t even have to try and stay awake getting through the book 😉
To Your Success,