Today, we’ll talk about the 80/20 rule, most of you have heard of it, Vilfredo Federico Damaso Pareto was an Italian engineer, sociologist, economist, political scientist, and philosopher who was born in 1848 and died in 1923.
He noticed that people in his society could be divided naturally into what he called the 20% vitally few and the 80% trivial many He later discovered that this principle could by applied much more broadly: i.e. 20% of activity, 80% of results 20% of customers 80% of sales 20% of products or services 80% of profits 20% of tasks, 80% of value of what you do.
So, let’s say you have 10 items on your to-do list, 2 of them will turn out to be more valuable than the other 8 combined In other words, the number of tasks is LESS important than the importance of tasks It’s possible that 1 task of your list of 10 can be worth more than the other 9 together.
Now that should be the task we should do first. We talked about prioritizing and eating the frog in a previous episode. Start by reviewing your business, where does most of it come from? What activities lead to most of your business? What business and/or services have the biggest ROI? We need to know our profit margins?
Which jobs brought in the most money and where did we lose money or only had a tiny profit margin? We want to make sure not to go after more jobs like that since this would fall into the 80%. In this case it keeps us from focusing on the more lucrative jobs, the ones that make our business profitable. So, before you begin work, ALWAYS ask: does this task belong in the top 20 or bottom 80?