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If your business is not growing, you need to get a handle on the way you are running it. Many business owners tend to spend huge amounts of time to perform unnecessary tasks that contribute little to growth. The 80/20 rule, otherwise known as the Pareto Principle, teaches that only 20% of your actions should lead to 80% of your success. Get a handle on your business by placing the 80/20 rule in implementation and identify high payoff tasks.
The 80/20 Rule (Pareto Principle) Explained
Developed in the early 19th century by Vilfredo Pareto, the Italian economist 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 the theory of Pareto Principle was edited by Dr. Joseph Duran. When used to cause and effect, teaching him to 20% of actions (cause) would produce 80% of the end results (effects). Because Duran theory is expanded on the original version had a Pareto 80/20 rule, Dr. Duran theory soon became known only the Pareto principle.
What Pareto principle means for your business
The 80/20 rule can be applied to almost any situation, but it is especially useful when applied to business (especially if you are now one show). The 80/20 rule is not just another ordinary time / business process management; when used effectively, but the power to drastically increase your income and free up valuable time, allowing the business to grow.
Perhaps this means that you can cut down on staff with weed out projects that are completely unnecessary to install an automated system. Maybe it means that it’s time for you to hire an assistant or a virtual assistant you can hide low-priority tasks. Use the 80/20 rule to identify high payoff tasks within the company and automate the low-priority or non-income driving tasks will allow you the freedom you need to grow revenue.
identify high payoff task
For the purposes of putting theory Duran in context, let’s say 20% of your employees are responsible for driving 80% of sales, or 20% of customers make up 80% of the product or service sales of phone.
to grow your business and success, it is important that you carefully analyze your business model and examine the 20% of your actions are responsible for 80% of your success.
Add the 80/20 rule in action by focusing on the specific projects which will lead in driving sales and revenue. Instead of relentlessly marketing business to new customers, focus more attention on all-selling to existing customers. It takes as often as ten times the effort to get new customers to buy from you as it does to up-sell to existing customers.
review the product and service sales for the last two years. If you have products or applications consistently not sell – close them out at a reduced cost or completely stop them. Identify the products or services (usually 20% of your stock) that continually sell and then focus your energy on driving more sales more customers.
If you’ve got customer feedback, let’s say, on eBook writing, instinctive solution would be to either handle each request individually, or give an updated version of the eBook, free of charge. However, you can easily turn the situation in the high payoff task by keeping the comments or questions and address them in a whole new series of eBooks. Remember the Pareto principle is to do more with less effort. You already have issues to tackle, all you simply need to do is put it in the form of information.
The Other Side of the Pareto Principle
You can assume that you only need to deal with productive side (20%), but projects that fall into unproductive 80% will also be addressed. Management as answering phones and e-mail accounts, set up a website and monitor it, and push papers should certainly not fall into the hands of the executive in business (that’s you). Not to say that this project should be eliminated from your business model, because they are essential. The difference is that they must be hidden so you can focus on the high payoff tasks and set up the company for growth. Hire a Virtual Assistant or employee to take responsibility for the tasks that you can not and should not do.
If your business is struggling, you can use the 80/20 rule to identify high payoff tasks. If you are currently working ten hours or more every day, put the 80/20 rule in action to finally take back control of your life. By doing so, you will be able to move past the ineffective projects that make up 80% of your business and take up most of your time.
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Source by Anne Bachrach