Using the 80/20 Rule for Your Business Success

Have you heard of the 80/20 principle?

It was initially presented by Vilfredo Pareto in the late 1800's when he noticed that 80% of the land in Italy was controlled by 20% of the population. It has since become known as the Pareto Principle, or the 80/20 Rule...

The amazing thing was that once he presented his theory, many other researchers, scientist and statisticians discovered that this distribution applies in so many different fields.

Some examples that you may have noticed:

You probably wear 20% of your clothes 80% of the time
20% of your efforts create 80% of your results - also in the workplace 20% of the staff get 80% of the work done
20% of a store's inventory accounts for 80% of it's profits
20% of customers account for 80% of the complaints and by contrast; 20% of customers accounts for 80% of your revenue

Now of course, these are gross over-simplifications and your individual experiences may vary, but there has been enough research and evidence to support this distribution spread.

So how can you use this principle to improve your business?

Knowing that 80% of your revenue and profits come from a select few of your clients, they deserve 80% of your time and effort.

Knowing that a select few of your clients account for 80% of your headaches and challenges around your business, you may want to re-evaluate whether to continue doing business with them or not. This is especially true if working with these less-than-ideal clients drain you from doing your best work with your other clients.

The challenge is that the idea of letting go of clients when you are doing your best to build your business may feel counter-intuitive and bring up fear and anxiety. What I wish to offer though is that working with less-than-ideal clients does 2 things.
First, it does not allow you to do your best work and thereby not servicing the client for their highest good.
Secondly, by taking up space in your calendar, it does not create the vacuum to be filled by your ideal client in an energetic way.

Define for yourself what your ideal client looks like. What are the qualities that make them ideal for you, get as clear of an image as you can around this client.

Then evaluate all of your present and future clients by this criteria, those that do not meet your qualifications may be better suited working with one of your networking partners.

As your business grows and your skill set evolves, you may consider grooming your list on a regular basis to make sure that you are focused on your top 20%. Which, by the way, will put you in the top 20% of service providers.