With the passing of every new year, we all like to reflect. Julie and I reflect by reading our journals and giggling at our photos. We feel very fortunate to be able to travel and see the world for a significant portion of the 365 days.
In the past, I used to be married to my businesses — virtually zero days off. Julie tolerated, thankfully. One day, I realized that I needed to change because working 60 hours a week was bull spit. The moment I altered my operations, I worked astoundingly less and made unbelievably more.
To have the luxury of time, I had to give up a lot. In fact, using Pareto’s Principle, I gave up roughly 80% of my potential. I chose to sacrifice in order to gain. Let me explain how this works.
Pareto principle (also referenced Pareto efficiency) is commonly known as the 80-20 rule (the law of the vital few). In 1906, Vilfredo Pareto observed that 80% of the land in Italy was owned by 20% of the population. He also concluded that 80% of the peas in his garden were produced by 20% of the seeds.
According to Living Life the 80/20 Way by Richard Koch, he summarized this rule nicely for entrepreneurs and business owners.
- 80% of your profits come from 20% of your customers
- 80% of your complaints come from 20% of your customers
- 80% of your profits come from 20% of the time you spend
- 80% of your sales come from 20% of your products
- 80% of your sales are made by 20% of your sales staff
Therefore, in order to successfully maximize your effectiveness, you must focus your energy on the 20% that yields you 80%. Don’t waste your time on things that yield you 20%, but takes up 80% of your time. And this is parallel with everything in life.
1. List Everything
Write down everything you offer and contend with — products, services, customers etc.
You might realize immediately that some items don’t fly off the shelf, while others are constantly best sellers. Also, you might realize that a small handful of customers always refer you new clients, while others are indifferent.
Identify your 20% items or customers that yield you 80% of sales or return. You want to keep these.
Similarly, identify your 80% items or customers that yield you 20% of sales or return. You might want to discard these.
This is the hardest step. Sacrifice means loss. Loss means pain.
However, imagine what would happen if you could focus 100% of your energy on your previously allocated 20% energy that yields you 80% of sales. The rewards would be phenomenal.
At the same time, sacrificing 80% of the tasks that yield you the least returns means that you have 80% more time. Simple math, mates.
Once you have sacrificed the duds, focus your energy on building up the 20%. Make them shine.
Personally, I am someone who likes to work really hard for small amounts of time and enjoy the rest of the day or week playing with Julie.
Hopefully this formula works just as well for you. With the new year, comment one resolution!
P.S. Check out an editorial tabletop I photographed for Wedding Style‘s newest issue!