Who is Pareto? And Why Should I Care
As we learned last week, there are 86,400 seconds in a day and, no matter how you organize, shuffle, and rearrange, you will never get any more. Truly successful people understand that the only way they can “get more time” is to ALLOCATE the existing time differently. In today’s fast-paced world of email, cell phones, social media, and all the other demands placed upon us, to be successful, we need a few simple ways to manage, allocate, and maximize our time differently. Start practicing some of these tips and then let me know how it’s going.
At its core, the secret to maximizing your effectiveness is to concentrate your activities on your highest-value activities. Put another way:
- Spend more time on high-value activities and less time on low-value activities.
- Start doing new highly productive things and stop doing old nonproductive things.
- Spend as much time as possible on those activities that are urgent and/or important.
Sounds easy. But, how do we differentiate between high- and low-value activities?
Apply the Pareto Principle, more commonly referred to as the “80/20 rule.” This principle is one that, if you look closely, will apply to virtually every aspect of your life. Pareto’s Principle dates to the 19th century and was used to explain the distribution of incomes throughout a society. Typically, 20% of the population earns 80% of the income. Today, we can take this principle and apply it to all aspects of our lives and businesses:
- 20% of your customers account for 80% of your business.
- 20% of your products account for 80% of your revenue.
- 20% of your employees will perform 80% of the productive work.
- 20% of your time will give you 80% of your productivity.
If we take this one step further, we can differentiate between high- and low-value activities by looking at what our hourly rate is. For example, let’s assume your yearly income is $100,000. There are roughly 2000 working hours in a year, so $100,000/2000 = $50.00 an hour. Now, whatever task you are doing at any given moment, you must ask yourself, “Would I pay someone this rate to do this?” For a real-life example, some time ago, I was working with a client who was generating an annual income of $75,000 and they wanted to double their income. We started breaking down the daily activities of this client and found they were taking donuts around to customers every day as a goodwill gesture. Effective way to stay in front of customers? Yes. But, they were spending two hours every day doing this. When I asked this client if they would pay someone $37.50 an hour to deliver donuts, they looked at me like I was crazy. But, then, the reality set in. This client started paying someone $10.00 an hour to deliver donuts and then spent that two hours a day doing more productive things. Then, they took the savings and started doing face-to-face lunches with clients and new prospects. The shift in how they allocated dollars and time payed a huge dividend and, within 18 months, they had doubled their income.
You can experience the same productivity shift by applying Pareto’s 80/20 rule to every aspect of your business and your life. Have questions? Feel free to reach out to me.
About the Author
With more than three decades of experience in all facets of sales management, customer service, business growth, and staff coordination, Certified Business Coach Greg Emslie is a focused professional with the tools to help you grow and manage your business effectively.
Driven by his ability to implement proven business concepts and help improve teams, Greg affects all areas of the companies he works with, including sales, leadership, profitability, and decision-making. He focuses on improving efficiency and processes for his clients while helping them grow their revenue base.
Ready to begin finding other ways to make your company more productive? Let’s get the conversation started. Contact Greg Emslie for a business strategy discussion today!