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Millionaire Mindset Series 22: 20/80 Rule

The 80/20 rule sounds like a statistic and in some ways it is. Personally I’m not a big fan of math’s; beyond basic statistics like page views, follower, unique visitors and when I stretch myself I can go as far as basic book keeping and budgeting otherwise I try and avoid all complex numbers. I work better with feelings, ideas and concepts.

The good thing about the 80/20 rule is that you don’t have to understand statistics to be a believer. Yes, it has foundations in economics and yes, it was “proven” using statistical analysis by a man named Pareto, but it is not meant to be understood only by economics professors.

In a nutshell, the Pareto Principle says that 80 percent of your results will be caused by 20 percent of your efforts. So 80 percent of your income will come from 20 percent of your clients and 80 percent of your sales will come from 20 percent of your prospects. The trick, as you might have guessed, is identifying the 20 percent that will produce 80 percent of your results.

You can definitely apply the 80/20 Rule to most aspects of your business or working life, however I believe your overall happiness and satisfaction are much better variables to focus on. Money certainly plays an important role in your happiness and your money is influenced by 80/20 relationships, but it is only a component that leads to your overall wellbeing, which should be your primary concern.

You’re surely faced with the constant challenge of limited resources. It’s not just your time you need to maximize, but your entire team’s. Instead of trying to do the impossible, a Pareto approach is to truly understand which projects are most important. What are the most important goals of your organization, or boss, and which specific tasks do you need to focus on to align with those goals. Delegate or drop the rest.

It’s important to identify your best (and highest-paying) clients. Of course, you don’t want all your eggs in one basket. But too much diversification will quickly lead to burnout. Focus on the money makers and strengthening those long-term relationships.

The temptation always exists to try the new and exciting. There’s nothing inherently wrong with that, but it boils down to your goals. Are you trying to grow your current business? Would an 80/20 mindset help you to stay focused on your strategic plan and spend less time chasing endless new opportunities?

No matter what your situation, it’s important to remember that there are only so many minutes in an hour, hours in a day, and days in a week. Pareto can help you to see this is a good thing; otherwise, you’d be a slave to a never-ending list of things to do.

So, what 20% of your work drives 80% of your outcomes?

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