The 80/20 Principle is one of the things I usually talk about whenever I have a chance. This principle has transformed the way I manage my business.
It basically means that all things are not created equal. In fact, only 20% of your effort will deliver the 80% of the results that you want. Conversely, the other 80% of your effort only delivers the remaining 20% of the result.
So what it means is that as an entrepreneur, we have to look for the big impact items, or the 20%, that will deliver most of the results that we want, and focus on them. Contrary to what others think, WE DON’T NEED TO DO EVERYTHING. We just need to PRIORITIZE the things that deliver the MOST VALUE.
For example, out of my 20 stores, only 4-5 stores deliver most of the sales. So if I have to prioritize of which branches to visit, knowing the Pareto principle makes things easy for me. The same goes for my 20% of customers that account for majority of the sales or maybe the few employees that cause 80% of the headache…
How are you using this principle? Can you share more examples in the comment below?