January 2, 2015
There is a strange phenomenon in business and economics (as well as in most of the world). This has been studied by philosophers and industries alike. It is the principle that 80% of our results, come from about 20% of our causes. What does that mean? It means that from small and simple actions, come the biggest rewards and changes. As a basic principle, it is demonstrated in the clothes that we wear, in the activities that we engage in, and the people that we most communicate with.
Studies have shown that most people only wear about 20% of their clothing 80% of the time. We wear what we like, what is most valuable to us, far more than we wear the other clothing that we have just because it is practical or functional. Research has also found that 80% of the emails that people send are to the same 20% of their address book.
But what does this mean for your business? Those same studies have shown that about 80% of a business’s profits come from the same 20% of their customers, who are buying 20% of the company’s products or services. This principle shows us that if business owners but more effort into that 20%, which is a relatively narrow portion of their world, they can see much greater profits in the long run.
This is, of course, also a lifestyle principle, in which people train themselves to focus 20% of their day on activities that can produce 80%-sized results in the future (like eating healthy, working out, building relationships, etc.). But do you want to know how you can use the 80/20 principle in order to change your business? Keep reading. A few small changes can add up to huge results in the long term. Here are some 20% changes you can make immediately to see major gains.
1. Make a list of the things that you do each day. Take a look at this list. How many of the actions that you perform each day have little or no effect on your future? How many things do you do each day amount to nothing in the end? This does not have to be a depressing exercise, it should help you realize that you, like most people, spend large portions of your day thinking about or completing trivial tasks. If you could divert energy from those trivial tasks into the tasks that really do matter, that do have long term results, how much better would those results be?
When it comes to your business, look and see how much time you are spending dealing with tasks that could be taken care of by someone else or that are even supposed to be taken care of by someone else. Simplifying your tasks down to just the things that you are supposed to be doing and which will reap the most rewards in the end.
2. Guard your time. While it is important to be generous with your time when it comes to friends, family, and mental health, it is important to guard your time and protect it from being sucked away by tasks and people that do nothing but drain you and do not propel you forward. In your business life, the worst thing that can happen is to lose an entire day in menial, trivial tasks, or in small dramas that do not help you progress.
Reclaim your time and use it to do only what actually helps you and your company step forward. For example, if you have a meeting every morning in which nothing valuable is ever accomplished, if it serves only to give people time away from their desks, either stop attending or stop holding that meeting until you have something that really needs to be discussed.
3. Exist right now. It is vitally important to be thinking about the future, where you want your company to go, what you want it to do, but it is also important to live in the right now. If you live too far in the future, you will not have the ability to get done what needs to be done in order achieve your goals in the future.
Making the most of right now is the best way to make the most of the future. Your present in an investment in the future of your company, and the only way to see a return on that investment is to really use the present moment to its fullest. So spend less time worrying about whether or not something will work out, and spend your time throwing your all into a project, to ensure that it works out.
4. Don’t neglect your relationships. In business, there is nothing more important that strong, vibrant relationships, both with the people you work with and the people that you want to work with. Yes, you are selling a product or service, but the only way to get someone to buy that product or service is to build a relationship of trust with that person. When you frame all of your marketing efforts from this position, you will begin to craft more direct, personal messages that specifically answer the questions your customers have.
In building a business, whether you are just starting out or have been open for decades, having a personal relationship with your employees is also important. When you genuinely like working together, the work day is more pleasant and people are more willing to perform tasks and do what is asked of them. While it is important to draw a line between friend and boss, there is no need to be a task master.
Putting effort into this 20% of your life and stripping away the excess is a great way to ensure that you make the most of the time that you have to build a strong, profitable business.