Applying the 80/20 Principle to Your College Business
Vilfredo Pareto was a known economist in the 1800s who observed that 20% of the Italian populace owned 80% of the country’s wealth. From that, it came to be known that 20% of a source was responsible for 80% of the result. This 80/20 concept, dubbed as Pareto’s Principle, is applicable to most other areas of expertise and can be used in your business and in your life.
The Principle ultimately reminds you to remain focused on the 20% that will help you advance your business’ purpose. It tells you to not spread yourself too thin and to work efficiently on the right things. For example, you may doze off during the day, but be sure that certain activities you do (the purported 20%) must be done to produce most (80%) of your results.
Now, it also happens that 20 percent of your efforts will results in 80 of your problems. The rule works both ways. The trick, really, is identifying the 20 and working on it. This ratio also isn’t set, but there will certainly be a minor number of items or people that will account for a majority of results.
You can work just as hard as the next person, but you’ll be producing better results. If you employ people, you should improve on the 20% that account for 80% of your support and satisfaction. You should also hire people for tasks you aren’t good at.
You will also find that this rule applies to your customers. 20 percent of your customers will account for 80 percent of the business. Work on creating a loyal customer base.
Give your customers a best-seller list as it is the small fractions of popular items that will give you that marketing edge.
Don’t waste your time on services and products that drain your resources and energy without giving you good results. Getting rid of negative baggage may cost you now but you’ll find that it’ll be cheaper in the long run.
Tim Ferriss talks a lot about this principle in his book 4 Hour Work Week and on his blog.