When you’re running a business, it’s common to feel like you have a never-ending to-do list and very little time. That’s life, but it doesn’t have to be your reality 24/7. If you’ve been reading this blog or exploring the options of trying a calendar tool, you know that you can maximize your productivity by utilizing the right resources and strategies.
We all have the same 24 hours each day, but it’s all about how you spend that time and set up your day. One of the best time management strategies for small business owners is the Pareto principle also referred to as the 80/20 Rule. Here’s everything you need to know about using this strategy to improve your focus and get more done in less time.
So Wais, What Exactly Is the Pareto Principle?
The Pareto principle was named after Vilfredo Pareto, an Italian economist who founded it back in 1895. Prior to defining the 80/20 rule, as it is popularly called, he studied how our effort and input yielded certain results.
Ultimately, he realized that pretty much every economic activity was actually subjected to this principle – in the sense that 80% of the Italian wealth of that time was actually controlled by as little as 20% of the population.
The Pareto principle may be applied to almost every circumstance. In essence, 80% of the outcome is actually produced by the 20% input. By understanding the principle, you also learn how to prioritize the tasks by the day, week, and month.
When it comes to business, the 80/20 rule is essential in relation to strategic planning. This is something that every team leader should know if they wish for the business to be fruitful.
How to Use the 80/20 Rule in Your Business
To put it as simply as possible, the 80/20 rule is a concept that will suggest that 2 out of 10 products or items (on any to-do list) will prove to be worth more compared to the other 8.
What is generally sad but true is that people tend to procrastinate on the 20% of the tasks that are actually important, the “vital few,” and tend to focus their energy on the remaining 80%, the “trivial many.” Indeed, while these may be simple to do, their contribution to business success is actually quite small.
Adding the Pareto Principle to Your Overall Strategy
Once you understand the basics behind the Pareto principle, you can easily use it to help your business. Here are the ways in which it can give your business a boost.
Increase Overall Productivity
The Pareto principle is a very effective way to help you determine the areas in which you need to focus your resources and efforts for maximum efficiency. By using this rule, you may prioritize the tasks in a way that you can focus on the vital 20% that is responsible for producing the 80% result.
Let’s face it, quite a bit of what we focus on during a typical work day is fluff. Some tasks will yield a much better return than others. Pareto teaches us that we should not be wasting so much of our time on trivial matters. It is time-consuming and it will not bring us enough value for the long-term goal.
This Pareto principle can also help you determine the reason why your business is unproductive. As a manager, you might actually use the rule to find the 20% of the reasons why your team is not being productive.
Increase Your Profit
If you identify which areas of your business to focus on for maximum results (20%) you’ll naturally increase your overall profit as a result. Think about it. In the past you might have focused more on areas of your business that didn’t yield much results.
With the 20/80 method, you can be more efficient and narrow down your focus. When it comes to your team members, you may find that only around 20% of them are yielding desired results. The Pareto principle may be used to determine if you want to improve the skills of that 20% staff even further – or if you have to place your focus on the other 80% that are barely getting through. When you know where to place your focus, your profitability will also get higher.
Improve Your Marketing
According to the 80/20 rule, the overview of your website analytics will suggest that 80% of the traffic will land on 20% of the pages. These pages usually tend to attract most of the viewers – being the pages that are critical to the servicing process of your company. The same goes with your marketing messages and ads.
When sending an email to your list, realize that the bulk of your audience may only process and read 20% of the message, especially if it’s a long one.
By utilizing the Pareto principle, you should be able to narrow down on your marketing and optimize your strategy in a way that makes it much easier for your audience to respond. This should also tell you which pages need to be worked on so that you may get the best of returns.
Identify and Fix Major Issues in Other Areas
Just as the Pareto rule can tell you where things are going right, it can also determine where things are going badly. You may prioritize the problems, and see which issues enter the 20% that is likely to affect your business the most.
This will not only help you identify the problem – but it will also allow you to find the appropriate approach so that you may fix it. Before long, your profits should be able to get a boost.
Enhance the Overall Customer Experience
Quality customer service and support is crucial. By using the Pareto principle to help improve customer support, you’ll know that 80% of the complaints are tied to about 20% of your products – which will further on allow you to tackle the improvement of that particular product.
Similarly, by using the Pareto rule, you may also determine exactly which customer support members get the most complaints. This way, you may rearrange your staff so that your clients are also happy with the support that they get.
Overall, the Pareto principle does not tell you to eliminate any of the least critical aspects of the situation. Instead, it will teach you how to shift your focus to the tasks with the utmost importance – and those that will be yielding the best results. From there you can start to shift your schedule and divvy up your time accordingly to maximize your results.
Have you ever thought about using the Pareto principle in your business? Which areas do you feel it could improve?