How I Will Be Rich

Here’s a little scoop on a concept that dates back over 100 years from an economist named Vilfredo Pareto. How does an idea in any way pertain to us in 2007? Let me explain if you do not know already…

This idea is called the 80/20 rule. Pareto’s rule can be summed as being that 80% of any kind of output comes from only 20% of an input. To make it a bit more clear, I’ll give a couple examples:

• 80% of business sales come from 20% of the client base.
• 80% of your results come from 20% of your effort and time.
• We spend 80% of our time with the 20% of our good friends.

This rule has been known to fluctuate in titles, such as the 90/10, 95/5, 99/1, and so on.
Since this rule goes hand in hand with any matter in life, you can look around now and see how this rule is something that we use daily but never actually take the time to notice. Look at the personal relationships you hold and of those around you and see how much time is spent with those individuals. Also, check out where a majority of your time and effort is spent at work, and then analyze to see if it is actually time worth spent.

I can’t give you a surefire formula for success, but I can give you a formula for failure: try to please everybody all the time.

-Herbert Bayard Swope, first recipient of the Pulitzer Prize

The largest goal of this rule is to understand what the 20% of the equation is. Of that, weed out what 20% makes you the least productive towards achieving your goals. See what makes you unhappy in life and in the workplace of that 20% and see how you can eliminate that to make the whole process much smoother.

Look at where you’re working right now and see how this 80/20 rule would pertain to the business. At our work this rule definitely applies. We have a few very large accounts that will send orders to us daily, and then out of the blue, we’ll receive an order from a company that we haven’t done business with for two or more years. We are able to easily track these orders to figure out which accounts are bringing more business to us, and in turn we are able to accommodate them in a way so they continue that business and feel more comfortable dealing with us. Creating a lasting bond with the 80% group in business will prove to make a company more profitable and much more efficient.

-The differences between the 80% and 20% groups is vast. Once the effort has been put towards establishing and tying the bond between you and the 80% group, it’s all downhill for you in the effort department. There will be a lot less calls coming in from them, and the whole experience will roll much more smoothly. On the contrary, the 20% group will almost drive you up the wall with the amount of work they’ll make you do for them. I experience this everyday while taking calls at work and explaining the same thing over and over. With this group there is a lot more effort being spent on persuading them into buying your product by going over all of the perks of your’s compared to the competition. The follow-up calls on order statuses will be enough to make you scream, “UNCLE!!!” Since these companies have not learned to actually trust anyone else, they will constantly call to double, sometimes triple-check that you are properly doing your job and that everything will be completed in a timely order. Trust issues, maybe? These are the companies that you would rather not deal with and not want to waste your time dabbling over. You’re better off focusing your time on the 80% that have full confidence in you and allow things to run in a much more automated fashion. Hey, isn’t that the point of business, and life in general?!

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