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What is the 80/20 Rule and how will it help my business?

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Published: 11Oct2008
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The Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor sparsity) states that, for many events, 80% of the effects come from 20% of the causes. It's named for an Italian economist, Vilfredo Pareto, who noticed that in his country 80% of the wealth was owned by 20% of the population.

The 80/20 principle has proven in business and economics that the majority of results come from a small minority of causes or effort. So, we can't say that the 80/20 numbers are accurate. Some situations are 90/5 and others 70/30.

This powerful rule has way more benefits than just in business. Learn to focus your attention on the "vital minority" to live the 80/20 lifestyle and accomplish more with less!

Every major religion and every bestselling self-improvement book or program promises a great reward from serious effort. The advice usually works for those who follow the directions carefully, but the trouble is that most don't get into the correct habits. The effort is too much. We fall by the wayside. Have you ever had that experience? I have.

Wouldn't it be great if we could discover a way to do less, and yet get more of what we want ? more love, more "toys", more happiness, more success? Wouldn't that be a crazy-good lesson for everyone?

It so happens that there IS a program. I found it after quite a bit of time and studying success. Here it is ...

It is the 80/20 RULE

For example, we send about 80% of our emails to 20% of the people in our address book. In business, 80% of profits come from 20% of customers and 20% of products. We wear 20% of our clothes, our favorite outfits, more than 80% of the time. Police investigations reveal that 80% of accidents are caused by roughly 20% of drivers and that 80% of crime is committed by 20% of criminals. Keep in mind the inexact numbers.

What about this: Businesses have known for a long time that they can improve their position enormously by concentrating on the key 20% of activities.

Why can't people do the same in their everyday lives?

Guess what? THEY CAN. We can make our lives enormously better by doing less... but there is a catch. The secret is not to do less of everything, but to do less of the majority of things we do(the things that don't work very well for us) and to do more of the few things that deliver what we want.

The key to making the 80/20 Rule work for you is focus(this is one of my weaknesses). In every area of your life you can figure out what few things are really important to you and the few methods that give you what you want. You should try to divide everything around you and everything you do into two piles.

First, there is the big pile. This is the 80% pile, that takes a lot of energy but delivers less-than-great results... sometimes these activities may even make things worse. This is the mass of little stuff that surrounds you and normally takes over your life. We'll name this "The Unimportant Majority." Then there is the small but vital 20% pile, which comprises the few things that work so well, it surprises you ? the "vital minority" that brings happiness to you.

Once you know what is in each pile ? the things you do, the thoughts you have, the people you meet, the techniques and methods you use ? you can do something simple and extremely effective: You can do less of the "The unimportant majority" things and more of the "vital minority" things.

The result? Much less effort but way more (and better) rewards.

The modern delusion is "more with more." Nearly everyone thinks that to get more out of life and to succeed in achieving what we want, we have to labor harder, devote more time to our work, and make sacrifices and tradeoffs (I've been seduced by this belief for years). The truth is that less is more, as long as it's less in the right areas. We make progress by stripping our activities and concerns back to a small, effective pile.

There are lots of simple, painless ways to start this "shrinking" process so that you can begin applying the 80/20 Rule and getting benefits in your everyday life.

One of the easiest ways to start this process is to find what makes you really happy. Think back to the last time you were really happy, then the times before that. What did these times, or a certain group of them, have in common? Were you in a special place, pursuing a similar sort of activity (with a particular person or group)? What are some common themes?

Now, how can you multiply your time in these happy moments? If you figure that your happy times make up only a fifth of your time, how could you take that to a third or a half... or even more?

There are plenty of activities that give us a poor return on happiness, and they are relatively easy to identify. Surveys of people watching television, for example, show that very few respondents say they are happy after watching two or more hours of TV. Typically, they actually become mildly depressed. I'm very harsh on TV in the first place... but that's very true.

What things do you regularly engage in that have a poor happiness reward? What do you do out of a sense of duty? If there's little pleasure in the duty, how much good are you doing? When you are happy, your happiness overflows into the lives of those around you. Time spent being miserable benefits nobody.

Dan Dimit was a struggling entrepreneur for years in the learning stages. Now that he has it figured out, his passion is shortening the success time for others from years to months. For more info like this visit his blog. http://www.thefreetrafficformula.com/blog If you'd like free training materials, 2 ebooks, minicourse and access to his Q&A conference calls, go to http://www.thefreetrafficformula.com

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