The Pareto principle or 80/20 rule,
created by Italian economist Vilfredo Pareto in 1906, observed 80% of
the effects come from 20% of causes. His research related to income and
wealth generation. Pareto observed in his home country Italy, 80% of
the wealth was controlled by 20% of the population.
Next, he did similar research in other neighboring countries and discovered similar results.
Today the Pareto principle or 80/20 rule has many applications. For example,
80 percent of sales come from 20 percent of the sales force. In most
church congregations 80 percent of the offerings come from 20 percent
of the congregation.
This same rule can be applied to attracting money. If you'll look
closely you'll discover 80 percent of your income comes from 20% of
your actions. At first glance you may disagree with this point. But if
you count the specific actions that directly generate money you'll find
this rule true. For example out of an average 8 hour day 20 percent of
your actions is generating 80 percent of your results.
The key is to zero in on the successful 20 % of your actions and
find creative ways to expand them. Here's 3 Powerful Tips To Get You
1. Focus More on The 20%, but Don't Ignore The 80%
The value of the 80-20 Principle when it comes to attracting money
comes down to one factor. It reminds you to focus and isolate more on
improving the 20 percent that matters. This means not just working
smart, but working smart on the 20% of activities that really matter.
For example, many businesses must deal with waste. Waste of time, waste
of effort, waste of resources, etc. This often results in busy work,
where busy people, equipment and resources is mistaken for efficiency
2. Keep Optimizing Your Business, Store or Website
80% of your profitable website traffic hits 20% of your pages. 20%
of your store space is responsible for 80% of your profits. 80% of your
business profits come from 20% of your efforts. So, the key to
attracting more is to find ways to expand that magic 20%. For example:
80/20 rule marketing says 20 percent of your marketing is the most
effective for generating 80 percent of your business. So, identifying
and increasing that part of your marketing efforts will produce
3. Reducing 80% of Waste With 20% of the Effort
80% of waste comes from 20% of your activities. So, develop a program or plan
for identifying waste in effort, resources and time. Whatever waste
cost you today, as you focus more on reducing it your return on
investment will grow.
Here's the key to attracting more money using the Pareto principle.
You know 20 percent of your money making activities produce 80 percent
of your financial rewards. Contrary to most people's belief, according
to this rule there's just a handful of activities people do that
directly generate income. Most would violently argue that point. Most
people count paperwork, filing, research, chatting with suppliers,
preparation to work and closing down work activities, etc. All the
previous activities are not money generating activities. They're known
as support related activities.
The 20% of the profitable activities to focus on is the ones that
generate traffic and sales. Money making activities often relate to
direct sales, advertising, marketing and other activities that get
customers to come to your store, website or business and spend money.
All other activities are support related, that's the 80%.