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Contrary to what you may think, the 80/20 rule does not include complex mathematical or statistical equations. It’s pretty straightforward actually, basically, it means that majority of the result of any situation is brought by only a minority of causes.

The 80/20 rule was first suggested by Joseph Juran, a management thinker. However, it was Vilfredo Pareto, an Italian economist, who first observed the rule among the Italian population. Specially, Pareto saw that 80% of the income in Italy came from 20% of the population.

What does the 80/20 have to do with living better?

The first step to applying the 80/20 principle to living is to analyze your lifestyle by breaking it down into elements. When you are able to do that, it would be easy to pick up the keys to happiness.

The next step is to focus on the activities that give you the most satisfaction. These are the activities that give you the best and most output because you enjoy them. Simply put, these are your passions.

You could be doing a 9-5 job and earning a good income, but you’re not happy because your job is not your passion. What I suggest is to reduce doing the things you don’t love and increase doing the things your love. What ends up happening, is that your income can actually increase, whilst you’re doing more of what you love.

Another action is to turn your passions into money making opportunities. For instance, you may love food so you go to restaurants and consume from other people’s output. That’s good; but you can make that better. Why not come up with a way to turn your food love into a part time income?

Use other people’s output to create your own output. If you love food, then maybe you can start your own restaurant, a cooking show, a recipe book or even a blog that features food. By doing so, you are creating valuable output that other people would enjoy and find practical use of. Therefore, you are converting your passion of food into a sustainable income.

What does the 80/20 rule mean when you’re running a business?

Let’s go back to the definition of the 80/20 rule, which is 80% of outcomes would only come from 20% of inputs. So when you’re a business person, focus on the skill set that you can do to create the most output and then delegate the rest to others who can create high output for those areas of the business too. For instance, if you’re a good writer, then you can spend 2-3 hours of your time everyday writing articles that would convert. But if you’re weak on the area of bookkeeping, then hire someone else to do that for you. This frees you up to spend more time on the activities that you enjoy and on making more income.

The same goes for employees. 80% of your company’s output may come from 20% of your employees. To encourage higher output, implement a reward system for your best people. If the company has not been doing too well recently, don’t be afraid to let go of the poor performing staff. Keep everyone focused on the activities that generate the most sales or revenues.

Don’t focus too much on widening your market because that’s won’t mean much if you’re getting bad clients. Bad clients are those that have never bought from you or take too much of your time with revisions even if they’re the ones constantly changing their minds. Instead, focus on upselling and improving your services for your best clients to stick around.

If you’re keen on statistical data, you will find that 80/20 may not be applicable to some areas of your life and/or business. It could be 99/1 or 60/40 but the idea here is to always work hardest on the factors that would work hardest for you too.

Bottom line is that applying 80/20 to you and your business WILL generate much better results – either measured in income or happiness.