Pareto’s Principle!

Pareto’s Principle

Here is the 80-20 Principle/Rule/Law/Assumption of business (and frankly “life”). This Principle says 80% of the effects come from 20% of the causes.

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, noting that twenty percent of the people owned eighty percent of the wealth. Pareto’s Principle can be a very effective tool to help you manage and effectively run your business. It helps you see your business in a new light or from a new direction.

Pareto’s Principle is used in mathematics, business, education, sports, and all sorts of other disciplines. How can you use this Principle to better run your business? What does it tell you about your business in ways you never fully realized before? How can you use it to your advantage?

80% of your sales will come from 20% of your sales staff.

80% of your sales come from 20% of your customers.

80% of your profits will come from 20% of your product line.

80% of your complaints come from 20% of your customers.

80% of your stock comes from 20% of your suppliers.

80% of corporate pollution comes from 20% of corporations.

80% of a restaurant’s sales come from 20% of its menu.

80% of a nation’s income will benefit only 20% of its population.

Etc., etc.  etc.