I live my life by the 80/20 principle, and I see it all over the world around me. I apply it to everything from decisions about my business to finding a new city to live in. At its core, the 80/20 principle states that 80% of your results will come from 20% of your effort:
- 80% of your profit comes from 20% of your customers
- 80% of your headaches come from 20% of activity
- 20% of businesses make 80% of the money
My brother was on this podcast during the early stages of his lawn care company, and he realized that 80% of his profit came from 20% of his efforts. For him, that 20% happened to be weed control and fertilization, as he made a lot more per hour on those activities than basic yard maintenance.
In my days at Storage Squad, we realized that 80% of our headaches came from 20% of our locations and service offerings. We offered shipping, which made up only 20% of our revenue but created all sorts of logistical and customer service issues. It wasn’t worth it the pain that it caused.
You need to cast a wide net early on, it’s how you find success. But at the end of every year, find where your 80/20 comes from. The 20% of effort that drives 80% of your results is your wheelhouse. Focus on these things that make you the most money while minimizing headaches.
Find the 20% of customers that drive 80% of your profit and target them relentlessly. Find the 20% of customers that cause 80% of your headaches and fire them. Those two groups almost never overlap! Make every decision in your business based on the 80/20 rule.
Spend time in quadrant two, the important but not urgent activities, and you’ll be very successful. This may be sales, simplifying tasks in your operations, or implementing more efficient processes. Make it your wheelhouse.
When my wife and I were priced out of living in Boston, I decided to take Storage Squad fully remote. We looked for a new city to call home based on the 20% of activities that bring us 80% of our joy in life. We sought out good weather, hiking, craft beer, local sports teams, yoga, restaurants, and live music. We visited four towns that met our criteria and picked our favorite, bringing us to Athens, Georgia.
My fear is that people will start service businesses and wake up ten years later having never bridged the gap towards an easier and more lucrative lifestyle. They’ll put in all the work and never reap the rewards. My goal is to give you the tools and knowledge to work on the stuff that’s high value, that other businesses aren’t doing, and help you find the opportunity to cross that bridge.
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