My favorite principle of all time, for both business and life, is the 80/20 principle. It’s a simple and well-studied concept that 80% of your results will come from 20% of your efforts. That means:
- 80% of your stress comes from 20% of your environment
- 80% of your joy comes from 20% of activities
- 80% of your profit comes from 20% of your customers
That 20%, where your efforts are so impactful, is your wheelhouse. If you can identify your wheelhouse, understand it, and focus on it, you can multiply your results with the same relative effort. Your business will be more profitable and you will be happier if you focus on that wheelhouse.
This goes all ties into working smart, not hard. Some people think that’s just an excuse for lazy people who want to get ahead, but the truth is you can’t just get ahead by working hard. Every day you need to decide how to spend your time and money, and working in your wheelhouse will maximize your use of both.
If you seek out the 20% of customers that generate 80% of your profit, you can then target them relentlessly. You can design your whole business around them and continue to grow and drive value where it matters most. The results will overwhelm you.
I’d like to challenge you to sit down every year and pinpoint your wheelhouse. Don’t just think about it, write down all your main activities and analyze the ins and outs of what you do. Take the time to really think about where your results are lopsided compared to your effort. Change how you invest your time and money based on these results, and if you do this every year your momentum will multiply like crazy.
Another principle that I love revolves around time management. Time is your most valuable asset, and how you spend your time will determine your success. All activities can be split up into four quadrants:
- Quadrant 1: Important and Urgent
- Crises, fire drills, and activities that must be accomplished ASAP
- Quadrant 2: Important but Not Urgent
- Planning, forward-thinking, process improvements, and emergency prevention
- Quadrant 3: Not Important but Urgent
- Distractions, interruptions, and busy work.
- Quadrant 4: Not Important and Not Urgent
- Wasting time, social media, video games, and mindless entertainment.
Every activity is an allocation of time to one of these quadrants. Successful people spend their time in the first two quadrants, and really successful people dedicate a lot of time to the second quadrant, the activities that are important but not urgent. These are your health, your relationships, your exercise, your marriage. They can be ignored and pushed off, but it’s so valuable to invest your time in them right now.
In business, this second quadrant is all about forward-thinking analysis. What can you do today to save time and money later? These are the things you do to prevent problems and prevent tasks from becoming urgent. Too many business owners are constantly fighting fires, doing things that need to be done right now, weighed down by emergencies. They’re working hard but not smart, they’re not taking care of these issues before they become problems.
I challenge you to set aside time to work on your quadrant 2 activities. Exercise, carve out time for the people you love, and put systems in place to solve problems at your business before they become urgent. This will create momentum in your life and free up even more time to spend in quadrant 2.
The main advantage of working in quadrant 2 is that you can spot issues before they arise. When you’re focused on quadrant 1, you can’t pull your head up and spot things and take advantage of them. When you look at the big picture, you’ll be able to identify and focus on quadrant 2 activities that will get your business rolling.
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