342: How to find your most profitable work

I want to talk about the 80/20 principle because it can be applied to making decisions in everything from running a business to choosing a place to live. The principle is used to demonstrate that an extraordinary amount of results come from a small subset of your sample. 80% of your results come from 20% of your effort, 80% of your headaches from 20% of your pain points, and 80% of your profit comes from 20% of your business.

My brother put this into action as an entrepreneur in lawn care. He highlighted that 80% of his profit came from 20% of his services, which were weed control and fertilization. By doubling down his focus on those two parts of his business, he was able to increase his profitability and decrease his workload. At Storage Squad we found that 80% of our headaches came from 20% of our service offerings; specifically, shipping was less than 20% of our revenue but a huge headache that caused all sorts of issues with logistics, tracking, and refunds.

Early on in business, you may have to cast a wide net. You don’t just clean windows, you clean gutters too, and you offer pressure washing. But every year, sit back and find what 20% of activities have generated 80% of your profit. That’s your wheelhouse. Focus on what you do best and find the things that make you the most money. 20% of your customers may drive 80% of your profit, focus on those customers. Similarly, 20% of your customers will cause 80% of your headaches, and fire those customers. You’d be surprised that they don’t align with the first group. Figure out what 20% of your efforts, customers, employees, etc. drive 80% of your results. Make every decision based on targeting that wheelhouse.

My wife and I applied this extensively when deciding where to live. We were in Boston running Storage Squad for five years before we got priced out after having our baby. I wanted to take the company fully remote, so we asked ourselves which 20% of our activities bring us 80% of our joy. We highlighted craft beer, hiking, affordability, good weather, live music, yoga, food, and sports. We then targeted towns that had all of this, visited four of them, and ended up in Athens, Georgia.

Think about this every year, analyze it, and find what’s high value for you. 20% of your work will drive 80% of results, so find out how to spend more time on that work. It may be recruiting, simplifying peoples’ jobs, building out processes, or selling. Figure out what you do that generates the most results for you and follow it. Work on the stuff that’s high value, that other businesses aren’t doing because they’re too busy fighting fires.

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About Me

I started the Sweaty Startup in December of 2018 because I believe the Shark Tank and Tech Crunch culture is ruining the real spirit of low-risk entrepreneurship.