DO YOU BELIEVE IN THE 80/20 RULE? THIS RULE IS ALSO CALLED THE PARETO PRINCIPLE. I do. At least, in many parts of my life. I just gave a short presentation on it at one of my networking groups. I think when people don't understand it, it can really bite them. Here is the example I used at the group:
In my business, we know which months are the busiest, and which are the slowest. Most people probably know this about their own business, but you may surprised what is "assumed". ANYWAY, IN OUR BUSINESS, October is usually the biggest month, and December is usually the slowest.
HERE IS HOW WE APPLY THE PARETO PRINCIPLE TO THE PRODUCTION PART OF OUR BUSINESS.
| Usual # of listings | Usual # of leases |
October | 8 | 10 |
December | 2 | 3 |
NOW, MANY PEOPLE WILL CHOOSE TO FOCUS TIME, EFFORT, MONEY, AND ENERGY INTO "BEEFING UP" DECEMEBER. Why? Because that number of listings and leases is not enough to pay the bills. However, this is where I really feel most people will make the mistake. Let's say that if you double your efforts in either of the months, prodcution will double. See where I am going? Here is what it would look like:
| Pareto # of listings | Pareto # of leases |
October | 16 | 20 |
December | 4 | 6 |
YOU SEE, BOTH MONTHS HAVE A 100% INCREASE IN PRODUCTION, BUT THE NUMBERS ARE TOTALLY DIFFERENT. We increase our listings by 8 in October vs. 2 in December. That is a net gain of 6 listings. We increase our leases by 10 in October vs. 3 in December, that is a net gain of 7 leases. What we choose to do is focus our efforts on October (who wants to take a vacation or spend time with family in October anyway? How about December? For us, it is a no brainer.). The problem is, we still have a losing month in December.
YOU HAVE TO PLAN FOR THE LOSING MONTH. Take the profits from October, and subsidize December. You will come out WAY AHEAD at the end of the year. And, for us, our employees will be happier.
PLEASE SHARE YOUR EXAMPLES OF THE PARETO PRINCIPLE AT WORK IN YOUR LIFE OR BUSINESS!!
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