The Pareto Principal:
The 80-20 Rule

The Pareto Principal, commonly referred to as the 80-20 rule, was introduced in 1906 by Vilfredo Pareto. Pareto was an Italian economist who documented that 20% of the people owned 80% of the property and wealth in society. The concept was later generalized to state:

80% of consequences stem from 20% of causes.

If some items or events are arranged in order of value, 80% of the total value will come from only 20% of the items. Obviously, it’s not exact, sometimes it’s a little more and sometimes it’s a little less. But, 80% of the time you will probably find the pareto principal holds true:

  • 80% of your grocery bill is spent on 20% of the most expensive items
  • 80% of your laundry is done on 20% of your clothes
  • 80% of production is in 20% of a production line
  • 80% of sick leave is taken by 20% of employees
  • 80% of TV time is with 20% of your favorite programs
  • 80% of problems are caused by 20% of the people
  • 80% of results come from the efforts of 20% of the people
  • 80% of repeat sales come from 20% of customers
  • 80% of our personal results come from 20% of our efforts

    The pareto principal also holds a piece of the puzzle to financial success:

  • Those in the top 20% earn 16 times more than the bottom 20%.
  • The top 4% (top 20% of top 20%) earn 54 times!

    They don’t worry about:

  • Employment
  • Job Security
  • Where their next paycheck will come from

    A home business offers the leverage that takes advantage of the Pareto Principal.

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    Apply the Pareto Principal


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