Pareto principle: surprising ways you can apply the 80/20 rule

Vilfredo Pareto (born Wilfred. Fritz Pareto 15 July 1848 – 19 August 1923), an Italian economist, though not much regarded in his days, his findings have helped to shape modern economics and entrepreneurship. It was widely believed then that since the earth rotated clock-wise and anti-clockwise, and rain fell on every man’s roof, resources are evenly distributed (50/50). Pareto discovered the principle of unequal distribution of wealth across families (80% of families owned 20% of wealth. Surprisingly, he discovered this eerie pattern while studying families of different countries. 80/20 principle since then have been applied to all areas of life. Here are 5 ways to apply 80/20 rule as an entrepreneur:


  1. Settings goals

When people set too many goals, and you ask them to chop them down they become infuriated. They think setting too many goals can help them to achieve more. Setting too many can lead to lack of focus and unhappiness. When setting goals, I suggest we write many of them down and prune them with few questions. We then discover that 80% of our goals are not worth pursuing. Here are few questions I ask myself when setting goals:

  • How important is the goal?
  • What is the reward for the goal?
  • What is the minimum attainment time?
  • How will the goal affect all areas of my life?
  • Do I have the necessary resources?
  1. Our relationships

Some people think having more friends can lead to more happiness and fulfilment. No! Believe me I’ve been into this before. Keeping few friends with the same mindset (20% of friends are instrumental to 80% of happiness and fulfilment). Whenever we meet with friends who are discouraging or doesn’t support our goals (we must do away with them proto!) Life is too short to keep unhappy friends.

  1. Our businesses

Yes, this is one of the most useful application of the 80/20 rule. 20% of our activities will bring 80% of rewards. As business people we may be tempted to keep every products, customers and activities. It’s always better to shed 80% and keep the vital 20%. To earn the highest reward. It may involve hard decision like: keeping few of our products.

  1. When saving money:

We can apply the 80/20 rule when preparing our budget. If we check our budget well many of the items are not really important (I can testify!) We want to have this and that but we must leave only the really important items.

  1. Saving time

We must watch our time. It is important to know that we can have more of most commodities, but not time. You can’t rewind it (except in science fictions and fantasies). It is necessary to know that we can optimize our time. We must attend to only really important things and shun all time wasting activities.


80/20 rule is not only the rule of unequal distribution of wealth but can be applied to almost all areas of our lives. 80/20 rule does not eliminate hard-work, but places smart work over hardworking. With 80/20 rule we can increase our income, optimize time and have more productive lives.

Note: 80/20 rule as used in this article may not necessary be the same ratio. It can be 55/45, 65/35, 75/25, 99/1.

How many ways have you applied the 80/20 rule? Don’t forget to add comment below and share this post with your friends.

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