The Pareto Principle is All About Essentialism

You have probably heard me talk about the Pareto principle before. Only I may have mentioned it as the 80/20 rule. The idea behind it is that 80% of your results will be achieved by 20% of your work. Most entrepreneurs find this to be true, often realizing that 80% of their income is generated from just 20% of their work.

Which makes you want to ask...is the remaining 80% of their work essential?

Know Your Branches

Let's start by defining the different branches of your business. Suppose you offer web design services to your clients. And then you also run a web hosting company. And maybe you designed book covers for some authors who also had you design their sites. And then you decided to teach a DIY course on Canva. 

All of these branches may be contributing to your income. But some are probably more profitable than others. 

If you actually examine your own business, you may find that you do have multiple branches with different levels of income.

Prune Your Branches

When you note your business branches, write down how much income you earned from each one in the last year. Once you have an idea of your profitable branches, you'll want to consider if some of them need to be pruned. As you organize your branches, be sure to write down how much each is earning you as well as how much time you're spending on it. That's because sometimes you may want to prune a branch that's profitable but taking up too much of  your time.

Focus on Your Branches

The amount of income a branch brings in should never be your sole consideration. You should also take into account what your business goals are. Then ask yourself, "Is this branch bringing me closer to my goal or further away?"

Ideally branches that aren't in line with your goals should be the first you prune. However, there may be a reason that you leave a branch in place temporarily. For example, if you are trying to shift from a service model to a product model, but you're earning the majority of your income from the services you provide, you may want to leave them in place for now while you shift the focus of your business.

The Pareto principle is a great way to look at essentialism. By eliminating business branches that are no longer a good fit or that aren't in line with your goals, you'll be able to focus on the branches that truly matter.