Real passion in an entrepreneur is vital but knowing the numbers is what helps you pay the bills.
While understanding a profit-and-loss statement and being able to apply for a bank loan is essential, lt is also vital being a business owner to understand the 80-20 rule, also known as the Pareto Principle.
The Pareto Principle is all about making the most of your time as a business owner.
In the business realm, the 80-20 rule says that roughly 80 percent of your profits come from 20 percent of your customers. Know who those most valuable 20 percent are and you will be ahead of the game.
If you want to apply the 80-20 rule to your business, you need to play around with how you spend your time. To start, make a list of the top challenges you currently face. For example, they could be around:
- Increasing sales
- Hiring good employees
- Getting paid on time
- Dealing with difficult clients
For each area, look into the efforts that have already been successful. This allows you to pour more time into those things and less into what isn’t working. And most likely, some things are working—you just might not see it at first. To know more about this principle, check this article: https://gusto.com/blog/growth/80-20-rule
