Is there a secret to becoming rich? Read this

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No, there isn’t. There’s something even better. Read this.

We know it’s impossible, but we can never help ourselves. We always look for global rules, so to speak, that solve our problems at one application. This is captured in an unsettled quarrel you may have come across. Is the best weapon one you only have to use once or one you never even have to use at all?

More practical, we want the secrets of business success and how to become rich. Admit it. How many success seminars have you attended? Have they fulfilled you? What if I told you, there is something really close to what you have been looking for? Will you finally follow our Twitter Page? Here is our Twitter Page.

This rule for everything is 112 years old. Back then, a guy noticed that 80% of all property in Italy was owned by only 20% of the people. Years later, this was worked on to become the Pareto Principle or the 80/20 rule. Apparently, 80% of all effects comes from 20% cause. Most of what we are involved in are a waste of time. It kind of makes sense going by our daily experiences.

You always insist you have nothing to wear. Most of your calls go to the same few of your 1000 people contacts list. You definitely only browse a handful of websites on the regular and only care for a handful of your followers. Or stalk the same social media profiles. It’s the same for everyone.

This 80/20 rule is best expounded upon by a book; ‘The 80/20 Principle: The Secret of Achieving More with Less‘ by Richard Koch. We read self-help books sometimes. It’s sad and embarrassing. The book explains Japan’s success from the principle’s perspective. The country has made a name for focusing majorly on quality. This is why you don’t really here about Japanese TVs and phones and stuff anymore. They prefer to make the components that make those things (okay, they just can’t compete on cost anymore).

Closer to home, the book attempts to change my thinking and your thinking about effort and result. Let’s give it a chance. You don’t need to think in terms of 50 – 50 for input and output. According to the 80/20 rule, what happens is that only a handful of what you do actually results in all that good stuff you call your life. It also explains business success through this.

Does the 80/20 rule hold?

As with everything, we have to question it. Global rules for things, outside science, don’t usually hold well. Just ask economists. One of them shows up on our TVs, now and again, to act like public finance works like NSE firms finance departments. In this case, you have to ask, if 80% effect is caused by 20% effort, why engage in the other 80% effort at all?

Well, the problem with this principle is that it’s retroactive. It’s not easy to tell what the 20% most important activities will be before the fact. Think of your business. You have to deal with finances, marketing, operations, people, strategy and yourself. So, which is the most important factor (and why is it working capital)? We always like to tell after the fact.

We see a successful entrepreneur and, of course, everything they do is why they are successful. Why overthink things? Zuckerberg quit school? Nice. Richard Branson is eccentric? Do that. Chris Kirubi was implicated in two public funds embezzlement scandals (I believe everything I read online)? What are you waiting for? We’re kidding, do good things like Tabitha Karanja.

Even though the 80/20 rule is a silver bullet of sorts, you still have to appreciate the nuance of applying it. At the base of it, it’s necessary to understand the problems you face very well. For example, in Kenya, is debt the problem or is it fiscal accountability? A problem is always caused by another problem. This is the only way to solve things, we insist. Do away with mosquitoes by destroying their breeding process. Since you will be utilizing a solution that “solves everything,” you must comprehend the whole problem. Borrow from the top-down approach to life and work, if you typically operate in the opposite manner.

A second way to avoid the problem of the 80/20 rule is to know what makes up the 100%. I know it sounds similar to understanding the whole problem but it’s different. This is about being aware of the details. This way you would measure up correctly. If you wanted to always be in your happy place, what would you do? We know it’s impossible to “always” be in your happy place, we’re just making a point. Anyway, wouldn’t you list what makes you happy and what leaves you sad, then work towards your right path?

How to apply the 80/20 rule

By the book, this rule is self evident in business. Most of your sales will come from a few products, especially supermarkets and shops. A few customers will contribute to most of your revenue. Much of your resources will be consumed by a few activities and 20% of your employees will deliver 80% productivity. That’s why CEOs earn many times over as they do.

The first thing an entrepreneur would need to know is that you should be the first to identify and exploit the opportunities. In Kenya, we now know that if you’re hearing about it from your friends, you’re too late. The multiplier or network effect of being first just makes your work easier, relative to newcomers.

Another lesson drawn from the 80/20 rule book is that you should start celebrating productivity and not effort. You should not work 4 days to produce 1 day’s result. This level of efficiency can only be attained by being choosy. Yes, you have our permission – never settle. Nobody can do it all. You have to be selective about what you do.

It’s simple. Reduce the amount of time you spend on low value work. Increase the amount of time you spend on high value work. How do you define these? Prioritize what you are good at. It doesn’t mean you neglect your other duties as an entrepreneur. It doesn’t mean that you never take time to learn new ways. It does mean you should have fewer goals, at a time.

Eventually, it should result in minimized costs when it comes to finance and operations. It should also lead to maximized value from your marketing efforts and your employees. Good luck.

 

Yes, we’re aware that the 80/20 rule implies that only 20% of our articles have been worth your time. Yes, yes, we’re having an existential crisis. We’ll have an excuse soon. 

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Web Content and stuff. You can reach me you know: editor@herbusiness.co.ke, malitrobert@gmail.com