September 2022

The Pareto principle, also known as the 80/20 rule, states that 80% of the results come from 20% of the causes. This principle can be applied to many aspects of life, such as productivity, happiness, health, and wealth. As an entrepreneur about to embark on the start-up journey, it is especially important to identify and focus on the most important tasks that will generate the most value for your customers and your company. The Pareto principle can help you prioritize your actions and allocate your resources more efficiently.

Here are some steps to follow:

– Analyze your current situation and identify the key metrics that measure your progress and success. For example, revenue, profit, customer satisfaction, user retention, etc.

– Collect data and track your performance on these metrics over a period of time. You can use tools like Google Analytics, Excel, or other software to help you with this.

– Focus on the 20% of customers who generate 80% of your revenue. Identify who they are, what they need, and how you can serve them better. Don’t waste time and resources on the other 80% who are not profitable or loyal.

– Focus on the 20% of products or services that generate 80% of your value proposition. Find out what makes them unique, desirable, and competitive. Which features or functionalities are the most used and appreciated by your users? Don’t dilute your brand or quality by offering too many options or features that are not essential or differentiating.

– Focus on the marketing channels or strategies that bring the most traffic and conversions. Be very critical of the content you send out to the world. Ensure the message matches the audience. The worst thing one can do is focus on channels that will miss your target audience or a message that fails to touch your target audience.

– From an operations standpoint, focus on the 20% of tasks that generate 80% of your impact. Prioritize the most important and urgent activities that move you closer to your goals. Be very strategic with your hiring process. Design the job descriptions to fit in with the masterplan. Look for the synergies and interdependencies between positions from a matrix perspective. Only hire those that will bring the most impact to your organization.  

– Focus on the 20% of skills that generate 80% of your growth. Learn and improve the core competencies that make you a better entrepreneur, leader, and problem-solver and do the same to help your employees develop into their most productive selves. Don’t get distracted by shiny objects or irrelevant information.

Focus your efforts and resources on these 20% of factors and eliminate or outsource the rest. This will help you optimize your value proposition, improve your customer experience, increase your competitive advantage, and reduce your costs and risks.

Analyze regularly and adjust your strategy accordingly. The Pareto principle is not a one-time solution, but a continuous improvement method. You should always monitor your performance and look for new opportunities to apply the 80/20 rule.

By using the Pareto principle, you can build a lean and agile start-up business that delivers more value with less effort. You can also avoid wasting time and money on things that don’t matter and focus on what really makes a difference for your customers and your company.