The 80/20 Rule: Less Hustle, More Impact
There is nothing that has made quite as large of an impact on my career as the 80/20 rule. It has changed the game for me and so i would encourage you to listen to my conversation with Rowan and Ian about this before you get into the theory of it all. You can listen to the podcast episode here or wherever you get your podcasts.
The 80/20 rule, also known as the Pareto Principle, is the idea that a small percentage of actions produce most of our results. Now it’s not always 80% and 20% but the pattern holds. It’ll apply to your business in a lot of ways.
80% of your profit comes from 20% of your customers.
80% of your complaints come from 20% of your customers.
80% of your marketing success comes from 20% of your channels.
80% of your wasted time comes from 20% of your activities.
It’s so easy to get caught up in all of the things you should be doing, but that’s just throwing something at the wall and hoping it sticks. The better decision you should be making for your time and your money is to focus on the activities that produce far more value than others. Not all activities are equal.
Diminishing returns is what happens when you keep investing time or money into something, but the extra effort produces less and less benefit over time. If 80% of your revenue comes from 20% of your products, services or clients, that means the other 80% of your effort is only producing the last 20% of results. Pushing harder in the low-return area just to make the product “just a bit better”, over-servicing hard clients or tinkering on marketing that hasn’t been working in the first place gives you diminishing returns.
Hustle Culture
Hustle culture is celebrated, albeit this is slowly changing. Cramming every hour with activity, assuming the more you do, the better results you’ll see, is rarely true. If 80% of your results are coming from 20% of your efforts, the other 80% makes you a busybody.
I’m guilty of this. I’ve fallen into this trap myself, and I think most business owners do at some point. I’ve got a business that I’m really excited about… My passion project. It’s fun and it’s my creative outlet. But the reality is, getting it off the ground takes a lot of time.
That time has to come from somewhere, and here’s the hard question I have to ask myself: Is that time better spent on a project that will bring in far less income right now, or on the work that pays the bills - my business consulting clients?
The passion project already exists, and it’s ticking over. But if my current goal is to increase my income, I need to be honest about which actions will move me towards that goal fastest.
What I just described is a classic 80/20 rule moment, and it’s one that catches almost everyone at some stage.
The passion project is exciting. It’s creative. It feels good to work on. But right now, it’s sitting in the low-return 80% zone. It takes up a lot of time and energy, but it doesn’t generate the majority of my results.
On the other hand, my business consulting work sits firmly in the high-return 20%. It brings in the majority of my income for a fraction of the effort compared to the passion project.
That doesn’t mean the passion project has no value. Far from it. It might grow into a 20% activity in the future. But if my immediate goal is to create more income, the smarter move is to focus my time on the high-impact consulting work now, while keeping the passion project simmering in the background.
The 80/20 lens helps cut through the emotion and look at the reality:
Where are my results coming from?
Where is my time actually going?
Am I pouring most of my energy into things that give me the least return?
If the answer is yes, then it’s time to rebalance.
Applying the 80/20 Rule
Now, it all sounds logical, but when you actually try to figure out your 20%, it’s easy to get stuck. It’s best to approach this with curiosity and treat it like an investigation. Start by looking at where your results are actually coming from, not where you think they’re coming from. You can pull up the last 12 months of your financial records and customer data. Go through your client list, product sales or service bookings and rank them from highest to lowest revenue. You can ask yourself, which of these not only brings in the most money but also does it with the least stress? You’ll often find a small cluster of customers, products and services that rise to the top. That cluster is your 20%.
When you examine your marketing efforts in the same way, identify which are actually driving customers who buy. Since I specialise in marketing, I have become very passionate about this one, so you’ll find a number of posts about this, which I encourage you to read. It’ll make your marketing efforts so much more effective. Don’t get sucked into the thinking that likes and clicks are bringing in profits. It’s not uncommon to discover that one or two channels are producing most of your paying customers while others are soaking up a lot of money and time with very little to show for it.
It might be uncomfortable, and likely a bit of denial is creeping in. You might realise that you’re devoting long hours to low-value clients because they’re “nice”, or running a service that barely breaks even just because you’ve always offered it. This is the 80% that gives you diminishing returns.
The goal here isn’t to cut everything outside the top 20% immediately, but rather just shift your energy. You can start by protecting the high-value activities by giving them more time, budget and attention. Over time, you can reduce, delegate, automate or stop altogether tasks from the low-return list. Over time, you’ll create a business where your efforts are going into the work that moves the needle and less is wasted on work that keeps you busy.
Just be honest with yourself and don’t do the things that feel productive in the moment. Once you know that, the way you spend your time, money and focus changes completely.
