Pareto Principle

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The Pareto Principle, also known as the 80/20 Rule, is a concept that suggests 80% of outcomes come from 20% of the causes. It was named after Vilfredo Pareto, an Italian economist who observed that 80% of the land in Italy was owned by 20% of the population in the early 1900s.

In Practical Terms:

• Business: 80% of your revenue may come from 20% of your customers.

• Sales: 80% of your sales may come from 20% of your products.

• IT Support: 80% of user issues may stem from 20% of common problems.

• Time Management: 80% of your results might come from 20% of your efforts.

Why It Matters for Small Business Owners and Real Estate Professionals:

Understanding and applying the Pareto Principle can help you:

• Prioritize your efforts (focus on high-value tasks or clients)

• Improve efficiency (streamline operations based on what drives the most results)

• Allocate resources wisely (invest time and money where it matters most)

Important Notes:

• The ratio isn’t always exactly 80/20 — the key idea is that a small portion of causes often lead to the majority of results.

• It’s a guiding principle, not a strict rule.