ACCOUNTING FOR THE PARETO PRINCIPLE 2: Small Business Applications
Rico Mossesgeld of Contract Worker, applying the Pareto Principle, defines a future freelancers can aim for: “20 percent of our efforts result in 80 percent of the benefit received . . . The people I consider successful make most of their income from a few choice efforts.” The Pareto Priniciple has been applied in a variety of fields & disciplines; e.g., time management, management of sales people, project management, development economics, etc.
A principle is a generalization of a significant number of similar observations in a sizeable number of instances. As with most principles, it is entirely up to you how you use it effectively.
The Pareto Principle has also been called the Rule of the Vital Few and the Trivial Many. For small businesses, it is best if you consider the 20% as critical and the 80% as important (and not trivial items which can be handled haphazardly or, worse, ignored). While you can lose your business if you don’t manage the 20% effectively, the growth of your business depends on how well you do with the 80%.
image from Microsoft Clipart
Tags: business growth, economics, Pareto Principle, poverty threshold, project management, sales management, small businesses, time managementRelated Stories
POSTED IN: Accounting Concepts, Accounting for NonAccountants, Best Business Practices, Small Business Finance
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