How to increase your income ten-fold in 36 months

No doubt you’ve heard of the "80/20 rule". Examples of the rule abound: 

"80% of your sales come from 20% of your customers"; "80% of your time spent doing something will yield 20% of your results"; "20% of your employees use 80% of your resources," and so on.

In "The 80/20 Principle," author Richard Koch, brings fresh insights to Italian economist Vilfredo Pareto’s 100 year old discovery. He describes the essence of the "Pareto Principle," as follows:

"…a minority of causes, inputs, or effort usually lead to a majority of the results, outputs, or rewards."

Koch notes that it isn’t always 80/20; sometimes it’s 70/30 or 90/10 or even 80/40 (it doesn’t have to add up to 100). The point is that the numbers are usually closer to 80/20 than to 50/50.

More important than the actual numbers, though, are the implications.

Koch suggests that we can improve our effectiveness in any endeavor by looking for the 20% that leads to 80%–the 20% activites that lead to 80% of results, for example. He counsels us to strive for excellence in a few things, rather than good performance in many. "What are the vital few inputs or causes, as opposed to the trivial many?" he asks.

He also offers this "career advice," with which I entirely agree:

  • Specialize in a very small niche; choose a niche that you enjoy, where you can excel and stand a chance of becoming an acknowledged leader
  • Use outside contractors for everything but your core skill Identity where 20 percent of effort gives 80 percent of returns 
  • Employ as many "net value creators" as possible

In essence, he is telling us to specialize in both the services we perform and the markets for whom we perform them. 

"Net value creators" are employees, usually, but could also be other resources. The idea is that we derive net value equivalent to the difference between what they cost and what they produce. The more net value creators we have, the better off we are, even if some provide more net value than others. 

On the subject of relationships, Koch tells us to seek quality rather than quantity. "Spend your time and emotional energy reinforcing and deepening the relationships that are most important," he says. "80 percent of the value of your allies comes from fewer than 20 percent of their number. Usually half a dozen key allies are far more important than all the rest. You don’t need many allies but you need the right ones."

On the subject of time management, Koch says we should forget trying to seek marginal improvements, or even trying to manage time at all. Instead, he says, we can be more productive by simply doing more of the "20 percent" activities that produce 80 percent of our results.

"The 80/20 principle says that if we doubled our time on the top 20 percent of activities, we could work a two-day week and achieve 60 percent more than now," he says. 

An attorney friend shared with me how he used the 80/20 principle to increase his income ten-fold in just 36 months. His was a personal injury practice, but the idea is simple enough to work in any kind of practice or business.

What he did was set aside one hour each work day (which he calendared in advance) and during that hour, he made sure to do SOMETHING on EACH of his SIX BIGGEST CASES.

He may have instructed his secretary to notice a depo or get a witness interviewed, he may have reviewed documents, he may have called his expert, but whatever it was, he made sure he did something on each of those files.

The result, he said is that his six biggest cases moved forward, and instead of waiting 2-5 years to get to trial, he tried or settled his biggest cases in 6 months to 2 years.

By consistently focusing attention on his most valuable cases, he increased his income 1,000%

Simple, eh?

What are your six biggest, most valuable cases, clients, or projects? Make them your priority; attend to them regularly, consistently, diligently, and they will reward you commensurately.

 

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