The Pareto Principle and Network Marketing

Written by Dale Horton Thursday, 07 July 2011 07:27

Economics is fundamentally the study of the scarcity of resources and the impact of that scarcity. We are currently living through the greatest transfer of wealth in human history. This has created some great challenges, but it is also creating a tremendous amount of new opportunity. The evolving marketplace has been instrumental in stimulating the development of new business and even new industries. And it has stimulated countless people to take action and move towards becoming small business owners for the first time. This economic contraction has, however, limited the amount of money available to new entrepreneurs for funding their business ideas.

Economics is fundamentally the study of the scarcity of resources and the impact of that scarcity. We are currently living through the greatest transfer of wealth in human history. This has created some great challenges, but it is also creating a tremendous amount of new opportunity. The evolving marketplace has been instrumental in stimulating the development of new business and even new industries. And it has stimulated countless people to take action and move towards becoming small business owners for the first time. This economic contraction has, however, limited the amount of money available to new entrepreneurs for funding their business ideas.

A great strength of the home-based business industry is the fact that you can build an extremely successful business from a very modest investment. The cost of starting a business in the network marketing industry is low and many folks, with nothing more than a desire to succeed and a determination to work, have become wildly successful. There is one resource, however, that is scarce for every one of us, regardless of whether we're building a home-based business or not. That resource is Time.

In 1906, the Italian economist Vilfredo Pareto observed that 80 percent of the land in Italy was controlled by 20 percent of the population. Some years later, the business consultant, Joseph Juran, observed that 20 percent of the pea pods in his garden contained 80 percent of the peas. From these observations & others the Pareto Principle was born. Generally speaking, in all areas of business and in life, 80 percent of the results are realized by focusing on the most important 20 percent of activities and conversely, 80 percent of activities will only yield 20 percent of the results.

The key factor in the failure of most entrepreneurial ventures is the human tendency to major in minor things. Our most valuable resource is Time and, in the home-based business industry, the highest use of our time is in prospecting. I define prospecting as nothing other than talking to people who have a need that your business can serve and helping them to do so. It is no more complicated than that.

Most people that enter network marketing do so with a host of other responsibilities, such as work, family, and other obligations. It is extremely important that you strategically set aside blocks of time for building your business and at least 80 percent of that time must be allocated to prospecting. For example, if you work your home-based business 15 hours per week, at least 12 hours of that time should be invested into prospecting. To do otherwise, will greatly limit your success.