The rich keep getting richer while the poor stay poor.
Most people believe it is because of their financial dominance, influence on the government, unethical business practices, etc. Well, that’s true in some cases but the question is, how did they ever reach that level? After all, not all of them were born with a silver spoon!
The truth is, the rich understand that everything in business, sales and marketing, and the math of what drives the world, is exponential and logarithmic. They have mastered the art of making their money work for them. They think in the powers of 10, and most importantly, they believe in the 80/20 Power Curve.
Before diving deeper, let’s first get familiar with the Power Curve.
80/20 Power Curve
The Power Curve works on Pareto’s Principle that states that, 80% of your results come from 20% of your efforts.
80/20 is fractal. No matter how much you zoom in or zoom out, the pattern remains the same.
80% of your business comes from 20% of your clients. Applying 80/20 again you get, 64% of your business comes from 4% of your clients.
80% of the traffic flows through 20% of the roads.
80% of the sales are made by 20% of the salesmen.
80% of the world’s wealth is owned by 20% of the population.
80% of the money received by a charity is donated by 20% of the donors.
80% of your monthly income is generated by 20% of your daily efforts.
80/20 is a law that strikingly applies to almost everything in nature.
What the Power Curve does is, it helps you visualize this principle. You can access the Power Curve at 8020curve which is a free tool created by Perry Marshal and Brian Woodruff. The tool contains some very powerful features that can help you understand your business and time better.
How much is your time really worth?
Let’s say you work 8 hours a day at $20 per hour making $160 a day.
Using the Power Curve,
Your most valuable hour is worth $53.74 while your least valuable hour is only worth $8.96. This means at your maximum potential you can earn up to $53.74 per hour instead of $20.
Further, applying the power curve to 480 minutes instead of 8 hours, we get,
Your most valuable minute is worth $15.49 while your least valuable minute is only worth 7.5 cents. This means at your maximum potential you can earn up to $929.4 per hour instead of $20.
But Karan, what does this actually mean?
This means that you can work one day a week and take the other four off. Instead of wasting your time on trivial tasks that pay less or not at all (the 7.5 cents a minute tasks), you ought to be spending your time on the important $15.49 per minute or $1,000 per hour tasks.
For at least 1 minute a day, even a $20 per hour employee is worth nearly $1,000 an hour. This means a $200 per hour employee (Consultant, Businessman, Lawyer, etc ) is worth $10,000 an hour. Isn’t that amazing?
A typical $100,000 a year person spends the majority of his time doing trivial $10 per hour tasks, a decent amount of time doing $100 per hour tasks and a very minuscule amount of time doing truly $1,000 per hour tasks that actually help him create the real value.
What to do?
Outsource the low-value activities. Either eliminate them or hire some lower-paid person.
Rich people don’t outsource the most important tasks but they get rid of the least important tasks that consume their valuable time. Hiring someone to clean your home is way better than hiring someone to talk to your potential clients. You wanna do that yourself because that’s where the real value is, that’s where the big bucks are.
When you hire someone to do your low-value activities, you automatically move to a new curve and you move your resources from the left side of the curve to the right. You go beyond the $20 per hour curve.
This is why the rich keep getting richer. They just keep moving their resources from the left side of the curve to the right, automatically earning more and more every hour.
You too are capable of earning $1,000 per hour or even more but the problem is, you spend most of your time doing trivial tasks that produce no value whatsoever. You can be that $1000 per hour person by simply getting somebody else to do the $10 per hour tasks.
Some low-value activities that can be outsourced:
- Washing clothes
- Doing the dishes
- Building or fixing things
- Moving stuff
- Attending meetings
- Cold calling
- Basic customer service, etc.
Let someone else do them while you focus on high-value activities like:
- Meeting prospects
- Building sales funnels and writing sales copies
- Creating new and better ideas
- Improving your USP
- Negotiating major deals
- Selling to high-value customers
- Planning finances
- Public speaking
- Hiring, etc.
But I can’t afford to hire someone!
That’s exactly what’s going on in your mind, right?
Well, listen, you don’t have to pay them the same day. You can always pay them bi-weekly, leaving you enough time to work on those high-value tasks.
You can hire virtual assistants online, often overseas, for $5 per hour or less.
You can even ask your spouse to help you out with the low-value tasks while you focus on what really matters.
Or you can just wait until you have any margin, you start getting any traction or you are just comfortable enough.
Be the master, not the slave
All this is not about earning thousands every hour, it’s about controlling what you do with your time and making the most of it. It’s about living your life and not being a slave to trivial tasks that suck your blood and leave you with nothing but sweat and dirt. It’s about valuing time, every minute of it. And lastly, it’s about being able to drive that expensive dream car on a beautiful sunny day, take that 3-week vacation and spend more time with the ones you love and care about.
If you want to make the most of your every day, please check this out:
5 Simple and Effective Productivity Hacks
Have you ever ended your day with a feeling that you could have done more?
This is something I learned from Perry Marshal’s book, 80/20 Sales and Marketing. What you read was the summary of a specific chapter from that book in my own words and style.