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Laws and Principles Entrepreneurs Live By

Pareto Principle  | Parkinson’s Law  | Law of Averages  |  Law of Association

4 Laws & Principles every Entrepreneur should know and live by:

The Pareto Principle

The Pareto principle is a very popular law …my guess is that you’ve probably come across it or have even heard of it numerous times throughout your life… however it was most likely referred to with a different name.  If you’ve ever heard of the 80-20 rule, or the law of the vital few, or even the principle of factor sparsity….then you’ve been exposed to the Pareto Principle.

Essentially this law states that, for many events, roughly 80% of the effects come from 20% of the causes.  And naturally this applies to a great many things and events especially concerning to the entrepreneur.  For starters….  as an entrepreneur….you’ve probably wondered why the distribution of wealth is the way it is….observing that just about 20% of the population has much of the wealth, while the other 80% doesn’t.  Who knows, maybe this keen observation on your part is the exact reason you are an entrepreneur…. so you can in fact make your way to the top 20% :).

This principle is also very relevant for the entrepreneur for purposes of time management…..20% of the things you do will account for 80% of your results while 80% of the things you do will account for 20% of your results.  I know…a bit depressing when you think about it….but this knowledge can be useful for creating and perfecting your plans of action.  In addition, the principle will come into play when trying to understand why some customers buy your goods and services, and why some….let me rephrase that…many, don’t.

So when 80% of the people you approach with your products, services, or opportunities say no….just keep in mind that it’s not you….and most likely not what you’re offering, and that it’s just a bit of the Pareto Principle at play.

Parkinson’s Law

Parkinson’s Law is something all entrepreneurs should be aware of.  Like the last law… you’ve probably experienced this one in the past but just haven’t been introduced to it formally.  So…I’ll do the honors.  Parkinson’s law was first articulated  in an essay of The Economist in 1955 and has been made more or less mainstream by author/blogger/entrepreneur Tim Ferriss.

The law essentially postulates that…  work expands so as to fill the time available for its completion.  So if you have ever had some friends or co-workers who were given an easy task to do with a somewhat large amount of time to complete….and yet they  somehow managed to stay extremely busy, spending an inordinate amount of time on a task that you could have finished in a day….. well then, you’ve been acquainted to Parkinson’s Law.

This is essential knowledge for an entrepreneur….especially those new to being their own boss and in charge of running their businesses efficiently.  The understanding of this law will help the new entrepreneur combat the programming received while they were an employee who wasn’t 100% vested in how long tasks actually took to complete.  Ultimately, if one truly cherishes their time and leisure, and doesn’t want to be a slave to their business….knowing this law is critical.

Law of Averages

This is a great law for us.  It’s the idea that probability will influence all occurrences in the long run, that one will neither win nor lose all of the time.  For example, If it rains every day this week, by the law of averages we’re bound to get a sunny day soon. This colloquial term is a popular interpretation of a statistical principle called Bernoulli’s theorem.  As an entrepreneur or professional, this law becomes important to you when  you decide to start going after the deals, the partnerships, and the sales.

The more you experience the no’s and failures in the pursuit of your ventures….the more likely you are over time, to experience that crucial yes and ultimate success.  A fantastic example I like to refer to, is the baseball player….  he strikes out 7 out of 10 times….and still get’s paid 5 million dollars per year.  The same success awaits the entrepreneur who  understands that with every no…they inch that much closer to their YES…and indeed their SUCCESS!

Law of Association

This law is often looked over for striving entrepreneurs but is crucial in moving towards the achievements you set for yourself.  Basically this is a law which suggests that we become like the average of the five people whom we spend most of our time with.

Meaning….that everything about you will average out to be similar to those five people whom you are currently spending most of your time with.  For instance,  your income will tend to be the average of your five best friends’ incomes.  If you want to raise the quality of your life, hang out with people who have already been there and done that…and who are living the quality life which you seek. If you want to become a better communicator, hang out with great communicators.  If you want to be more positive, hang around with more positive and up beat people. If you want to be a terrific parent, spend lots of time with men and women who have mastered the art of parenting.  If you want to start making at difference….get around those who are out there making some waves of impact.  So in essence… birds of a feather flock together.

But…do you know why birds of a feather flock together? It’s because they’re all going in the same direction. They share a common vision. So if you’re going after a goal, any goal, go and find the people who have already achieved that goal, or who are well along the path to attaining that goal, and then be with them, hang out with them, camp on their doorstep if you have to. :).  Joking aside…this is an important law to live by….so get out there and make some connections with those whose lives you want to be living.

And if you find your self in a situation where making critical associations with people is difficult because of your location, or because you just need some time to gain the courage to reach out, remember that the next best thing to associating with great company is reading great books.  It was Rene Descartes after all who once said “The reading off all good books is like conversation with the finest men of the past centuries”.

To Your Success!

“Our acts can be no wiser than our thoughts…our thinking can be no wiser than our understanding.” – George S. Clason

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The LOSER’s LIMP

For the past couple of weeks I have been having my fair share of trials and tribulations. I’ve essentially been busy being busy and not fully executing on the tasks I’ve set for myself to reach specific goals that are important to my personal and professional life. Basically two weeks have passed since I made an agreement with myself on what needs to be done in order for me to get where I want to get, and I didn’t realize until recently what I was doing specifically and what was really going on internally that was keeping me in this mode for the past three weeks, until of course my Fiancé asked me, “So how are those plans coming along…you know, those plans you shared with me the other day and set for yourself?” and naturally, I answered hesitantly, “uuhhhmm,… well, I am doing good everything is coming along, EXCEPT, I can’t really move forward UNTIL I am absolutely sure this is the right approach, so I am going to WAIT till next week…just to be sure …” Well, I pulled the wool over her eyes and appeased her for the moment. However it was almost instantly after I did so, that I said to myself in this realization, “Wait a minute… this is a LOSER’S LIMP.” I was pretending I had a good reason for why I wasn’t doing the very things that I knew I could do, the things that I knew I should do. I read about this….this is what ole Zig Ziglar was talking about in his book See You at the Top.  I’ll actually quote him verbatim because it’s a superb anaology, one I didn’t think I could be guilty of, especially since I was aware of it….so here it is:

“Characteristically, when a person falls victim to Garbage Dump Thinking, he develops an assortment of “Loser’s Limps.” You know what the Loser’s Limp is if you’ve ever attended a football game or watched one on television. The offensive player slips behind the defensive player, reaches up, pulls in a pass and heads for the end zone. The defensive man quickly recovers and takes out in hot pursuit. When the offensive player gets about 20 yards from the end zone, the defensive player realizes he’s not going to catch the man with the ball. Everybody in the stands knows it too. So, the defensive player frequently pulls up limping and the people in the stands say, “Well, no wonder the poor guy couldn’t catch him. Look, he’s crippled.” Now that is his Loser’s Limp. What is yours?”

I figure we all have these Loser’s Limps, some are big ones, some are small ones. I obviously just realized I have some small ones of my own that I really need to take care of. So I am definitely going to make it a priority to work on them, because I don’t want to be “that person” who makes excuses or who others will make excuses for. So what I am planning on doing…actually, I should say, what I AM GOING TO DO to help me with this minor limp, is print out on a sheet of paper an exceptional quote that I captured three days ago from one of my favorite books, and proceed to hang that quote above my study room, so everyday I will be reminded that I have the choice to correct my Loser’s Limp. Curtains please…….

“If you neglect to make the start, or stop before you arrive, no one will be to blame but you. This responsibility is yours. No alibi will save you from accepting the responsibility if you now fail or refuse to DEMAND riches or success from life.” – N. Hill

So in my learning that we all have Loser’s Limps I don’t think I will ask you if you have one, but what I will ask is; What is yours…and will YOU do anything to correct it?

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Mastering Mountains

This post serves to compliment my last two posts…and well many of the other posts that have been weaved throughout this blog that have been a type of  nudge from me to you  to grow…to change.  I think it’s appropriate for me to post this now because, let’s face it…I ask a lot of you.  I know I throw a lot of ideas and challenges out there to you that aren’t necessarily your everyday habits, and so I definitely understand that they are not easy to consider, let alone do.

So think of this post as your hiking gear to go along with all the “mountains” I’ve pointed out to you.  What I’ll stress first is this idea of not shrugging off ideas, activities, or goals that seem too hard to initiate, or from retreating from your challenge, your “mountain”, all because it looks too high or seems too difficult.  For instance, a couple of posts ago…I suggested being positive all the time as a way to live better, be happier, and to live a healthier life.  Of course I know it would be tough to automatically be “that” supercharged positive person starting tomorrow.  So if you decide to do it…will you be that person tomorrow?  No, but you’ll be closer.  Should you still try?  Yes!  Another example I suggested was journaling everyday, morning and night as a good practice to learn more, learn quicker, and to grow and become more at an exponential rate.  Do I think you will be writing five pages and have a completely revolutionized life by tomorrow?   No, not necessarily.  Do I think it’s a great idea and that you should strive for it?  Absolutely…no doubt!

I guess there are two things to really keep in mind when considering not just my recommendations, but anyone’s, or in starting anything new for that matter.  The first thing is….to start, and the second is…. to take small steps.

If you actually give your toughest challenges a try and pay attention…you will see, oddly, that there really is some type of magical power behind just starting.  What happens is….a momentum is created and shortly thereafter with enough persistence… the positive results begin to show up.  It’s Crazy!  Perhaps this is what Johan Wolfgang Von Goethe meant when he said:  “Whatever you can do or dream you can, begin it…boldness has genius power and magic in it”.

And then of course, there is the second thought to keep in mind when you are about to make some changes….and that is….take small steps, even baby steps if you have to.  The idea is to just start moving in a determined fashion towards your end point.  It always seems to work for the tortoise; it’s been working for the people who have achieved greatly…why couldn’t it work for you?  I’ll bet this is exactly what Confucius had in mind when he made his famous quote:  “A journey of a thousand miles begins with a single step.” 

So..as much as I like to challenge you I am sure life likes to do it a whole lot more.  If you remember these two points I’ll bet your chances of surmounting those challenges, of mastering your mountains…. will go way up!  Give it a try…..Good luck!

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It’s In the Numbers

 

I had a conversation with a friend earlier today about her new network marketing business involving the sale of chocolate, and the funniest thing happened.  I asked her how much money she was to get paid for every sale she made, and she said “she didn’t care” because she will make money regardless.  Now, I write this because I am a very optimistic person and yet I am also a pragmattic who leans towards a business school of thought which condones one having a minimum understanding of the fundamentals of commerce.   What are these fundamentals?… Numbers.

The numbers tell us if we are profitable, if we are having success, if we should continue on the same path, throw in the towel, try something new.  As entrepreneurs, business people, or just ordinary individuals looking to move in a certain direction in life, The NUMBERS are our guiding light.

Do you know your Numbers?  How much more money do you need to be determined in your own eyes as “successful”?  How much money are you actually being paid for your time and effort?  How many more sales calls do you need to make to reach you quota or goal?  How many years do you still need to work before you can retire? How many more ours of education do you need to be considered knowledgable?

It is my belief that if we don’t have something to measure our exchanges of services & products, our successes, or our actions by, then it will be difficult to actually know which direction we are actually moving.   If you want to change your circumstances or move up in the business world,  be sure to have a way to calculate your direction.   It’s in the numbers.

Do You Know Your Numbers?

A man without a goal is like a ship without a rudder.

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