The 90/10 Rule for the (Beyond) Full-time Investor

When an entrepreneur with a family and a full-time, W-2 job says he’s “busy,” that’s an understatement.

It’s probably one of the less ideal situations to be in when taking up a business venture. I know, because I’m there. It’s difficult on the family as well… if you don’t do it right.

So, how does the head of the family, who is paying the bills, raising his children, and sharing the responsibility of the household, all while trying to get a “side-hustle” going, manage everything?

Well, the simple answer is the 80/20 rule.


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What is the 80/20 rule?

The rule itself is pretty simple.

Pareto Principle

Also called the Pareto Principle, says that 80% of an output constitutes 20% of an input. It’s an observable theory in nature. For instance, you can find that 80% of the land in a certain area can be owned by 20% of the population. Or 80% of sales in a company come from 20% of the sales staff.

So, because we know this is often the case in our daily lives as well, you can control this and achieve better and higher output by focusing on that 20% that is actually producing most of the results. For example, if most of your deals come from door knocking then it would be wise to focus most of your energy on that. If 20% of your friends are the ones that give you 80% of your happiness, then you should hang around that 20% more often.

Of course, this rule can be difficult to practice consistently in real life, especially for those with lives that are extremely busy like a father with 3 kids, a husband, and a job that demands 50-60 hours per week.

The 80/20 rule should be 90/10 rule

The Pareto Principle goes even further.

You can even find in some areas that 90% of results come from 10% of output. I first saw this principle in Perry Marshall’s book “80/20 Sales and Marketing”

Realistically, the 80/20 rule should be 90/10 for those that are extremely tight on time. Because even that 20% will be hard to fit into a life of work and family. So we have to restrict even further in order to have happy lives at home.

For those of you in that chaotic reality like me, a lot of online entrepreneurial advice can be dangerous. Especially advice on “grinding it out” non-stop, or quitting a w-2 job (thanks, Gary). I’m not the one to give any more advice other than my opinion on that issue, because I haven’t quit my w-2 and don’t plan on it anytime soon. But I can give advice on how to make a more efficient use of your restricted time, to actually drive you toward your goals… while having a happy life at home.

So, the below advice isn’t a “how to quit your job for your business” type of article, but a how to use the 90/10 principle and apply it to your busy-as-heck-family-man entrepreneurial life piece. So, from my experience, my trials and errors, here are 3 important things you can do to practice the 90/10 rule when time is a constraint and have a happier, less stressful time at home.


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1. Get Rid of What’s “Important”

The number one advice for forward progression in your business without increasing your stress levels is to get rid of stuff in your life.

My wife is very into the “minimalism” movement. Basically, minimalism teaches to get rid of anything that you don’t love. It lessens the amount of stuff you have and teaches you to enjoy the things you love. The same lesson can be taught in business.

When you ask an entrepreneur, “What’s the most important task right now?” They can rarely choose 1-2 things. That’s because “everything” is important. But that kind of thinking ends up cluttering priorities, overwhelming the host, and stalling business growth.

Focus on what’s important.

What’s amazing about our brain is that when you focus on one thing, the outside peripheral world disappears so that we can solely focus on the target. It’s a built-in evolutionary trait of survival. There are many exercises that show how when we focus on a single image long enough, peripheral images start to disappear and the focused image becomes sharper and clearer.

This phenomenon is called the Troxler Effect. And the concept applies to business as well. I learned this from Gary Bencivenga –“the greatest living copywriter” – in his teaching at the Titans of Direct Response seminar. He said that when we focus our attention on ONE thing/desire/goal/task, then our brains use all mental energy to solving that ONE thing; even doing it at a subconscious level (if you’ve read “Think and Grow Rich” you know what I’m talking about).

The completion of that one thing is smoother, sharper and faster. This is the essence of the 90/10 principle.

Instead of trying to do everything, ask yourself, “what are the 2-3 tasks that make me money in my business?” After all, you’re an entrepreneur (whether you like it or not) and “making money” is your primary goal.

To do this, you have to start with what’s not the most important tasks.

This takes hard thinking. Because everything at first is “important.” However, ask yourself, “What are the tasks that aren’t driving my business forward?” For instance, learning how to manage an AdWords campaign is probably not the best use of your time. It takes time to learn, and for a family person, time is the most precious resource. Same with trying to learn online marketing (very few investors become successful with online lead generation right from the beginning as a newbie entrepreneur).

So, if your primary goal is to find deals, then focusing on the tasks that get you in front of sellers is the only task you should be worried about. Even at the expense of not going to meetups, not browsing Biggerpockets, not building a Podio system, and not learning new things in Real Estate. This is, of course, assuming you already know what Real Estate strategy to venture in, and you know how to analyze deals. If you don’t know, then that’s your focused task for a period of time.

Take my plan of action in my business, for example, the info-publishing industry. Because I’m a father of 3 and a husband, as well as a passive investor, I need to eliminate the unnecessary tasks and focus on what moves my business forward which is creating content weekly. That alone drives my business forward each time. Creating content has the most impact because it contributes to traffic and product development.

2. Choose the Most Impactful Task

Like the most powerful task in my business, so should you choose the task that has the most impact. In your real estate venture, it could be door knocking or cold calling. This does two things; it gets you in front of sellers faster than any other marketing media, which means getting a deal faster, it gets you to practice and learn how to negotiate and build rapport the quickest.

I know this sounds elementary, but we get so carried away with petty tasks that don’t move you forward. You should be choosing tasks that have an impact. Tasks that accomplish multiple things (if possible) and that get you to your primary goal the fastest.

3. Set Controllable Goals

This isn’t another “10x your goals” advice. There’s plenty of articles on how you should dream bigger. Instead, we should be reducing our goals.

It’s ok to have massive goals. But having that big goal does nothing. It sits there, making you upset when you don’t reach your “millionaire status” in one year. Instead of huge unattainable goals, turn those into small bite size goals you can actually control.

Here’s what I mean.

You can’t really control if you’re going to flip 12 houses this year. You can’t even necessarily control if you’ll get a deal this month. But you are in complete control of the tasks that can get you to that goal. Once you figure out what the most impactful tasks are, those tasks will be your new “bite-size” goal.

For example, let’s choose door knocking as the most impactful task. Let’s say that on average you (or people in your industry) get a deal after 200 doors knocked. Well then, that’s your new goal. Spread it out evenly to 50 door-knocks a week, and now you have an attainable and realistic goal for the week.

At the end of the week, when you accomplish those 50 doors, you don’t have to worry about hitting that bigger goal of getting one deal a month anymore. You did all you can for the week and went after your goal while achieving it. If you finish early and you have extra time in the week, you can either spend it with family or choose some other impactful task for the business.

What if you don’t reach your bigger goal of one deal a month? Well, first off, you’ll be less stressed and upset with yourself because you did all that you expected yourself to do (door knock 50 doors a week). Then you need to re-evaluate your small-bite-size goal. Is it too small of a number? Are you door knocking in the wrong places? Are you losing deals because of your lack of skill?


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As I mentioned, this isn’t a “how-to-quit-your-job” or “how-to-be-successful” piece. And, the 90/10 rule doesn’t guarantee any success. But it does guarantee that you spend more time with your family (or whatever matters most in life to you) and live stress-free not worrying or getting overwhelmed.

It also guarantees that you focus on moving your business forward. “Forward” doesn’t necessarily mean success, but it does mean constant progression which leaves you with a much better chance of success than stagnation and distraction.

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One Response to “The 90/10 Rule for the (Beyond) Full-time Investor”

  1. Aaron Douglass

    This really got me thinking. For the longest time I couldn’t figure out what I’ve been doing wrong. Drilling it down and getting clear, I’m certain that I’m spending more time on the activities that are producing nothing. I was able to get a few nuggets out of this and I greatly appreciate it! It’s definitely what I needed to read (hear) right now. Thank you!

    Reply

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