 Hi, today I wanted to talk to you about the 80-20 principle or the Pareto principle. This is a principle which some people might disagree with me here, but I believe should not be applied at the beginning. Because at the beginning, when you're first starting out is when you're trying to build your business, maybe from scratch or maybe from something small. So you're trying to get new clients, you're trying to grow. At this point in time, you don't know where your new business is going to come from. So you're trying to explore every avenue. This is not the time to lay back and take it easy. This is not the time to try to find a work-life balance. This is not the time to say, I'm not going to check emails on weekends or whatever. This is my feeling. Again, during this time is when you want to work harder so you can relax more in the future. Whatever hard work you do now pays a lot of dividends in the future so you should try to explore every avenue, as I said. However, at a certain point, you will find yourself with more work, but then you'll probably be very busy and you'll be stressed out and you'll have to juggle all these clients. That's a good problem to have. In order to best solve it, we have what's called the 80-20 principle. This to me is something that should be applied in all walks of life, anything you feel stressed out over or that you have a lot of work to do. For now, I'll just apply it to freelancing, freelance translation, freelancing, whatever. So just briefly, the Pareto principle, according to Wikipedia, states that for many events, roughly 80% of the effects come from 20% of the causes. So what does that mean? How does this apply to you? The way this applies is that you can use this as a general rule of thumb. So an analysis of this sort can lead to great gains. More specifically for your business, you might find that 80% of your profits come from 20% of your clients, or 80% of your complaints come from 20% of your clients. Or that 80% of your profits come from, say, 20% of the time you spend working. If this is the case, then it makes sense to drop what you're doing 80% of the time, even if you risk losing 20% of those profits. This is just so you can redirect these efforts into something that's more like what's made the 80% of your profits. And this means that you'll be earning a lot more with less effort. Now this might be a bit confusing the way I'm putting it, so I'll try to give an example. So let's say you have one client, a Swiss client. This Swiss client is smooth as silk, in the sense that the Swiss client assigns a translation with a deadline, you accept and you deliver the translation on time, and then you get paid. Just as it should be, everything works out great. Now let's say you have another client, an Italian client, who assigns a translation and then changes the deadline, has a tendency to require further changes. Once you've delivered, will say something like, I have a 10 page translation, but it turns out to be 15 pages, or we'll try to add more here and there without trying to sneak it in some way. Or we'll want to have a chat with you on Skype or over the phone, quite often. And often delays payment, or you have to keep chasing your payment with them, etc, etc. You know the deal. So what should you do? Obviously client, the Swiss client is better than the Italian client. But the Italian client might be paying you decently as well, even though you have to chase the payment, you do get payments and they might be good payments. However, after an 80-20 analysis, things should become more clear. And you realize that all the time spent on the Italian client actually pays a lot less per hour than the Swiss client. Once you've conducted this analysis and you've realized where you're directing your efforts and your time, your energy, i.e., it's a lot more useful with a Swiss client and you're earning a lot more per minute or per hour than you are with the Italian client. At this point, you have two options. First you could decide to cut out the Italian client altogether. You say, forget it. I'm just dealing with the Swiss client. It's a lot more efficient. So now you have your newfound spare time. You're not chasing. You're not Skyping. You're not dealing with all the changes. And so you have all this spare time. You can either find similar clients like the Swiss client or you can just say, hey, I'm still gaining 80% of what I was doing before because I have my Swiss client. And now I have all this free time. I can chill. I can relax. Or option two is you could contact the Italian client and you could lay down certain ground rules. Look, these are my new payment terms. This is the maximum number of edits I'm going to do. And this is the maximum number of Skype conversations I'm going to have. You don't have to be mean about it, but you can be firm and specify that these are your protocols from here on out and that your other clients are following these protocols as well. The worst case scenario here is that the Italian client doesn't adhere to them and can't follow them in which case, you know, fine, you have freed up 80% of your time and you've only lost 20% of profits, but they might be able to follow these new protocols in which case suddenly you have a client a lot more like the Swiss one. By the way, I'm half Italian, so I'm allowed to make fun of Italians like this. So no one get offended or get offended. If you want. Fine. In summary, any 20 analyses are great and they're extremely useful. You should probably be applying them not only to your business, but to most activities you perform. I hope you found this useful. If you did, please click like, please subscribe for more videos like this. And that will keep coming up regularly and also please share this with other people who you think might find this useful. That's it for now though. I'll see you in the next video. Thanks. Bye. Sa vedo.