Breaking Down the 80/20 Mindset: Subtracting for Success
with Perry Marshall
with guest Perry Marshall #MakingBankS5E37
Entrepreneurs know that when it comes to business, your mindset is the most important strategy that is at play. How you are handling situations or going into your business ultimately sets up the foundations of your company and indirectly, the success that you either have or fall short of. It seems like every business at the top has its mindset…so which one should you use?
Perry Marshall, an expert business strategist, and author joins us today on this episode of Making Bank. He talks about his 80/20 mindset that has helped millions of people improve their careers and their lives. With a ton of experience in business, Perry realized the importance of cutting down and subtracting when thinking about the bigger picture of things. When businesses grow, oftentimes they can get lost and become unsustainable.
Learn what the 80/20 mindset is, how Perry discovered that it worked, and how you can apply it to your entrepreneurship journey.
What is The 80/20 Mindset?
Perry uses the 80/20 mindset not only for his business but also for his life. This rule means that 80% of your results come from 20% of your efforts, and 20% of your results come from the other 80%. This principle doesn’t just apply to entrepreneurship or business NASA’s jet propulsion labs use his 80/20 curve as a productivity tool.
To break this down further, Perry explains that “the concept is multiplied by subtracting, excelling by eliminating the biggest obstacle to you being successful – the extra baggage that you’re carrying around. And secondly, is to replace whatever you’ve been operating on before, like the operating system of your business mind, and replace it with something that is just as valid for a 10,000-dollar business as a 10-million-dollar business or vice versa.”
Perry observed that with the growth of a company, the way that the business operates changes. This means that the foundation and the way that the business started wasn’t as sustainable as it could be and could be improved so that further growth won’t run the company into a wall. The point of this is to make sure that all of your efforts are ran the same way, no matter the company size or worth. There’s no use in starting a company if you don’t want that growth, and there’s no use in keeping a company if the only thing that is driving you is getting bigger.
“To most people…it would never occur to you that you might be operating on a set of assumptions that will stop working once your business gets to a certain size because you know, people are just in survival mode,” Perry says, and he is adamant about having a plan that will work and foster that growth that you want to achieve.
Discovering How it Worked
So how did this all occur to him? Back when Perry was working, the president of his company came into his office and said that the company had too many projects, too many expenses, too many vendors, too many employees, and not enough cash. The company wasn’t going to make it unless there was some sort of change that would be implemented to save the business.
After some push back in trying to keep the ideas alive and not cut down the business, Perry realized that his president was right. There was a time where he realized “We’re going to have to cut as much fat as we can without cutting muscle, which is not easy. And we’re going to be spending months doing this and you waited too long to do it. So, it’s all going to be painful.”
Perry spent the summer cutting down the company. And it was stressful and sad, but he realized something pretty quickly. This was the very first time that he ever completely switched to a subtraction mindset. The 80/20 mindset is not just about identifying the top 1% or the top 5% of what you should be doing to succeed. It has that as an aspect, but it also has the idea that you have to cut out a whole bunch of trivial stuff before you have the resources to four on the 1%.
If you don’t have the resources to be in the top 1%, you’re just thinking about the 1%. You’re not doing anything to achieve the goals you want. When Perry finally put the efforts towards getting the resources, it was a whole lot easier to run and navigate with less stress and less pressure. There was a fewer number of things that they needed to jam through a machine to make it world. This was a complete mindset shift.
The point of 80/20 is essentially cutting the things that you don’t need out so that you can spend more of your time and energy on something that will get you to achieve the goals that you set in place and allow you to grow. When the business grows, of course, things are going to change in the business. But sticking with a solid foundation can allow you to not have to cut down things later on.