Pareto Analysis, often referred to as the “80/20 rule,” is a decision-making tool used to identify and prioritize the most significant factors contributing to a given outcome. It is based on the principle that 80% of effects (e.g., profits, problems, or outcomes) stem from 20% of causes (e.g., key clients, issues, or efforts).

Originating from Vilfredo Pareto’s observation that 80% of Italy’s wealth was owned by 20% of the population, this principle has been widely adapted to business scenarios. Business mentors use the tool to help clients focus on the critical few activities or problems that yield the greatest impact, rather than spreading resources thinly across many less impactful areas.

When should I use it with a client?

Pareto Analysis is most commonly used in situations where resources—such as time, money, or effort—are limited, and prioritisation is essential. Business mentors often turn to this tool in the following scenarios:

• Problem-solving to identify the most frequent causes of recurring issues (e.g., customer complaints or process inefficiencies).
• Strategic planning to determine which clients, products, or services contribute most to revenue or profitability.
• Time management to guide entrepreneurs in focusing their energy on tasks that drive the most value.
• Improvement projects to uncover the critical areas that require intervention to maximize efficiency or quality.
• Decision-making to evaluate where to allocate resources for the highest return on investment.

Discover more information about this business mentoring tool in the PDF attached below.