How to Choose the Right Work Laptops for Your Business

One of the best things about being an entrepreneur is that you get to be your own boss. But when you're the boss, you also have the responsibility of making all the right choices for your staff. Purchasing work laptops for your team can be overwhelming if you don't know where to start, but it doesn't have to be. 

Shopping for a laptop is just like shopping for anything else. Follow these five steps and before you know it, you'll be outfitted with the right tech for your small business. 

Step 1: Define your budget

When entrepreneurs don't set a budget for themselves before shopping, especially for technology, they often end up overspending. Not every business needs a fleet of top-of-the-line machines, and it's a waste of time to consider high-cost options if they don't suit your bottom line. Of course, you don't want to go so cheap that your workforce becomes inefficient either. 

If you're not sure how to strike a balance between cost and quality, check out our breakdown of laptop budget ranges: 

• $300 and Under: In the $300 and less range, you'll find low-end Chromebooks and Windows machines exclusively. We don't recommend laptops at this price point for business users as they typically have a cheap build quality, limited storage and slow performance. 
• $350 to $599: In this price range, you'll find mediocre Windows laptops and good business Chromebooks. The reason Chromebooks are better than Windows machines in this range is because they have far less storage (which is expensive), so they can stay low priced without sacrificing on build and display. Either way, you should only purchase a work laptop in this price range if you plan on sticking to basic tasks such as using Microsoft Office, posting on social media and browsing the web. 
• $600 to $900: Most business users' needs can be met in the $600 to $999 price range. You should have no trouble getting the memory and storage you need as well as a processor that's powerful enough for business multitasking. Work laptops in this category often feature business-class security features, such as fingerprint scanners, and they tend to have good battery life, comfortable keyboards and nice displays. 
• $1,000 and up: For $1,000 or more, you can get a laptop that's much more powerful or more portable than those in the cheaper price brackets. Premium ultraportable models, such as Dell's XPS 13, for example, offer fast performance in an extremely sleek package. Bulky, powerful workstations also fall into this category and can range from $1,500 to $3,000 or more.

Now that Unless you're able to spend at least $1,300 per laptop, you'll be choosing between a Chrome OS and a Windows OS, but there are three primary operating systems, and you should know the difference. 

Apple OS X

Laptops that run Apple's OS X carry hefty price tags, but many die-hard Apple fans are willing to pay a premium for a beautiful machine with a well-designed interface. Historically, creative professionals favored Apple laptops because of their high screen quality, function keys and ability to run high-octane programs such as Avid, Maya and Dreamweaver. 

Many creative pros still purchase laptops from Apple, but it's no longer considered the mandatory go-to brand, especially since recent MacBook Pros have featured less RAM than previous models and seem more focused on appealing to a mass audience rather than a niche. 

Whether you opt for a machine running Apple OS X or not is primarily up to personal preference and how much you're comfortable spending. 

Windows OS

In general, Windows is the standard for work laptop operating systems. If you go with a Windows OS, you'll have more laptops to choose from than if you go for Chrome OS or Apple OS X. There are Windows machines available in every configuration and price range possible, which means you can be pretty picky (within your budget of course). 

Windows 10, the latest version of the operating system, comes with a handful of new features that can boost your productivity. Cortana, Microsoft's virtual assistant app, can perform all sorts of tasks, from scheduling appointments to checking the weather. Then there's Task View, which lets you set up multiple virtual desktops for easier multitasking. 

Chrome OS 

Google's Chrome OS is the new kid on the block when it comes to operating systems, so if you're not sure what to expect from a Chromebook, you're not alone. When Chromebooks first hit the market, they were primarily created with students in mind because they have a super low starting price point. 

Now the offering of Chromebooks is more diverse and there are business-focused laptops running Chrome OS. Chrome is a great choice if you're an entrepreneur who is comfortable living in the cloud (you can't download programs on a Chromebook) and who doesn't want to worry about updates. 

Chromebooks are built to automatically download and deploy updates for you, which is a great timesaver for busy entrepreneurs. Thanks to an increase in cloud-based programs, such as the Adobe Creative Cloud, Microsoft Word, Excel and PowerPoint, Chromebooks are growing more functional for a broader range of business owners. 

Step 3: Choose a design 

The key to choosing the right laptop design is considering how you (and your team) work. Here are a few questions to ask yourself before you shop: 

• Do I want a hybrid laptop or a traditional laptop? You're already familiar with traditional laptops that open on a hinge, but now there's a new breed of hybrid laptops to consider. Hybrid laptops, also called convertible laptops, are laptops that double as stand-alone tablets. Some hybrid laptops feature screens that detach completely from the keyboard while others have hinges with a 180-degree range of motion, so you can fold the laptop inside out and use it as a tablet. 
• Is a comfortable keyboard a high priority? When you're busy looking at laptop designs it can be easy to forget about the basics, but keyboard comfort is an important feature for most business users. Keep in mind that the smaller the laptop, the smaller the keyboard, and typing on a miniature keyboard for hours at a time can be tiresome. If possible, test out different keyboards to get a feel for what you like, but if you can't do that, at the very least, make sure you take note of the size of the keyboard on any laptop you consider. 
• Will I be traveling with my laptop or mostly working in one place? Portability is a major concern for some business owners and a nonissue for others. If you travel a lot or like to work in different locations on a regular basis, it may be worth sacrificing screen size and keyboard size for a lighter computer. You can always check the dimensions and weight of a laptop under the technical specifications online. 
• Do I need a touch screen or stylus support? Touch screens are a nice feature if (and only if) you use them a lot. Laptops that have touch screens and/or stylus support are nearly always more expensive than similar models without touch screens. Computers with touch screens also use a lot more battery power than those without, even if the touch screen feature isn't actively used, and to top it off, touch screens are heavier than regular screens. If you need a touch screen or stylus support, you should absolutely look for that feature in a laptop, but don't spring for it just because you think it seem like a cool add-on. 

Step 4: Compare these three specs 

By now you've probably found a couple different laptops that fit your budget, have the operating system you want and meet your design needs. Choosing between them comes down to the specs. Looking at specs can be overwhelming when you're not familiar with all the tech talk, so we're breaking it down in simple real-world terms. 

CPU

Under the technical specs you'll see the laptop's CPU (central processing unit, also just called the processor) listed. The CPU is the first thing you should look at when comparing different laptop options. 

If your laptop were a car, the CPU would be the engine. As you can imagine, the quality of your laptop's processor has a huge impact on usability. That said, many people overspend for top-of-the-line processors when they don't need them (an equivalent would be someone who buys a Porsche but never drives over 40 mph). 

As you compare CPUs on the laptops you're looking at, keep these general guidelines in mind: 

• Low-end CPUs: Low-end CPUs include the Intel Atom, AMD E Series, Intel Pentium and Intel Celeron. These CPUs are best suited for very light use. If all you plan on doing is typing and web browsing, a low-end CPU may be fine, but, in general, we don't recommend these for business use. 
• Midrange CPUs: Midrange CPUs include Intel Core m3, Intel Core m5 and Intel Core m7. You will likely only see these CPUs in lightweight laptops and hybrid laptop designs. These CPUs are alright for basic work tasks. If the laptop you're buying is a secondary machine for travel, or something you'll only use occasionally to take notes and send emails, this range of CPUs should suit your needs. If your business requires you to run robust programs on a regular basis, you should spring for more power. 
• CPUs that are good for most business use: Intel Core i3 and Intel Core i5 processors are suitable for most businesses, they're like the reliable four-door sedans of the laptop world. If you regularly multitask on your machine and do things, like run QuickBooks while managing massive spreadsheets in Excel when your browser had 15 tabs open, a Core i5 is a better choice for you than a Core i3. If you're a standard business user who uses Outlook, types documents, streams media, store photos and posts to social media, a Core i3 will suit your needs just fine. 
• High-end CPUs: When they first came to market, Intel's sixth and seventh generation Core i7 processors were found exclusively in high-end laptops. As with most technology, the price has decreased somewhat, and you can now find laptops for under $1,000 that have i7 processors. While there's nothing wrong with purchasing a laptop with a Core i7 processor, you probably don't need one. 

Many people think a powerful processor equals better performance, and everyone wants the best performance possible, but that idea is both true and false. Here's an analogy: Imagine loading a bag of groceries in the back of your four-door sedan (your Core i3 or Core i5). You can easily drive that bag of groceries home, right? Now imagine putting that same bag of groceries in the back of a high-end pickup truck with way more horsepower. Was it easier to drive the bag of groceries home in the more expensive truck? No, it didn't make a difference, because the task you were performing was so lightweight that you didn't even tap into the benefit of the pickup truck's extra horsepower (the ability to haul massive loads, attach a snow plow, use four-wheel drive, etc.). 

The same is true for high-end processors. If you're not going to do video editing or 3-D modeling, you don't need a high-end processor, and having one won't improve your laptop experience. If those demanding tasks are part of your daily business, a Core i7 will be well worth the money. 

• Luxury CPUs: If you gave yourself an unlimited budget for business laptops, you may encounter a few that feature the Intel Xeon. The Intel Xeon is only necessary for professionals who regularly do hardcore business analytics, vector-based processing, and other highly intensive data science and analytics tasks. If all those terms sound like Greek to you, you don't need an Intel Xeon. If an i7 is a fancy pickup truck, an Intel Xeon is a high-end sports car, like an Aston Martin or a Porsche. There's a very small population for whom buying a sports car is a financially sound decision, and the same is true for a luxury laptop with an Intel Xeon. 

Memory and storage

The second most important factor to evaluate when comparing work laptops is memory and storage. There are two basic types of memory and storage that your laptop will have. You can think about them like long-term storage and short-term memory. For short-term memory, there's random access memory (RAM), and for long-term storage, there's your hard disk drive (HDD; it can also just be called a hard drive). Some computers have a solid-state drive (SSD) in addition to a HDD (for long-term storage), while others only have a SSD for long-term storage. 

SSDs are newer than HDDs, but they are becoming increasingly popular for storage because they're faster than HDDs (meaning they make your laptop run faster too). SSDs don't have any moving parts, so they're also more durable and compact than standard hard drives. 

Here's how to figure out if the laptop you're looking at has enough memory and storage for business use:

• RAM: Skip any laptops that have 2GB RAM as they'll be frustrating to work on. Aim instead for laptops that have 4GB (good) or 8GB (even better). Some laptops come with 16GB, but that's not necessary for most business users. 
• HDD & SDD: Unless you're planning on doing a lot of video editing (and therefore storing tons of footage on your machine), you should be fine with a minimum combined storage capacity of around 256GB. Bear in mind that if you opt for a Chromebook, you will have far less hard drive space. (And if you're ok with living in the cloud and running mobile apps, that's ok.) The storage suggestion here is primarily for business users purchasing Windows or Apple machines. 

Battery life 

The last major spec you should consider before making your final decision is battery life. Battery life is a nonissue for some business owners and a huge deal breaker for others, and only you know how often you'll be using your laptop without access to power. 

In any case, it's a good idea to glance at the battery life of any machine you purchase. Bear in mind that different laptop manufacturers use different metrics to measure battery life, so don't take their reported number as an absolute fact but more as an estimate. If you want the exact battery life of a laptop, it's best to check out third-party testers, such as our sister site Laptop Mag. They rigorously test every laptop for battery life by continuously surfing the web over Wi-Fi. 

Some laptop manufacturers make add-on batteries for an additional cost. While these extended-life batteries can massively improve the battery life of a work laptop, they also add considerable weight to the machine, so make sure you consider combined weight if you opt for an extra battery pack. 

Step 5: Purchase your work laptops with confidence

Now that you've successfully narrowed down your choice of work laptops based on exactly what you need, you can confidently make your purchase. If you're still feeling unsure about your choice, you can always check out our continuously updated best picks, such as Best Business Laptops and Best Work Chromebooks.  budget is set, filter all your future searches based on cost. Even looking at laptop models that are outside of your price range is a recipe for budgetary disaster, so steer clear. 

Step 2: Choose an operating system

The Small Business Financing Trends of 2018

Every startup has one major need in common: money! Financing a startup takes a great deal of overhead, often before any revenue streams have come to fruition. That means while your fledgling company is spending money left and right to get up and running, it's likely not bringing anything in.

Not to worry, there are plenty of different ways to finance your startup. Whether you borrow money, leverage your savings, use credit, or go another route, it's important to understand your options and the pros and cons of each before you choose.

While these are far from the only ways to finance your startup, here are three of the most popular methods today's entrepreneurs choose.

Borrowing

Traditional bank loans

The notoriously high rejection rate of bank business loans combined with the proliferation of online lenders has made traditional business lending seem like it's not even worth the time and effort. But plenty of small business owners still turn to local and national banks, as well as the Small Business Administration (SBA), to help them finance their operations.

"Traditional bank loans typically offer better terms and build credit, but the arduous [process] that comes along with this type of financing often overextends time-to-credit necessary to meet the small business's needs," added Matt Schaffnit, CFA, co-founder and COO of Lending Technologies Corp.

Alternative lending

Alternative lenders provide quicker, smaller, more flexible loans through an online application and transfer process. Depending on your credit score, you can be approved for a loan in a matter of minutes and have your money in just a day or two.

While having all these options can be great for businesses that may not qualify for a traditional bank loan, it also means you'll need to be much more diligent about researching potential lenders and their reputations. Sabrina Parsons, CEO of Palo Alto Software, said that although online lenders will make a lot of promises about their funds, some are just "sharks" out to take advantage of small business owners.

"These sharks will charge business owners to 'qualify' for a loan and to have access to their lenders," Parsons said. "[Also, some alternative] loans can come at a very high interest rate, and business owners need to understand the implications of these types of loans."

Editor's Note: Looking for information on business loans? Fill in the questionnaire below, and you will be contacted by alternative lenders ready to discuss your loan needs.

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Schaffnit said the biggest trend in alternative lending is consolidation, and he believes this trend will persist.

"Newer alternative lenders are learning that managing net interest margin is more important than they realized," he added.

He further noted that if the Trump administration follows through in lightening the regulations on lending, it could have a positive effect on small businesses' ability to access capital from more traditional and thus more affordable sources.

"However, we also foresee an overall increase in regulations trending over time," said Schaffnit. "We believe these side effects will be net-positive."

Bootstrapping

Funding your business out of your own pocket – commonly known as bootstrapping – is the simplest but potentially most difficult financing route. On the one hand, you are in total control of your finances; you don't have to make any payments to lenders or share equity with investors. On the other hand, you're on the hook for every penny you sink into the company, and if it fails, your personal funds are going down with it.

"We see entrepreneurs end up in a position where growth and revenue is strong, but because of long payment cycles, they are short on cash to meet payroll, purchase supplies or acquire inventory," said Ed Castano, principal product manager at TriNet. "Understanding your options, whether it be a bank line of credit, invoice financing, purchase order financing or something else, can be the difference between expansion, stagnation or layoffs for a small business."

Bootstrapping is more about necessity than preferred method of financing, according to Schaffnit. More often than not, there is simply no other source of funding available to bootstrappers because they are too early-stage or lack the scalability for loan or venture financing, he said.

Fundraising

Raising capital

Tens of thousands of startups have turned to venture capitalists and angel investors to get off the ground, and their ranks are only increasing. A 2016 Gust report on startup funding saw the number of funding applicants submitted in the second half of that year increase almost 6 percent from the same time in 2015.

Schaffnit noted that venture-type fundraising typically only works for high-growth businesses or businesses that have proven track records and significant revenues, so it is not typically an option for the vast majority of small businesses.

Christopher Hale, founder and CEO of Kountable, a platform that connects entrepreneurs in developing countries with investors based on a "social capital" score, said that investors are really looking for how close a business gets to the underlying economic activity of a community. Investors will look at some of the same thing lenders do – cash flow, market opportunities, the founding team's experience, etc. Entrepreneurs in the modern world have one more trick up their sleeves: their digital footprints.

Kountable uses a social capital measurement called a K score, and it takes online activity into account when evaluating entrepreneurs.

"[Kountable gathers] a number of different data points, [but] we're not looking at the traditional definition of creditworthiness," Hale told Business News Daily. "The K score measures performance capability, [which] is fairly easy to identify in one's digital footprint."

Crowdfunding

In an age when new Kickstarter and GoFundMe campaigns emerge every day, crowdfunding is quickly becoming a go-to option for businesses that want to raise money without the pressure of formally pitching investors. Success stories of entrepreneurs who raised tens of thousands – even hundreds of thousands – of dollars in just a few weeks seem to be a dime a dozen.

In a 2017 blog post, Crowdfund Campus outlined three trends to watch out for in the years ahead:

1. Niche platforms. Campaigners are moving away from mass-market platforms to those that draw a specific crowd. Niches such as gaming, education, music and sports are all forming their own platforms to better serve both those crowdfunding and those investing.
2. Smarter investors. Potential investors are no longer as free with their money, just in case another recession hits. Educating these investors should be a high priority for entrepreneurs looking for funding.
3. Blue-chip crowdfunding. Large blue-chip corporations are learning that crowdfunding is the best medium for authenticating ideas, garnering support and determining demand with very little risk.

Looking for other ways to finance your entrepreneurial dream? Visit this Business News Daily guide for a full list of alternative ways to fund your startup.

Additional reporting by Nicole Fallon and Adam C. Uzialko. Some source interviews were conducted for a previous version of this article.

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Why the Stock Market Volatility Matters to Small Businesses

After a long period of steady growth, the Dow Jones sharply decreased in early February, jolting the business and investor communities alike. There are a few reasons for the correction and ongoing volatility, including rising wages, concerns about inflation and anticipated interest rate hikes. This last cause is a near-certainty expressed by many members of the Federal Reserve, and it's not going to impact only stock markets, but small business owners as well.

The Federal Open Market Committee (FOMC) is the Federal Reserve body responsible for governing monetary policy. Part of this means setting the federal funds target rate, which is the rate at which banks lend each other money overnight. This impacts interest rates everywhere in the larger economy, so when the fed funds rate is hiked, generally so are rates elsewhere.

Here's what small business owners need to know about rising interest rates and how to best take advantage of the current low-rate environment before it comes to a close.

What are interest rates?

It's a basic question, but when dealing with macroeconomics, it's worth reviewing the basics. At its core, what is an interest rate? Since interest rates are a percentage paid on top of the repayment of borrowed money, we can quite simply consider interest as "the cost of money." And if the fed funds rate generally impacts all other interest rates – when the fed funds rate goes up, typically so does your bank's – money becomes more expensive to borrow, making saving cash a more attractive prospect.

On the other hand, when the fed funds rate goes down, it incentivizes borrowing. Moreover, saving is far less lucrative, so individuals and businesses who had been accruing interest in a savings account might be more likely to spend some excess funds on needed investments. This is why the Federal Reserve dropped interest rates during the economic crisis in a bid to incentivize spending and stimulate the sputtering economy.

By raising and lowering interest rates, the Federal Reserve is encouraging certain behaviors it deems beneficial to the larger economy. After the financial crisis, economic activity was grinding to a halt, so to encourage borrowing and investment, the Fed dropped rates. However, leave rates too low for too long and you risk creating an inflationary environment, because high levels of spending – demand for goods and services – drive prices up. Raising the interest rate combats these effects, but raising them too quickly can stifle economic activity.

Altering interest rates, then, is like a balancing act between incentivizing economic growth on one hand, and managing inflation on the other – and the FOMC orchestrates this balancing act. Today, the Fed is determining that the economy is sufficiently recovered from the 2008 financial crisis to begin weaning the economy off of cheap money, and that ongoing prospect is in part responsible for the volatility in financial markets.

Recent history of the fed funds rate

The prospect of rate hikes is not new. In fact, the Federal Reserve has been periodically lifting rates since December 2015. However, since the financial crisis in 2008, the Federal Reserve held interest rates at unprecedented near-zero rates. That means the cost of money has been cheap for nearly a decade, and businesses and investors have gotten used to it.

"We've gone from an environment where the Fed has been especially accommodative going back to financial crisis," said Mark Wynegar, president and portfolio manager of Tributary Capital Management. "And what we see is economic data that has given the Fed room to unwind these things and normalize interest rate policy a bit. GDP is perking up a bit, and we've seen an exceptionally long economic expansion. We're starting to catch some whiffs of inflation, a bit of a bump on the wage front, and the Fed is using that as a backdrop to get rates to more of a normal level."

Although recent rate hikes have ended the seven years of near-zero rates, the 1.5 percent target rate is still incredibly low, and until now, the markets reacted with a collective yawn, continuing a gradual climb year over year since the recovery. Now, however, as rising wages and fears of inflation have surfaced, so has anxiety about further rate hikes, which the Fed has not been shy about expressing are in the works.

Loretta Mester, president and CEO of the Federal Reserve Bank of Cleveland, said she expects three or four 0.25 percent rate hikes in 2018, which would bring the uppermost target rate to 2.5 percent. Other officials have worried aloud that three hikes might be too much, but nobody seems to suggest that there will be no hikes. However, even if the target rate hits that 2.5 percent upper limit by the end of the year, that will still be historically low. For example, prior to the financial crisis, the fed funds rate sat at around 5 percent, also on the low end of the historic spectrum.

What should you do before rates increase?

The good news is that you haven't missed your window to take advantage of historically low rates. The better news is, even if four rate hikes go through in 2018, rates will remain historically low. However, finance is often a game of relativism – buy low, sell high – so you'll want to make the right moves while rates are still this low.

What Is The 80/20 Rule And Why It Will Change Your Life

I mention the 80/20 rule frequently in my writings so I thought it was about time to write a proper introduction to the concept. I believe it’s fundamental to every business person – to every human being – so if you have never heard of this rule, please read on and absorb everything I’m about to tell you, it could potentially change your life.

The 80/20 rule sounds like a statistic and in some ways it is. Personally I’m not a big fan of maths and beyond basic web statistics like pageviews, impressions, unique visitors – and when I stretch myself – conversion rates and split testing, I try and avoid all complex numbers. I work better with feelings, ideas and concepts.

The good thing about the 80/20 rule is that you don’t have to understand statistics to be a believer. Yes it has foundations in economics and yes, it was “proven” using statistical analysis by a man named Pareto, but it is not meant to be understood only by economics professors.

Here’s what the Wikipedia has to say about it:

The principle was suggested by management thinker Joseph M. Juran. It was named after the Italian economist Vilfredo Pareto, who observed that 80% of income in Italy was received by 20% of the Italian population. The assumption is that most of the results in any situation are determined by a small number of causes.

I can’t remember exactly when I was first exposed to the 80/20 Rule but I know when it first really hit home. I was in my local bookshop and I picked up a copy of Living The 80/20 Way by Richard Koch. Koch took the 80/20 Rule and made it his own by writing a series of books on the topic. Living The 80/20 Way fit me well because it discussed living life productively seeking maximum satisfaction by focusing on your passions (Koch has written other books focusing on the 80/20 Rule for business and managers that I didn’t enjoy quite as much). At the time I sometimes accused myself of being lazy for not “working hard” but I realized what I was doing was living an 80/20 lifestyle and in fact probably being a lot more productive than those working harder than myself.

What Exactly Is The 80/20 Rule?

By the numbers it means that 80 percent of your outcomes come from 20 percent of your inputs. As Pareto demonstrated with his research this “rule” holds true, in a very rough sense, to an 80/20 ratio, however in many cases the ratio can be a lot higher – 99/1 may be closer to reality.

It really doesn’t matter what numbers you apply, the important thing to understand is that in your life there are certain activities you do (your 20 percent) that account for the majority (your 80 percent) of your happiness and outputs.

You may have expected me to say that 20 percent of your activities produce 80 percent of your financial rewards, and that is true, there are probably a handful of activities you do each week that produce your income. You can definitely apply the 80/20 Rule to most aspects of your business or working life, however I believe your overall happiness and satisfaction are much better variables to focus on. Money certainly plays an important role in your happiness and your money is influenced by 80/20 relationships, but it is only a component that leads to your overall well being, which should be your primary concern.

80/20 Examples

There are many economic conditions, for example the distribution of wealth and resources on planet earth, where a small percentage of the population controls the biggest chunk, which clearly demonstrate the 80/20 Rule. There are business examples such as 20 percent of employees are responsible for 80 percent of a company’s output or 20 percent of customers are responsible for 80 percent of the revenues (or usually even more disparate ratios). These are not hard rules, not every company will be like this and the ratio won’t be exactly 80/20, but chances are if you look at many key metrics in a business there is definitely a minority creating a majority.

At a micro level just by looking at your daily habits you can find plenty of examples where the 80/20 Rule applies. You probably make most of your phone calls to a very small amount of the people you have numbers for. You likely spend a large chunk of your money on few things (perhaps rent, mortgage payments or food). There is a good chance that you spend most of your time with only a few people from the entire pool of people you know.

I’ll present to you how the 80/20 Rule applies to my life and how I have used the concept, although not always deliberately – it’s just the way I construct my life (for maximum pleasure!) -to improve the efficiency of my output and enhance my overall lifestyle.

My 80/20 Life

In my life I’ve noticed plenty of 80/20 ratios and generally they relate to my core competencies and passions. I really enjoy writing articles such as this, recording podcasts and interacting with other business people through Skype and blogging. In terms of rewards, the two-to-four hours or so per day that I spend writing – when I’m in the creative zone and my best work comes out almost effortlessly – is my money time. My articles and podcasts work hardest to generate income for me, create business opportunities and allow me to express myself creatively. I get the most financial and intrinsic satisfaction from this time.

I expect you could tell me a similar story about your life. During times you really enjoy yourself your output is at its peak. Your passion activities probably don’t pay your bills at the moment, which unfortunately means that you can’t sustain your life by indulging only in what you enjoy. I’ll talk more about transforming your life to a financially stable and personally fulfilling 80/20 format later in this article.

During some times in my life I struggle and waste time performing activities I don’t enjoy or I am not good at. For example bookkeeping is not high on my fun list. I don’t always like managing keywords in Google AdWords campaigns because I don’t have the patience to thoroughly test the variables and track the numbers. The same can be said for things like Google Analytics. These activities are more numerical in basis, I’m not a numbers person so when possible I leave these tasks, along with other activities like programming, graphic design and proofreading to other people, the specialists who enjoy them.

Some of my time is spent procrastinating or working inefficiently doing activities that provide very little benefit. This often occurs when I am tired or below peak physical condition. I sometimes lack the mental throughput to motivate myself to be productive (and boy, my writing stinks when I’m tired!), but I’m working on it and getting much better at reducing time wastage. When I’m in this state it’s smarter for me to study – read books and ebooks – because I’m not capable of producing quality output, but taking input – learning – is a good use of time when I am not there 100 percent mentally.

80/20 Business

When I look at one of my businesses, BetterEdit.com, it’s very clear that a small handful of repeat customers account for most of the income. The customers who become longterm users, who gain the most from the services and fit well demographically and socially with the business model, are key. They provide 80 percent of the value but only represent 20 percent (or much less) of the overall people that use the business. My job is to determine the best way to attract and convert more customers into longterm users.

With blogging I learned (and teach in my Blog Profits Blueprint newsletter) that there are a handful of activities that I do every day that produce the most results. Breaking things down further, there are usually a key 20 percent of elements within an individual blog article (think article headline) that have the most dramatic effect on results. The numbers of course are not clean 80/20 ratios but there are definitely dominant factors at play.

In a business sense, finding the 80/20 ratios is crucial for maximizing performance. Find the products or services that generate the most income (the 20 percent) and drop the rest (the 80 percent) that only provide marginal benefits. Spend your time working on the parts of the business that you can improve significantly with your core skills and leave the tasks that are outside your best 20 percent to other people. Work hardest on elements that work hardest for you. Reward the best employees well, cull the worst. Drop the bad clients and focus on upselling and improving service to the best clients.

How You Can Live An 80/20 Lifestyle

When you start to analyze and breakdown your life into elements it’s very easy to see 80/20 ratios all over the place. The trick, once your key happiness determinants have been identified, is to make everything work in harmony and avoid wasting time on those 80 percent activities that produce little satisfaction for you.

The message is simple enough – focus on activities that produce the best outcomes for you. This applies to both your business/working life and your “other” life (I think they are all part of your “life” but people often prefer to distinguish them). The problem for most people is how to make a living from what you really enjoy, so lets focus on that…

I’m sure you have heard the phrase “struggling artist”. The stereotype where a creative person, musicians, actors, writers and artists, struggle to get discovered and work long hours on horrible day jobs, often in retail and hospitality, until hopefully they finally break out, get discovered and become famous. It shouldn’t surprise you that the ratio of struggling artists who actually become famous enough to live off their craft also follows an 80/20 Rule – only a small few of the overall total manage to get that far.

The same can be said for entrepreneurs. How many of you now reading this article are working day jobs, jobs you probably don’t like much, while you work hard after-hours to get your dream business up and running?

In truth, and this is a sad fact, most people in the world work jobs they don’t like and only truly live their passions on weekends and outside of working hours. Only a small sample actually live their passions day in and day out, how they want to and when they want to. If you want to become one of the special few so you can live your passions on your terms there are a few things you can do.

Focus On Your Passions, Not Material Possessions

The simple fact is not everyone can be a famous artist. Not everyone will start a million dollar business. I’m not going to tell you stop striving for those goals, I’m working on them myself, however you can work smarter TODAY to find greater fulfillment, and that is what living an 80/20 lifestyle is all about. Best of all, your likelihood of becoming one of the famous artists or entrepreneurs is enhanced if you tweak your life to follow the 80/20 Rule because you tap into what you do best more often.

The first thing you must decide, and this is often the hardest step, is to determine what it is exactly you have passion for. Some people can answer this question easily – “I want to be a famous pianists/singer/poet/author”, “I’d like to run my own real estate agency/coffee shop/advertising company” etc. Others may have a general idea “I don’t want a day job” or “I want to run a business” but the specifics are not sorted yet. If you are not sure what your passions are all I can suggest is test yourself. It’s usually easy to determine what you DON’T like so keep doing that until you find what it is you DO like.

Outputs Vs Inputs

I’d like to make a point about outputs vs inputs before moving on. Most humans are good consumers – we are good at taking inputs. Chances are you can easily rattle off a bunch of things you do enjoy about your life: eating out at nice restaurants, consuming junk food, reading books and magazines, going to parties and dance clubs, watching movies and DVDs, listening to music, meeting new people, surfing the net, having sex, playing sports and shopping. All of these activities more or less are inputs which means you consume the outputs of other people.

You may consider the activities I just mentioned passions but it’s hard to find a sustainable passion if all you do is consume. To foster an 80/20 lifestyle you need to locate activities that are passions for you because you create output for others to enjoy. Yes you can get paid to have sex, watch movies, eat at restaurants and read books, but chances are you won’t find it fulfilling or sustainable for very long OR you will be required to provide something back as part of your involvement – that’s your output, the value you create.

It’s okay to love eating out at restaurants and claiming your passion is food, if your intention is to also create output by starting your own restaurant, or a restaurant reviews website or a newsletter or magazine or becoming a chef. If you enjoy listening to music you might also enjoy producing your own music or covering the music industry as a journalist on your own blog.

Only by producing output for other people to enjoy or make practical use of can you expect to convert a passion into a sustainable income. You should understand this already as I suspect the times in your life that you have created something for others or worked on something that benefited other people you experienced the most fulfillment. If you suffer from a lack of direction now, if you are depressed because you don’t even know what your passions are to start applying the 80/20 Rule to, you need to do one thing – start being creative and giving back – produce output! You won’t find fulfillment only by consuming.

An 80/20 Lifestyle Blueprint

To start living 80/20 today you have only to do one thing – focus your energies on what you enjoy.

Part time work – Part time passion

Many people work a full time job and work after hours on a business or hobby or creative talent. If this is you I suspect your ratio is not 80/20 and probably closer to 20/80. You spend way too much time at a job you don’t like, you are probably not very motivated to do it well so you don’t fall into the vital 80/20 employees for that company, and by the time you get home you are too exhausted to spend time on your passion. You feel like you are getting nowhere fast. This lifestyle is not good for anyone since all the relationships fall into the 80 percent that produce 20 percent of the value. You get very little from it and the people you work for get very little from you.

If this currently describes your situation what you need to do is start changing those ratios. Reduce the amount of time you spend at a job you don’t like and increase the amount of time you spend on your passion. You may say you can’t do that because you need the money but I suspect you don’t really need as much as you think you do. Most people can live off part time work but choose to work more because they want more things. You may see your peers enjoying material goods which creates desires in you. Your wants start to outweigh your needs, which is probably the biggest pitfall in our modern, advertising driven, materialistic society.

I’m not saying you have to live like a pauper but I know that your real happiness comes from spending time doing things you enjoy the most, not from earning more money. Chasing the dollar for the sake of the dollar does not work. Chasing passion often leads to a greater income because the quality of your output is so much higher. Focus your energy on increasing investment in your core strengths and you will reap rewards.

Drop your working hours to three days per week and spend more time attracting more clients, booking more singing gigs, finding more time to write your novel or to develop your invention or code your software or find investors or whatever it is you really want to do.

For those of you who have no intention of turning your passions into money generating enterprises this is still a good option. If money isn’t your primary concern but your music is, why do you spend so much time working to earn more money than you need? Yes you need to plan for the future and build assets, but clearly for your musical soul it’s not something that needs to take the majority of your time and energy. You can be happy without that mansion by the sea and you never know, if you spent more time on your music the eventual album sales may one day lead to that mansion by the sea. If not, at least you will be a lot happier for following your enthusiasm rather than the dollar.

If financial freedom is important to you and a big part of your plans look at this step as phase one and work to convert your passions into income generating propositions. Grow your business client-by-client, gig-by-gig or sale-by-sale. keep adjusting your work vs passion time ratio as your business grows to support you and you no longer need your job income. Look for 80/20 activities in everything you do and drop any inefficiencies as soon as you can.

Don’t Let Fear Stop You

The biggest factor that stops most people from chasing their dreams and working towards their real goals is fear. Fear of the lack of security, the reduced paycheck and of the unknown future keeps people locked into routines that are not satisfying. That path leads to sadness, depression, poor health, low income and ultimately an early death. Who wants that!

Don’t let fear be the reason for not achieving your goals. Stop, reassess your real passions, remove the money equation long enough so you can think without worrying about finances, and make plans to move towards your 80/20 lifestyle activities. Maximize what you are good at. Find the activities that produce the most results for you and your business and put your energy where the big rewards are.

Yaro Starak

80/20 Optimizer