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The Power of Leverage

“Give me a lever long enough and a fulcrum on which to place it and I shall move the world.” – Archimedes

leverage

So what’s this got to do with Business? That’s a good question. Let me explain…

Leverage is a general term for any technique to multiply gains and losses. By applying the concept and the power of leverage you can achieve a lot more in both your business and life. Without the power of leverage your rewards are restricted to only the amount of work or energy you put into a task. You may work tirelessly but your rewards are limited to that work and you would have to continue to expend that amount of energy and time to produce the same or similar results.

OK, so are you saying I can work less and get greater rewards? Give me an example of the power of leverage…

People

Mary Kay has built an empire by engaging the aspirations and energy of like-minded women.

“I would rather earn 1% off a 100 people’s efforts than 100% of my own efforts.” -J. Paul Getty, American Industrialist

Education

Why not learn from others. You can avoid learning from the “mistakes” called experience if you are willing to learn from others who have already made those same mistakes.

“Formal education will make you a living; self-education will make you a fortune” – Jim Rohn

“If you want to go somewhere, it is best to find someone who has already been there.” -Robert Kiyosaki

It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction. – Warren Buffett

Technology

If you are sitting at desks all day long I guess you don’t need mobile technology. However there’s no reason you should have to tell a customer you didn’t get their email or voice mail as you were out of the office. Take your office with you by leveraging mobile technology which nowadays means Smartphone’s and tablets.

One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man. – Elbert Hubbard

Systems

McDonald’s is the ultimate example of using systems (and other people’s money and energy) together with franchising to create leverage.

One definition of leverage is: divide to multiply. Think about divide to multiply in terms of day-to-day life, say, a tree cutting. You take a cutting from one plant, but don’t end up with half a tree; you end up with two trees. In terms of business, franchising is the easiest way to describe divide to multiply.

Marketing.

Would you rather hunt like a leopard or hunt like a spider?

Leopards hunt when hungry and in fact when they are nearly starving. Yet once they are fed, leopards will take their kill into a tree and rest in their gluttony. Leopards live a life of feast or famine!

Spiders on the other hand put all of their effort into building their web (network) and once that’s done they can stand by while their food comes to them!

“The richest people in the world look for and build networks, everyone else looks for work.” – Robert Kiyosaki

Leverage your brand. You shouldn’t let two guys in a garage eat your shorts. – Guy Kawasaki

Financial

Financial leverage refers to the use of debt to acquire additional assets.

The financial crisis of 2007–2009, like many previous financial crises, was blamed in part on “excessive leverage.” However, the word is used in several different senses. Consumers in many developed countries borrowed large amounts of money. For most of this, “leverage” is a euphemism as the borrowing was used to support consumption rather than to lever anything. Only people who borrowed for investment, such as speculative house purchases or buying stocks, were using leverage in the financial sense.

 

Here are 7 forms of leverage in business and some examples.

1. OPM (Other People’s Money): debt, the stock market
2. OPT (Other People’s Time): employees, hiring freelancers
3. OPW (Other People’s Work): franchising your business.
4. OPE (Other People’s Experiences): get a mentor or a coach. Read books, blogs etc.
5. OPI (Other People’s Ideas): venture capitalist use other people’s ideas to make their own money grow
6. Scalable Production & Distribution: Amazon, Costco and Walmart
7. Scalable Customer Base: iTunes, Evernote, Dropbox

In the end the word leverage simply means ‘the ability to do more with less’. Leverage is the key to business success!

Where can you find leverage in your business? Want some ideas on how to get started, I would love to hear from you.

 

 

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