• SumoMe

Up to this point we have discussed the first two steps of the 5-Step Business Evaluation System: Fills a Need and a Proven and Easily Duplicated Business System.

The third step is to find a business that employs Leverage.

leverageFinding a business system that utilizes Leverage will enable to you minimize the time and resources you need to commit to your business without compromising the speed to reach the level of success that you desire.

So, what exactly is Leverage?

Leverage is simply the single most important factor that will differentiate your ability to get paid what you are worth versus being paid what a job is worth.

Let’s look at a brief example. Say you’re doing well by today’s standards and working a 40 hour-a-week job that brings in $200,000 annually.  Quick math tells you that you are earning ~$96 per hour. What happens if you’re inspired and decide that you’d like to make $300,000 in the next year? What are your options? Are you on salary or can you up your hours to 60 per week to accomplish this?  If so, do you really want to? Can you find another job that will pay you that extra $100,000? It’s unlikely at best that these options will make any sense. Without Leverage you are trapped.

There are actually many different types of Leverage and here I will be discussing three of the more important ones in relation to selecting a business: Technical, Financial and People.

  • We are smack dab in the middle of the Information Age and any business that you are looking at should employ some form of Technical Leverage.  In fact, finding a business that takes advantage of cutting edge technology (be it software, hardware or both), a streamlined system and the proper training to efficiently and effectively utilize these tools will dramatically increase the speed with which you can expect results AND will decrease the frustration typically experienced while taking on a new venture.
  • Financial Leverage is the type that is most utilized by the ultra wealthy to build their businesses. Using OPM (other people’s money) is a way for people to build a business without ever dipping into their own pockets.  Simply put, financial leverage provides you with a plan to use OPM to generate a larger return than the cost (i.e. interest) of using the money. This can enable you to become profitable quickly without ever having to use any of your own money.
    Many people will forgo the opportunity to start a business because they don’t have the money and they buy into the belief that they personally need to have deep pockets to fund such a venture.  ANYONE can start a business at any time by utilizing financial leverage; you just need to have the belief in yourself and to take a stand for what you really want.
  • When most people think about using People Leverage they think that means hiring people as employees. While having employees is certainly a form of people leverage and may provide some benefit, it is often accompanied by a series of costly headaches and can even be counter productive by creating a situation where the business is less streamlined and efficient.
    People Leverage can and should include leveraging people’s knowledge and experience. If someone has walked the path before you, learn from their findings and mistakes. Any business you choose should have well established experienced leaders who are willing to teach and train you in an effort to help you avoid pitfalls. You can leverage their experience all the way to the bank.
    You can also leverage people’s capabilities. If there is something you need done and it doesn’t pay for you to learn how to do it, pay someone who has that expertise. You can benefit from the specialized skills that people have and are offering in order to help build your business.
    Last is the most powerful form of people leverage: leveraging relationships with people. (This must not be mistaken with taking advantage of people, something I highly urge you to avoid.) As sated before, hiring employees can bring with it a multitude of headaches but if you cultivate ‘win-win’ relationships with people as associates you will both experience the rewards of this mutually beneficial relationship.  These people have a vested interest in helping your business and they are not just merely showing up to collect a paycheck.  These people are not only in alignment with your mission but also have the capability to contribute to the growth of your business and as such, increase your profits.

Finding a business that utilizes all three of these forms of leverage is paramount and may very well hold the key to the realization of owning a successful business that creates the wealth you desire.

Next I’ll share with you the 4th step of the 5-Step Business Evaluation System. Until then, make it a great day!