The Only Word You Need To Understand In Business

About twenty years ago, the word “leverage” started gaining traction in business. Hedge funds used it to describe the housing and asset markets, while business leaders began using it to refer to applying a “lever” to a problem. 

But since then, the word’s meaning and scope have taken on profound proportions. Now, it seems that everyone is using it, and for quite different reasons from before. 

The old approach to business was to set something up, working hundreds of hours per week. 

But the new method is to use “leverage” to get more done. 

This insight comes from the realization that the only benefits of running a business come from when you can convince other people or things to work for you. It’s the idea that you can amplify your impact by relying on external resources (to your personal time). 

But what does this look like in practice? 

That depends on who you ask. These days, there are so many different types of purported leverage that it makes your head spin. 

That’s where this guide can help. It runs through some different types of leverage and how you can use them to boost your business. Once you understand the power of leverage, you’ll never look back. 

Financial Leverage

The most obvious and common form of leverage is financial. Using other people’s money to grow your business is one of the best ways to get into a leadership position in an industry, without betting the house. 

Money leverage works best when you already have a killer idea, but just need funds to implement it. Using other people’s money can help you get ahead of the rest of the market and thrive. 

Most entrepreneurs go to the bank and ask for a loan – the standard procedure. But you don’t have to go that way if you don’t want to. Private venture capital or even getting money from people you know can work. 

Time Leverage

Time is another thing you can leverage as a business owner. The more you can control this limited commodity, the more your business will thrive. 

For example, you could focus on delegating activities and tasks to people in your organization. Outsourcing repetitive work to someone else allows you to focus on high-value activities only. 

For example, you could hire employees and outsource. You could also pass the work you’re doing at the moment to your team so you can get on with growing the business. 

Using time leverage is often the scariest because it involves a loss of control. But the more you can do it, the better. 

Systems Leverage

Another strategy is to use systems leverage. Here, you’re exploiting the power of systems to get more done. 

Systems are usually external to your business. For example, you might tap into fulfillment centre expertise instead of trying to set one up yourself. 

Alternatively, systems can be internal. For example, you could use software to automate parts of your client onboarding process. 

Whatever you do, systems can be highly effective. Once you have them in place, even if they are just a sequence of doing things, they can have a massive impact on overall productivity. 

Network Leverage

Network leverage is another form of leverage you can use to grow your company and steamroller your rivals. It works when you form connections and partnerships with others, which opens doors and allows you to land more contracts. 

Network leverage is nebulous at first, but grows significantly from that point onwards. The more you interact with influential people in your industry, the more you can grow. 

If you don’t like networking personally, hire someone to do it for you. Find an individual in your company who can help you move forward and grow your connections. 

Media Leverage

Finally, you could explore the idea of leveraging the media. The more you can do this, the more you can get their branding to work for you. 

For example, suppose your company is building a product that helps local people. Talking to a journalist about it could let you gain even more publicity. They could explore what you’re doing, how you’re providing jobs in the local area, and the many ways you’re building products that assist local people. 

You could also use the media to help you go viral. Just a single report could be the best way to work smarter and harder, giving your business a boost. 

Ultimately, leverage is about reducing the pressure on you to grow your business and passing responsibility over to others. The more you can use these additional resources, the more you will be able to boost your enterprise.

This is a contributed post.