Why leverage is the key to success
Unless you’re a virtuoso, you need to leverage the talents of others to be successful in business. If you can get great people working for you, you can achieve just about anything.
Examples of this abound in the real world. Elon Musk was able to set up a rocket company that can send people to the international space station for pennies because he worked with the best people in the world. Microsoft was able to do the same in the 1980s, collecting all the smartest minds in the country, putting them together in a room, and demanding them to create personal computers.
When it comes to your personal financial success, leverage is almost indispensable. You literally cannot succeed without it.
Why is it that some people can go from nothing to multi-billionaires? It’s because they understand the power of leverage, connections and building links with others.
COPYRIGHT_WI: Published on https://washingtonindependent.com/ebv/why-leverage-is-the-key-to-success/ by Alberto Thompson on 2021-09-15T12:26:33.906Z
Before we even investigate why you should use leverage, we need to define what it actually is.
You’ll most often come across the term leverage in financial circles. It typically refers to putting some of your own money down so that you can access more of other peoples’. Property investors will often use the bank’s money as “leverage” when buying and renting our real estate.
But there are other forms of leverage you need to be aware of. Time leverage, for instance, if the idea of using other people to accomplish tasks that you need completing. So, for instance, instead of doing all the work to build a brand yourself, you simply pay a marketing agency to do it all for you out of your profits.
Then there is “personal leverage.” This concept is a little wishy-washy, but it refers to how you use the connections in your life to build something that you want. For instance, you might trade your expertise with theirs and build knowledge that allows you to thrive.
You can also build financial freedom through operating leverage. The idea here is to set up a business system with fixed costs and then continually increase production to cover them. The fixed costs don’t change as you scale, so as you acquire more customers, your profits multiply and multiply.
When you think about it, investing and leverage are similar. Let’s say that you buy a bunch of stocks. When you do that, you’re buying the rights to business’s profits. And what are profits except the good results of other people’s efforts?
Leverage works in practically all aspects of life. You can use your personal brand to “lever” your way into social situations that would have been inaccessible before.
Leverage works in the background - another thing that makes it great. You don’t actually have to dedicate your time and energy into building new income. Instead, you take control of resources that do it all for you.
If you take a look at many of the world’s most successful people, they all got there using massive amounts of leverage. They understand that going into debt isn’t a bad thing. Instead, it’s a way for you to use other people’s resources to buy and use assets that you could never afford otherwise.
Businesses do it all the time. The reason that many of the world’s biggest companies are in so much debt is because they understand the power of leverage. They know that if they can borrow cheaply, they can dedicate vast resources to projects.
There are many ways that you can use leverage in your business, some of which we’ve briefly mentioned already.
Marketing is perhaps the simplest form of leverage. Agencies already have skills, talents and networks that you can tap into without having to develop them yourself. This way, you can access them at low cost and get much bigger results than you hope to produce on your own.
You can also make use of intellectual leverage - as mentioned above also. This is where you have knowledge on your team that nobody else has. You’re able to understand things in a way that rivals cannot.
You can also leverage your customers to talk about you. So instead of marketing to each person you want to reach directly, you get a cluster of your audience super excited about what you’re doing so that they will go out and tell all their friends about you.
Don’t underestimate the power of leverage. Once you understand how to use it, you can make your life considerably better - both financially and personally.
Leverage has become much easier over recent years. Practically anyone can take out a loan or connect with people who can support them in completing projects.
It’s also the smart thing to do. Cheap credit isn’t going anywhere. It’s here to stay. Governments don’t have a choice. Anyone who isn’t taking advantage of leverage is going to find it very difficult to get ahead. Inflation and tax increases will continue to eat into their wealth, preventing them from having the life that they deserve. If you want to escape this system, you need to be one of the people who understands and can take advantage of leverage.
Learning about leverage can sometimes be challenging, particularly if you don’t like mathematics. However, once you get your head around the implications of it, you soon see how it’s possible to go from very little to a lot in a short space of time. You realize that if you can use other people’s resources productively, you can scale the quality of your life almost infinitely. You go from being a regular employee to somebody with real wealth.
Granted, there are risks. Levering up often requires borrowing or committing time to other people. But most people who try it find that it works for them.
So, should you go for it? Well, that’s very much a personal decision. Most people don’t. However, if you want your life to go in a new direction, why not give it a try?