Business mentor tip #83 – Subscribe to the concept of leverage

October 28, 2012Post by Laura Humphreys

 

 

 

 

 

 

 

 

 

At the end of each year you should be working less in your business than you were at the end of the year before.  This objective is something that’s missing in typical business plans and yet your goal towards freedom should always focus on leverage, leverage, leverage.

Here’s a definition of ‘leverage’ I found online at businessdictionary.com:

“Leverage is the ability to influence a system, or an environment, in a way that multiplies the outcome of one’s efforts without a corresponding increase in the consumption of resources. In other words, leverage is the advantageous condition of having a relatively small amount of cost yield a relatively high level of returns.”

If you add the words “or time” after the words “small amount of cost” in the above definition then I think we can really start to appreciate what leverage means in a business sense. It’s about you achieving more by doing less – multiplying the outcome of your efforts and decreasing the time you spend to get this outcome.  A typical owner operator business, such as a plumber or an interior designer, spends all of their time IN the business doing the work to make the money.  This is the opposite of leverage.  This is using all of your resources to achieve the same return, day in and day out.  As I said earlier, you are never going to get rich exchanging time for money.

How do you stop the business being dependent on you?  If your own skills and talents form the basis of the income for you business, please start right now to think about how you can change this.