The Power of Leverage
How does a shy 20 year old kid from Brooklyn go out on her own to Los Angeles, California and build a business in a field she knows nothing about? The odds are all not in favor of her being successful but she found something that would help her build a business that was profitable year over year…that thing was LEVERAGE. That kid was ME.
A great mentor of mine told me very early on in my career:
“Know what you know,
Know what you don’t know
And know who knows what you don’t know.
That’s all you need to know!” – Greg Kapp
When I started out in business I knew there were many things I didn’t know. I was entering an industry (financial services) which I knew nothing about, no college degree and coming from a creative field with a complete right-brained thought process. On paper I didn’t stand a chance!
When I go around the country and talk to various business groups, organizations and teams I am often asked the question: What’s the secret? How did you do it?
While the true answer is: There is no secret! It’s just getting up everyday and working your butt off! I believe it’s this one little thing that I learned early on that gave me an edge over my peers; yet was accessible to them all. Leverage.
The definition of leverage:
1. use borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.
2. use (something) to maximum advantage.
To be clear the leverage I’m referencing is not one that is manipulating or abusive but rather a capitalization of something or someone to get something or somewhere.
My first experience with leverage was when my mentor said something to me that shifted my thought process. He said “If you give me your 100%, I will give you 200% and teach you everything I know.”
Wow! When I heard that… I thought…this is it! I can LEVERAGE his knowledge for my business! That was my first experience with the concept of leveraging. Years later when I look back at it I realized the ability to leverage was everywhere – if you looked for it!
In my business I was able to be successful and earn a six + figure income fast because I leveraged many things. I leveraged my mentors, for their knowledge and experiences; my peers, for their time to help me build my business; a simple duplicate-able system, so that my business would expand and collapse time frames; a strong financial backing of a publicly traded company, so that I wouldn’t have to fund-raise and that’s just to name a few.
As I’ve grown my business over the years I’ve been able to continue leveraging people and things around me as well as be leveraged by others to help others grow their businesses. My philosophy is that:
“Nothing great can be done by one person, but one person’s effort combined with others can truly do something great!” – Fradel Barber
Here are some steps you can take to get better at leveraging the people and things around you:
1. Know what you know, Know what you don’t know, And know who knows what you don’t know.
That’s all you need to know!
Don’t attempt to know everything before you do anything. Sometimes the best way of learn is as you are doing it!
“Knowledge doesn’t create action, but action creates knowledge.”
2. Find the good in everyone and everything – Once you see that, you can learn to recognize ways that you can leverage it. Naturally, we are quick to identify people’s weaknesses rather than strengths. When you practice seeing people’s strengths first you can find ways to leverage them.
3. Be willing to give something in return. LEVERAGE is NOT charity. There should be a return on the investment for the person or thing you are leveraging.
Just like when you take out a mortgage to buy a home; you are leveraging the lenders money in order to secure the house. In return you are paying interest to leverage the banks money. Don’t abuse the ability to leverage someone or something if it will only be one-sided.
4. Your ethics will determine the quality of what or who you can leverage.
Just like in the mortgage example, the lender will also do a complete financial analysis to make sure you are well suited for them to lend you their money. You’ll get to leverage more money and harder to access people the better your ethics and personal development are – people need to trust you and trust in you!
5. Don’t over leverage! Leverage isn’t using or manipulating. If you abuse your privilege to leverage you will have less than what you started with. In the recent real estate and housing crisis we’ve seen many people that were over-leveraged with the amount of debt they had vs. their income and other assets and therefore many ended up losing everything. Make sure when you are leveraging it’s to help you build and grow to the point that eventually you can do well on your own without the leverage!
6. Find something where if leveraged you can make something more of it than if you’d do it yourself. Understand where leverage is needed and how to use it. Measure all the risks and costs to leveraging. For example, if you had enough money in the bank to purchase a home and you took out a mortgage, your money would need to be earning more than the interest rate of the mortgage for it to make sense. Similarly when leveraging other people’s time; leverage it for the best purposes so that can it can help you gain more knowledge and/or more time.
All the above examples apply to leveraging people’s time, knowledge and efforts. Leverage if used properly can collapse time frames and get you what want or where you need to go a lot quicker!
“I would rather earn 1% off a 100 people’s efforts than 100% of my own efforts.” – John D. Rockefeller