Leverage. It’s How You Make Big Money In Anything
A good buddy of mine is quitting his 9 to 5er to start his own business. The first step is to start small. The second step is to apply the concept of leverage to really build it into something.
The idea of OPM (using other people’s money) to magnify your position is well understood. Especially in the property and investment markets. What it’s really about is leverage.
In fact, big money always comes about by capitalizing on leverage.
Leverage In A Nutshell
The easiest way to apply leverage is to duplicate successful results again and again. How much you can do this is dependent on market size, compettion, and of course, the success rate of your duplicating process.
If you’ve got a high success rate, the sky’s the limit.
Here’s How You Do It
If you have your own blog, you’re already doing it. There’s a lot of money in media because you produce the product once and then duplicate it thousands of times relatively inexpensively.
I only have to write this post once and thousands of people can read it. Think about all these media categories:
- Movies
- TV and radio shows
- Newspapers and magazines
- Video games
- Web content
Build it once and the hits keep coming.
Now, obviously there are a lot of brick-and-mortar and service types of businesses that can’t leverage themselves the way media companies can. But as a small business owner or entrepreneur, your goal is to build up your business to the point where you have to expand.
My buddy is starting a pressure-washing business. Pretty simple and basic. Maybe it doesn’t sound real sexy or glamorous, but it’s a solid little business to start. There’s some decent money to be made for an owner-operator in this market and that’s phase one.
Phase two is applying leverage. And this is what every entrepreneur should be setting goals towards. It’s the basis of every trade business …
- Start the business and build it up into a solid earner. Making anywhere from $50 to $100 an hour.
- Find a good, dependable person. Start giving them your work part-time and spend that time yourself going out and bringing in more work. You’re still charging $50 to $100 an hour, but you’re only paying $10 to $30 an hour for the labour. That’s the leverage.
- Steadily grow their position into full-time employment and duplicate the process with your next employee.
It’s that simple. The hardest thing to do is manage people. But that’s something that’s infinitely easier to do when you take the time to bring great people into your organization. So build steadily but carefully. And hone your duplication (growth) process every step of the way.
The next thing you know, all you’re doing is working on bringing in the business. And the next thing after that, your sales team is doing it and you’re just directing the vision of the company.
That’s leverage. And that’s how you do it.
The best ideas are simple ideas.
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12 Comments
Anthony
May 29th, 2007
at 3:24 am
Great job of “breaking it down”. I think a lot of service industry business owners build themselves as an owner-operator, and never go any further…….not a very good long term plan.
Shane
May 29th, 2007
at 3:51 am
Hey Anthony,
It’s ridiculously simple to understand when you get down to the basic building blocks of it. I like writing this stuff ’cause it helps it “stick” in my head too!
Fellow Entrepreneurs Wrote (8) : Andreas Bard | Motivational Articles
May 29th, 2007
at 7:43 am
[…] over at Zoomstart.com has published the article, Leverage. It’s How You Make Big Money In Anything. A good read, and he is breaking it down to the basics and I guess it where we have to go […]
Daniel McLean
May 30th, 2007
at 6:08 am
It’s been a while since I’ve heard OPM, thanks for the reminder. Thought you were going to lead into franchising which is another great option for your scenario. Some great points, it’s so true that money earners are not always sexy, junk and breakers yards are often millionaires!
Shane
May 30th, 2007
at 7:16 pm
Daniel,
Franchising is a great way to create leverage. McDonalds and many other companies have built empires by leveraging their brand into franchises.
And yeah, sometimes the the most unobvious businesses are huge cash cows. They fill a need and the overhead and variable costs are low; they just make money.
Josh Mullineaux
June 9th, 2007
at 2:46 am
Great post! This is one of the things that my business partner Nate and I are doing right now. Getting the right people to work for us seems to be the biggest hurdle. In the beginning we thought getting clients would be the hardest, lol. Not true. There’s real value in a simple, easy to understand/read post.
Shane
June 9th, 2007
at 4:30 am
Hey Josh,
Yeah, it takes quite a while to build a great team. That’s one of the main reasons it’s a good idea to build surely and steadily.
A lot of companies that grow too fast implode because they can’t find and develop an amazing team at the same pace.
Enlightning Posts/Blogs | Josh Mullineaux dot Com
June 16th, 2007
at 4:39 am
[…] Shane-zoomstart.com-Leverage. It’s HowYou Make Big Money In Anything […]
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June 18th, 2007
at 2:04 am
[…] of mine recently decided to start his own business. You might remember me talking about it and how leverage works. He’s partnering up with his brother, who has his own small painting […]
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August 31st, 2007
at 1:02 am
[…] line ventures are about leveraging an existing brand. They’re about taking one success and rolling it into another and they can […]
Nik
November 16th, 2007
at 11:12 am
You ‘re right Shane leverage can be a very good form for your business growth. That reminds me of a book I’ ve read “The richest man in Babylon” where the hero invests with the money he gathered along the years on slaves to make his work. Now we don’t have slaves but we can have employees and with a good wage they can do over and over quality work for our business.
By the way the book is great I recommend it.
Shane
November 16th, 2007
at 8:45 pm
Hey Nik,
Glad you liked it. I’ve heard of The Richest Man in Babylon. Never read it, but by your description it’s exactly how leverage works when you’re building a business from the ground up.
And the beauty of building it up from nothing is you know everything about what makes it tick. There’s no better experience a leader can get than that when it comes to making the big decisions later on.
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