What ‘leverage’ is, and the impact it can have on your business

February 7, 2012

I remember when I first became self-employed and everything was down to me. Unless I won clients and completed work for those clients, there was no income. If I worked really hard one week, I would receive an income. If I didn’t work hard or took holiday, I didn’t get paid.

I especially remember how much I hated bank holidays. Everyone told me to take the day off but I know that I was effectively losing a day’s income. There was no leverage, my income was a direct result of my effort.

So when I first heard of the concept of ‘leverage’ – ever more for ever less – it really got me thinking. How can it be that you can put less effort in but actually get more back – how does that actually work?

In business, it can work in a number of ways. The most obvious example is team. No matter how good you are, even if you are the best at what you do, if it is just you in your business, your income is limited to what you can physically produce in the hours in the week. Having team, gives you the opportunity to effectively clone yourself and your efforts and multiply the results.

I always smile when people tell me of their reluctance to recruit employees and how nobody can do the work as good as them. That could be an attitude that works for a peaceful life but it’s not an attitude for having a leveraged business. Two of the most profitable periods that have happened in my business happened when I was on holiday which has led me to believe that, on the contrary, lots of people can do it as good as me and also do it much better than me. This is leverage.

I’m currently on ‘holiday’ and I’ve spent the day painting a room in my house (this is not using the ‘play to your strengths’ concept which I’ll blog about at a later date) and I haven’t once worried whether my team are handling the business okay. I know they are fine and know that I will come back to the office to see examples of team over performance. This is leverage.

I’ll blog about more examples of leverage in the coming days after I’ve finished the painting*

*I came up with the idea of today’s blog on leverage after using an extendable roller to paint the ceiling, I bought it from Homebase and highly recommend it!

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