Leverage in small business is the terms to do the big task with small efforts. let me clear, somehow you notice that when you move big machine one place to another place or just push up your car with the help of Jack lever with one by one specific movement. How a small jack pushes up a car which is almost 100 times more weighted than jack.
It’s easy to handle by leverage and you could do the work with help of the bunch of small levers.
Got it !!
let me explain some more example which is related to real life.
Example 1. When you open any lock, there is some lever exist in the lock, and with the help of unlocking lever by lever, you unlock the door.
Example 2. When someone studies, and cleared the exams with good numbers, this is leverage use by him into day by day study.
Example 3. Someone who wanna lose their fat. He exercised daily and reduce fat centimeter by centimeter, here leverage works.
Do not forget download Bonus spreadsheet from the bottom of this article. this will help you to understand how leverage works.
Now the point is, How you take advantage of leverage into your small business?
We see business is so vast, hundreds of task a business person do every day. and he succeeded with the help of leveraging many things. I am going to explain these things one by one.
Financial leverage is how entrepreneur plans his money or borrowed money. It can be the form of the business loan, money on interest or it can be the rotation of money. By this leverage, an entrepreneur earns more profits.
I am giving you one example to explain this. Suppose someone takes 1,00,000/- loan from the bank on 10% interest and he spends 10,000 as interest to use this money for one year. He invests this money in product selling which gives 5% profit on each sale every month. the total number of rotation is 12 time with 5% profit.
Now the benefit of this leverage is
60,000/- 5% profit every month on 100000/- * 12 (month)
10,000/- Interest payment
50,000/- profit earned by leveraged money
This is the power of leverage money.
Manpower leverage is the best one part of every business. To be the smart entrepreneur, you should delegate your repeated task to your employees. With this, you can make yourself free for most important tasks. Set a process for all your execution and delegate them.
This is the power of manpower leverage.
Company resources can also be leveraged. If you have manufacturing unit and your machinery efficiencies are more than your actual production. you can be rented these resources to earn more. This will consume your efficiency and generate wealth for you.
Distributors and Dealers have the big network and they retain customers with various kind of products selling. You can take advantage of your product selling and new launching for their network to consume your products.
Even you can use your customer leverage as a loyalty. serve them better so they can publicize your products and services. which is greatest leverage example. customers always recommend better services to their colleagues, relatives and known.
Operational execution is the repetitive process. Instead of manpower, you should work with machinery to maximize accuracy. this will produce your product with same quality and standards all time. It will decrease your unskilled manpower issues as well as quality issues.
Business automation process is also one of the best leverage examples. when you automatize your procedures, You will save a lot of company time. when one assembly line you develop with automation, manual process decrease. Also, technology makes task smoother.
Recommended Book of Leadership Leverage success
You would like this article too. – Business habits that can make you best performer
Leverage in small business is the great weapon to sharp your business process. This will move your business to next level. You also identify areas where leverage can be applied to your business cycle.
I would like to get your comments and reviews. You can also share this article with your friends and relative to take benefits of leverage as well.