When it comes to growing a business, working long hours and trying to do everything yourself has never been proven to be the best way to create wealth. Rather, what you should be doing is leveraging other people's time and skills in order to free up your time and skills to do the important things that create the most wealth. So, read on to learn the 7 important forms of leverage that you can use to increase your income.
‘Give me a lever long enough and a fulcrum on which to place it and I shall move the world’.
This quote by Archimedes nicely sums up the power of leverage.
Leverage is the main reason some people become rich and others do not; the more leverage you can utilise, the wealthier you can become.
Now, I’m not talking about borrowing a load of money and getting into huge debt until you drown under the weight of it. That can be an effective, but often risky way of building wealth and something a lot of people use to get rich in real estate.
But, leverage does not just refer only to borrowing money. In fact, there are 7 forms of “leverage” and the more you use them, the wealthier you can become.
Leverage is simply the ability to control a lot with a little. Through leverage, you can effect change much more rapidly.
Leverage equals speed or velocity.
The more leverage you have, the faster your escape from the Rat Race.
The seven most important forms of leverage are:
1. OPM (Other People’s Money)
2. OPT (Other People’s Time)
3. OPW (Other People’s Work)
4. OPE (Other People’s Experiences)
5. OPI (Other People’s Ideas)
6. Scalable Production & Distribution
7. Scalable Customer Base
1- OPM (Other People’s Money):
OPM or gearing is simply the use of debt. It’s what you put in the liabilities section of your personal balance sheet. So, why use gearing? Can’t saving make you rich?
If you want to become wealthy, you need to both invest and use money from other people to move you to your goals faster.
OPM lets you buy assets earlier, at a faster rate, and control a larger amount than if you simply used savings.
These three factors in financial leverage enable you to become wealthier faster.
2 – OPT (Other People’s Time):
There are numerous companies, small businesses and individuals that will sell you their time, such as professionals specialising in a particular field.
I, like all business owners, have a team of specialists who help me. I have an accountant (two actually), lawyers (several), an insurance broker, a financial advisor, a social media team, a website manager and so on. I use all of these people, as they save me time and money.
They save me money because they free up my time to make more money.
Their knowledge helps me as it would take years of learning and experience in each field for me to have the knowledge they have.
3 – OPW (Other People’s Work):
This is similar to OPT, but now you employ people to leverage their time.
Apple, for example, leverages the time and effort of 147,000 staff members. OPW (and OPT) essentially allows you to capture the time and effort of many.
It allows you to produce quickly what you couldn’t produce alone in numerous lifetimes.
4 – OPE (Other People’s Experiences):
One of the best resources of leverage available to you is the experiences of others. It’s an enormous waste of your time and totally unnecessary to try and learn everything you need to know by trial and error.
You can learn from the experiences, knowledge and mistakes of others.
This may be via a mentor, OPT, OPW, books, seminars, school, online programs or franchise business.
There’s no point learning by trial and error and making costly and time-consuming mistakes when you can leapfrog over that and benefit from another’s experience.
5 – OPI (Other People’s Ideas):
This refers to learning and copying good income-producing ideas.
Franchise and networking businesses are testaments to the power of OPI – learn a proven method and replicate it yourself. The process of wealth creation is the ultimate use of the leverage of OPI.
The system of wealth creation is the same today as it was yesterday, last week, last month, last year, and last generation. Sure, the technology changes and systems become refined and improved, but the fundamentals don’t change.
The process is tried, tested and is proven to work.
You just have to learn it and diligently apply it.
No trial and error.
No wasting your precious time.
No wasting money on products that don’t sell or business models that aren’t profitable – just leverage OPI.
6 – Scalable production and distribution:
Whenever you are looking at investing in a business, you should always ask if the product or service can be easily scaled for both production and supply.
For example, a book can be easily scaled, as it can be printed as many times as demand requires. And, with an electronic book, production and distribution is easier and cheaper than ever before.
Let’s take face-to-face teaching or giving live seminars as a further example; they were not easily scalable, but with the advances in technology you can livestream them, record them and make them available for download, so there is much greater scalability.
7 – Scalable customer base:
A local shop by itself doesn’t have a scalable customer base, it can only service customers in its local area. People from all over the world may want your product or service but if they don’t know about you or can’t get to you then it’s as if you don’t exist.
But, the internet has given businesses a truly global customer base for virtually no cost.
The more the customer base is scalable, the more valuable the company.
Those companies that deal in non-physical products have both scalability of production & distribution and a scalable customer base.
They represent the most scalable, powerful businesses the world has ever seen.
Even apps barely a year out of the gate can attract valuations of billions, despite the fact they are forecast to lose money for several years.
That’s why Google, Facebook, Airbnb and others are worth hundreds of billions or more; all because their model is so scalable.
With leverage, you’re not alone.
You can tap into the strengths of all the resources you need around you.
You can vastly multiply the effectiveness of one person.
Through leverage, systems of production and sales can run and grow independently of the inventor or owner.
Leverage allows you to create systems that run themselves.
Leverage is essential to create wealth. Those who want to become wealthy or are on the wealth path must focus on understanding, mastering and fully utilising leverage.
If you want to escape the Rat Race and build an extraordinary life of wealth, power and freedom, why not join my online community of like-minded Freedom Lovers for education, advice, support and mentoring?