Tuesday, February 15, 2011
The Power of Leverage
Leveraged income can be defined as the income derived from the efforts of others. Unfortunately the majority of people in the world today earn a linear income, which basically means that they trade their time for money and unfortunately no matter how clever they are or how high their hourly rate, they are still restricted to only 24 hours in a day and therefore a limited earning potential. Leverage on the other hand, allows you to use the time and efforts of others to create an income. By learning to leverage your time, you can financially benefit not only from your own efforts, but from other people’s efforts as well.
“I would rather earn 1% of 100 people’s efforts than 100% of my own efforts” - John Paul Getty (American Billionaire)
How Can I Leverage Other Peoples Efforts?
Imagine that you are in the business of mowing lawns and that you could make $40 for every lawn that is mown. If you were to average 5 lawns per day, you would earn a gross income of $200 a day before expenses. This is an example of a linear income where you use 100% of your own efforts to create an income. This is what the majority of people do their entire lives.
Now imagine that you owned a lawn mowing referral business where instead of mowing the lawns yourself, you spend your time finding lawns that need to be mowed and employ contractors to do the physical work. Let’s say you have got to the point where your business now employs 20 contractors that each mows 5 lawns per day. You pay each contractor $30 per lawn, but you charge $40, such that you make a profit of $10 per lawn. 20 contractors mowing 5 laws each means that you are now mowing a total of 100 lawns a day, which is a lot more then what you could have done by yourself. Even though now you are only earning $10 a lawn in profit yourself, when you add it up your miles in front. Using the power of leverage you are now earning $1000 a day (ie $10 per lawn x 100 lawns per day = $1000 per day).
So basically you could spend your days getting dirty and sweating as you work hard (not that there is anything wrong with this) and get paid $200 a day, in which you then need to deduct expenses such as running costs and maintenance OR you could earn $1000 per day, just finding yards that need to be mowed. As a smart businessperson which is the smarter option?
Don’t get us wrong, to get to the stage where you can start to leverage off others you may have to do the physical work first. That is, it might take you a year of mowing lawns yourself before you have an adequate customer base before you can start to employ contractors to do the work for you. But a smart business person is willing to make short-term sacrifices to make long term gains.
Unfortunately in most traditional businesses, like the example above, the only ones who benefit from the work of others are the business owners, even though it is loyal hard-working employees that do most of the work.
Does this mean you should quit your job tomorrow and start your own business? Well if you have a solid referral base, a good understanding of cash flow, management skills and the capital to get you started, you might consider it. Unfortunately the majority of people are not in this position. The good news is that today there is a business opportunity that allows you to use the power of leverage without having to quit your current job, or require a substantial up-front investment. This is the power of network marketing.
Not only does network marketing allow you to benefit from the work efforts of others but it also earns you a residual income, the kind of income that when you walk away, it continues to pay you. Because network marketing uses both the power of leverage and a residual based income it is now being recognised and endorsed by many business leaders in the world today.
“If I lost everything and had to start again, I would find myself a great network marketing company and get to work!” - Donald Trump, on the David Letterman Show
Network marketing is no longer something to joke about, it is creating more millionaires today than the dot com boom industry did before the bubble burst. This is the reason why respected entrepreneurs like Warren Buffet, Donald Trump, Robert Kiyosaki, economic forecasters like Paul Zane Pilzer and life and business coaches such as Dr. Denis Waitley are all recommending this proven system. In fact there are about 150 000 people just like you, joining network marketing every single week.
Traditional businesses fall into the trap of developing and training people, just for them to move on to starting their own business and become a direct competitor. One of the main advantages of the network marketing business model is that it allows you to help others succeed without creating competition, instead you get to leverage off the success of others, ultimately contributing to your success.
Better still is the fact that you don’t need a university degree or large capital to get started in the industry. Network marketing offers the power of leverage to earn a residual income to anyone who is willing to succeed.
As with any business opportunity, in order to be successful you find that timing is half of it and execution is the other half. If you're looking for the right business opportunity that allows you to capitalise on both the power of leverage and growing market trends to create a powerful residual income then network marketing is the answer you have been looking for.