| Understanding Leverage | | | | pond building. This freedom to do other things and |
| Expansion of any business comes through leverage. | | | | expand your business is the result of using leverage. |
| Leverage is a means of developing and growing a | | | | Leverage and Teamwork |
| business using the efforts and resources of others. | | | | You cannot build a large sustainable business by |
| | | | yourself. You need a team working together for the |
| Leverage Advantage to Making Money | | | | common good. You need a large customer base for |
| Now let's study leverage a little closer. Let's assume | | | | your team. Each team member need not have his |
| that you like gardening and cutting grass. You start a | | | | her own large customer base. It is the combined |
| grass cutting business by agreeing to cut your | | | | base of all of the team members that creates the |
| neighbors lawn for $20 each week. You find that it | | | | large customer base. This is maximizing leverage. |
| takes about an hour to cut his lawn. You go down | | | | Leverage is necessary to take your business to the |
| your block and find that there are several other | | | | next level. Each sales person or store sells a little, but |
| homeowners that would like to have their lawns cut | | | | the combined efforts of all create a large amount of |
| for $20 dollars each week. By selling yourself, you | | | | total sales. |
| add more customers to your business. Soon you | | | | Just look at McDonalds Corporation. Each store sells a |
| have a thriving business and you are cutting about | | | | given number of hamburgers and makes a profit for |
| eight lawns a day and earning $160 ($20 x 8 hrs) | | | | the owner (franchisee). The corporate entity |
| each day. You do a great job and you get several | | | | (franchisor) receives a small amount of the gross |
| referrals to your lawn cutting business. | | | | sales income from each store and provides each |
| Before you know it, you realize that you could | | | | store with uniform detailed systems, marketing |
| actually get most of the lawn cutting in your | | | | materials, training and raw materials. The combined |
| subdivision and you could actually have enough | | | | effort of all of the stores creates a multibillion-dollar |
| customers to do forty yards a day. Since you can | | | | business. |
| only handle eight lawns by yourself you hire other | | | | Leverage for Residual Income |
| workers to actually cut the lawns and you do the | | | | Generally speaking few people succeed in creating a |
| selling and work on the expansion of your business. | | | | large business on their own. Yes, some can make a |
| You pay each of the workers you hire $15 a lawn. | | | | large income for a limited amount of time, but when |
| Since the customers are your clients, you collect $20 | | | | they stop working their income stream stops. To |
| for each lawn that is cut, but you only pay your | | | | create a large sustainable residual (stop working) |
| workers $15 so you have a profit of $5 per lawn. At | | | | income,you need a team. You must learn how to |
| the end of the day your company has cut forty | | | | build that team using leverage. |
| lawns and you have made a $5 profit on each lawn | | | | Encourage others to become successful by training |
| or $200 for the day. However you personally have | | | | and by example. We develop associates and teams |
| not cut any lawns. | | | | that are individual profit centers, each sharing a |
| This is leverage because you actually made money | | | | common goal or objective. All team members must |
| off the efforts of others. By not having to cut lawns | | | | be working together to advance the company |
| yourself, you now have the freedom to work on | | | | objectives and share in the rewards. Building a large |
| expanding your business. You may consider | | | | team creates a profit center where everyone |
| expanding into landscaping services, brick paving or | | | | benefits from the success of the team. |