The Power of Leverage in Business and Personal Life (2024)

The straightforward concept of “leverage” has the power to get you more time, better fitness, career development, business success, financial freedom and relationship contentment. Despite these benefits, most of us don’t utilize leverage in business or personal matters as much as we could. You may lack confidence in your skills and assets, so you fail to take advantage of them. Or you may be aware of your resources but unclear on what it means to leverage them.

Leverage can help you save time and money, gain expertise and more. But how does leverage work, and how can you make it work for you? From using financial leverage to make more money to transforming your relationships, understanding the power of leverage is the first step in expanding your opportunities and overall fulfillment.

What is leverage?

The dictionary definition of leverage is: using a lever to exert force on another object. To really get at the heart of what leverage can accomplish, it’s critical to understand the many different types of leverage in business and in life.

• Financial leverage: Financial leverage essentially means using other people’s money to gain rewards. Businesses can employ monetary strategies like debt financing and investment to increase financial leverage. You’ll have more capital available, but will also increase your debt. Keep your financial leverage ratio low for greater stability.
• Operating leverage: A form of financial leverage, operating leverage occurs when your operating expenses are fixed but your revenues or profits are growing. To measure your operating leverage, divide your fixed costs by your variable costs; high operating leverage means you lose more money overall when revenue decreases.
• Time leverage: Time is the scarcest resource – yet we all trade it away every day when we go to work. Time leverage is therefore one of the most important kinds. It means using other people’s time to accomplish your tasks, essentially giving you more hours in the day. Delegating and using technology are two ways to increase your time leverage.
• Personal leverage: Personal leverage, or relationship leverage, is vital to every area of your life. When you surround yourself with the right people and use those connections to get things done, you’re using the power of leverage in the best possible way.

The whole point of leverage is that you’re already equipped to succeed. When you leverage your existing resources, they expand and multiply to produce new resources. This fleshed-out leverage definition facilitates momentum to the top, where you’re able to achieve anything you desire.

How does leverage work?

The concept of leverage is analogous to the sport of pole vaulting as seen in the Olympic games. There’s no fancy machinery – just speed, a catapult and the determination to succeed. The same is true of leverage in business and personal matters.

Someone who wants to buy a home or a business leverages the cash they have by adding others’ (typically, the bank’s in the form of a loan) cash to it, similar to a joint venture. The buyer’s cash may have bought them a mobile home but not the four-bedroom, two-story they desire, so they leverage additional cash to meet their financial goal. People using leverage get far more for the share they put in, with the right business proposal. If leverage didn’t exist, mobile home parks would cover residential areas far more than they do today.

Because leveraging means expanding rewards for every outlay, this term can apply to all kinds of concepts beyond debt and investing. Creative entrepreneurs use leverage in business to build skills, techniques and relationships that expand their network to get ahead. Consider how leverage is used in the Forbes article, “10 Powerful Women Who Played Team Sports.” There, Forbes writes that:

– Irene Rosenfeld, Chairman of Kraft Foods,

– Mary Schapiro, Chairman of the Securities and Exchange Commission,

– Ellen Kullman, CEO of DuPont

. . . and more all leveraged their time on the basketball court, lacrosse field and more to learn critical lessons about teamwork, tenacity, success and failure. They embraced leverage – meaning that they did more with their experience than just becoming better athletes and winning games.

These leaders internalized how to make a team run, how to come back after defeat and how to work diligently to achieve success. They got ahead in their respective fields because they transferred athletic training concepts to the workplace and, eventually, the chairman’s office. Whether or not you played sports growing up, you can leverage different aspects of your life to your professional advantage.

Benefits of leverage

The main benefit of leverage is that you can do more with less, maximizing achievement in every area of your life.

• Build wealth: The power of leverage is that it boosts your returns on your financial investments, so that you can build wealth in a sustainable way.
• Grow your business: Leverage in business allows you to save time and money, find new efficiencies, get new information and grow your business to new levels.
• Increase productivity: Leveraging your time, connections and more helps you be more efficient, boost productivity and achieve your goals faster.

Using the power of leverage in business

Marketing expert Jay Abraham promotes “leverage marketing” as a foundational principle of business success. By optimizing your company, you’re able to outperform yourself. So how does leverage work in business? You must pay attention to the key drivers of exponential business growth and leverage your:

Marketing

Creating a world-class marketing strategy is one of the most straightforward (and cost-effective) ways to implement the concept of leverage in business. With the right strategy in place, you’re able to use the same amount of marketing time and dollars to make a larger impact. To optimize your marketing approach, look to your competitors, partners and team for inspiration.

Business plan

Your business map is one of the most powerful resources you can leverage. Rather than think of a business plan as a method of crunching numbers, think of it as an interactive tool to get you from point A to point B. To leverage your business plan, be sure to include clear goals and anticipated challenges, and stay flexible so you can adapt to changes in real time.

(Human) capital

Your business capital – human, intellectual and financial – is one of the most powerful drivers of business success. In life and the world, leveraging relationships is particularly critical to staying afloat. Invest wisely in your people, first and foremost – your staff, customers and wider industry network. Ensure that staff have the training, resources and support to do their jobs with passion. Foster a culture of innovation that values relationships – that will translate into greater profits.

Business model

Your business model is your integrated approach to engaging your market. It is a potent component of leverage in business, since a business model allows you to make small changes that have massive effects. Constantly evaluating your business model is a critical component of financial leverage and a way to stay relevant in today’s constantly-shifting markets.

Products and services

Flexibility is king when it comes to running a successful business. If your product or service needs adapting, do what needs to be done to make, keep and leverage raving fan customers.

Using the power of leverage in your personal life

How does leverage work when it comes to personal matters? It’s a valuable tool for increasing self-confidence and eliminating limiting beliefs that are keeping you from reaching your fullest potential. All of us have had experiences that were painful, confusing and demoralizing. It’s normal and healthy to feel emotions like sadness, anger and loss when challenges overwhelm us.

By harnessing the power of leverage, you can use those experiences to spur personal growth. Like leverage in business, leveraging in your personal life means acknowledging your strengths. What did you learn from the past? Have you given yourself credit for getting through those difficult times?

Leverage encourages you to see challenges as opportunities instead of negatives you’d rather forget. A painful experience becomes a source of stamina where you demonstrated resilience you didn’t know you had. A failed relationship becomes a source of self-knowledge that reveals areas you can improve on in future relationships. As you apply this concept to healing your mindset, it has a spill-over effect that improves your entire outlook on life.

5 assets you can leverage for maximum achievement

1. Leverage time

Authors get rich advising others how to get more done in a limited timeframe. But when you have a million things to do, does any tip or insight solve it? This is where applying leverage in business through strategies around time management comes in handy.

One tip for practicing leverage in business entails organizing your workload effectively. You can create more time when you group several similar activities that have the same goal. If you’re cooking one meal, preparing for the next night’s dinner makes sense. After all, you have the knives and cutting board out and you’re working with your plastic wrap. You can read more about leveraging time by tackling similar activities back-to-back (or “chunking”) in this post.

Another way to use the power of leverage is to delegate tasks to employees, assistants, family members or other connections. What can you put off your plate so you can focus more on what really matters? Determine where you bring the most value to your business, family or career and invest your energy in the tasks requiring those sophisticated skills. A personal assistant, student intern or errand runner can carry out the rest. Without minimizing your delegatees’ skills, make it clear at the outset that you retain control over whatever project you assign so that you’re credited for it.

2. Leverage achievement

While you may think that achieving a goal you set out to accomplish is enough in itself, consider whether you can spread this limited win to other areas of your life. When considering how to craft a meaningful leverage definition for yourself and others, using previous accomplishments to spur future ones is an excellent place to start.

Olympic swimmer Michael Phelps leveraged his swimming achievements by negotiating endorsem*nt deals worth $10 million annually from sponsors like Speedo, Ping and Wheaties. While his DUIs and other misdemeanors led sponsors to drop him, his net worth of $80 million will keep him in goggles and swim caps for the rest of his life. How can you use your achievements as leverage in business? Can a recent award or recognition land you a new deal, higher salary or a speaking engagement?

3. Leverage connections

Does the thought of leveraging connections (friends, peers, colleagues) sound manipulative to you? Actually, we’re not implying that you buddy up to people in a networking group in the hopes of getting business, freelance work or a job from them at all. With leverage, meaning you’re making full use of all your resources, you’re cultivating relationships instead of forcing them. It’s about respect and collaboration, not manipulation.

How does leverage work in professional circles? Instead of seeing connections as a superficial way to get what you want, you must understand connections are critical because they jump you ahead on the learning curve in many areas. Connections let you know about available jobs before they even hit the job boards (the ones you would have spent hours researching). A connection may even be able to provide an introduction to a decision-maker at your target company. Getting past gatekeepers may have taken you hours in research and phone calls. Your connection handed the phone number over immediately and possibly encouraged you to mention his or her name.

Connections are a valuable component of leverage in business, since they help to widen your knowledge base and skills as well. Others in your circle pass on information about conferences, books and other educational opportunities that reveal the latest and greatest in your field. Because you can’t be in several places at once, peers can act as scouts for you, without even intending to. Sharing information to help you gratifies them. Additionally, connections work both ways. There could be valuable opportunities or information that you pass on to your connections that they might not have known about otherwise.

Finally, connections won through networking groups can save you money. Networking group members understand that they act as the go-to person for questions in their field. They even look for chances to demonstrate their expertise. Give them that opportunity when you ask them for the legal, medical, tax or other advice that would have cost you $250 for 60 minutes hiring someone. Learning to leverage your connections keeps you from making costly financial, legal or marketing errors.

4. Leverage your talents and skills

While having talent is fantastic, even a lucky break, everyone has a story of the one who squandered it. Talent without hard work doesn’t get far. Students identified as gifted in high school struggle and even rebel when professors start requiring them to work for their grades in college. Individuals who take their talent for granted and fail to invest in it miss the lucky breaks that come along in anyone’s career.

How does the power of leverage tie into your natural talents and skills? An authentic leverage definition recognizes the value of human capital, like your skill set. Leverage your talent and acquired skills by continually adding to them. The graphic artist can learn a new medium, the negotiator a new tactic for a different industry. You never know when an opportunity will arise to use this new aspect of your skill set.

Improved skills bring value to your business, workplace and relationships.

Colleagues and supervisors will pay attention when you take initiative to work on already impressive skills. This willingness to learn also reflects a realistic and even humble acknowledgment that you still have room to grow. Having a mindset like this is important when making business decisions such as when to file bankruptcy.

5. Leverage your education

Like the three athletic women CEOs above, you, too, can get ahead by learning to leverage a time-limited experience into another era of your life. Your education may have ended, but have you explored the benefits it still offers? Most colleges and universities present lectures, retreats and even travel opportunities closed off to the general population.

Taking advantage of these opens you to the cutting edge in research and experiences brought to life by experts. How did you polish your foreign language skills during your semester abroad? What did you learn about community through your time in a sorority or fraternity? Every life experience becomes an opportunity for leverage, meaning no life event is ever wasted.

Career counselors know well the networking opportunities your past education and current, possibly vibrant, local alumni chapter offers. Often, a career counselor’s first advice for job seekers revolves around reconnecting with college alumni associations and connections. They know recruiters and business owners look for anything to connect with a job candidate. Exploring the common experience helps them evaluate whether they’re a fit for the company or not.

Using leverage in business to unlock new opportunities for yourself isn’t opportunistic – it’s crucial if you want to succeed in the professional world. Begin to maximize your potential today by learning to leverage the tools you already have at your disposal. Get the support and inspiration you need with Tony Robbins’ Ultimate Edge. This resource will help you discover your true desires and overcome obstacles to creating the phenomenal life you deserve.

For more ways to take your business to the next level check out the Tony Robbins Instagram, Podcast and Amazon pages.