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Leverage

Definition – Leverage is the ability to influence a system, or an environment, in a way that multiplies the outcome without a corresponding increase in resources. In other words, leverage is the advantageous condition of having a relatively small amount of cost yield a relatively high level of returns.

In a craft environment leverage could be using a designer to create a template and then employing lower-paid staff to use this template many times. Items can now be recreated consistently, quickly and at a much lower cost.  In manufacturing a company might spend £1,000 on a new machine which lasts 5 years, but if they can use this to leverage their turnover by £10,000 for each of those 5 years then they will have received a  5000% return on their investment.

Leverage is also obtained whenever someone employs extra staff,  opens up a new office, manufacturing plant or shop. Franchising is the perfect way of gaining extra income from duplicating your efforts without the effort and risk of doing it yourself.

Applying Leverage

Leverage can be applied to just about everything that you do, for example if you create an affiliate program then you are using your affiliates to leverage your marketing. It could be creating training manuals for new staff so that you give everyone consistent high quality training and you don’t have to spend unnecessary time to make them effective team members.