Leverage is the key to unlocking your full potential and creating the life you want.” – Brian Tracy.
Leverage is a powerful tool that can help individuals make better decisions and achieve greater results in business, negotiations, and everyday life. Simply put, leverage refers to using a small amount of resources to generate a much larger impact. In this blog post, we will explore what leverage is, how it works, and how it can be applied in different areas of life.
The idea of leverage was first introduced over two millennia ago by Archimedes. He famously declared that with a lever long enough and sufficient distance, he could move the world.
Leverage as a concept has been utilized by humans for thousands of years to attain disproportionate power by focusing their energy. One notable example of this is the ancient Egyptians who leveraged levers to elevate stones weighing as much as 100 tons for the construction of pyramids and obelisks. Numerous tools that have been used for centuries, including scissors, pliers, door handles, wheelbarrows, fishing rods, and more, embody the principle of leverage.
The concept of leverage has applications across many areas in life such as business, decision making and such. Leverage operates under the idea that strategically focusing our actions applied correctly can produce substantial and lasting outcomes. Finding a solution to a complex issue often involves identifying the areas where leverage can be maximized. A leverage point is where a small difference can make a large difference.
Leverage in Business
In business, leverage is often used to maximize returns on investment. For example, a company may use leverage to secure funding for a new project or to purchase a larger asset, such as a building or piece of machinery. By using leverage, the company is able to invest more money into the project or asset than it would have been able to do otherwise, which can result in higher returns.
Airlines are able to charge exorbitant prices for drinks and snacks as passengers have no alternative options. Spotify and YouTube have the power to subject users to countless advertisements because their services are free, giving them leverage. Companies holding a monopoly, due to a patent for instance, can charge higher prices as they dominate a specific market. A doctor can present a high bill as there is no way for the patient to undo the service or seek a cheaper alternative.
Leverage in Negotiations
Leverage can also be used in negotiations to give individuals an advantage. For example, a person may use leverage to negotiate a better salary or to get a better deal on a product. This can be achieved by having knowledge of the market or the product, having a strong bargaining position, or having the ability to walk away from the negotiation.
“Leverage is not about working harder, it’s about working smarter.” – Robert Kiyosaki
The principle of leveraging in negotiations can be grasped by anyone who has ever engaged in bargaining at a market or with a salesperson. The strategy involves presenting the product or service as having significant flaws and being of little value, making the act of purchasing it a favor to the seller. The next step is usually to present a low offer, to which the seller counters with a slightly higher price, yet still significantly lower than the original asking price. By using leverage in negotiations, individuals can often get more than they would have otherwise.
Leverage is a tool that can greatly enhance an individual’s ability to make better decisions and achieve greater results. Whether in business, negotiations, or everyday life, leverage can be used to maximize returns, gain an advantage, and make more informed decisions. By understanding the principles of leverage and how to apply them, individuals can increase their chances of success and reach their goals more efficiently and effectively..
