Critical Steps to Online Success--What is this "Leverage" thing everyone is talking about?

We hear this all the time in business:

"It's not how hard you work, rather its how much leverage
you create. In the end, leverage is what makes the
difference. You can only do so much yourself."

But what exactly is "Leverage"?

It comes from the word "lever".

You put a wrench on a nut and the length of the handle
multiplies your strength.
Double the length of the handle by putting a length of pipe
over it and you double the turning force at the nut.

It works the same in business!

Let's look at a car dealership service shop as an example:

These are just fictitious numbers (I guessed at them), but
they'll serve to illustrate the point.

You take your car in and they charge you $125 an hour for
4 hours-your bill is $500 (plus taxes of course…let's not
forget our benevolent government).

Say your mechanic gets paid $30 per hour plus benefits-
maybe $45 total cost to the dealer. Then there's rent of
the premises, construction of the shop bays, tools and
equipment, leases and maintenance, cleaning, utilities,
interest charges, insurance, back office support
(accounting, management etc.) and lots more. I'll make a
wild un-researched guess and say all of that (the cost to
the owner of operating the shop) adds up to $55 per hour
for each service bay. So the mechanic who actually fixed
your car plus the cost of running the shop costs the owner
(in this example) a total of $100 per hour.

You pay the shop $125 per hour and the owner gets to keep
the balance-a net profit of $25 per hour.

If this is a very successful auto dealership they probably
have 10 bays working 10 hours a day, 6 days a week. At a
$25 per hour profit margin that works out to $780,000 per
year for the dealer.

If the owner works in the business then she (or he) works
one hour pushing paper and earns $250 per hour from the
efforts of others-a 10 times multiplier on their efforts.

That's leverage in action.

In real life the owner is probably retired and living in
the Caymans or Hawaii. The owner is lying in the sun and
making $250 per hour (or maybe golfing) while we sweat to
earn the money to get our car serviced.

So if you're smart, you work hard on creating leverage
now, so you can lay back eventually in the place of your
dreams.

That's the path of the true leader . . .

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http://homebasedbusinessontheweb.com/cap/

Jim Keayes is an expert Internet Marketer. He teaches people
to be successful online.