Ever heard of Elon Musk?
If you haven’t… shame on you.
Elon has MASTERED the game of leverage. Here’s a cool story about him:
While building out Tesla and Space X that guy was thinking long term. He foresaw that he would need a connection in the solar industry in order to maximize the profit of his companies.
So… he went and helped his cousin get started and grow his own solar business.
BAM. He now utilizes the technology at Solar City to help give Tesla car charging stations( via solar power) all over the country.
Elon leveraged the people and relationships around him to his advantage.
This isn’t manipulation, guys. This is business smarts.
You probably thought when I said Elon mastered the game of leverage, I meant debt. Not in this case.
Elon is a leveraging genius. He has figured out how to maximize all 3 types of leverage.
So what are the 3 types of leverage?
1. The People’s Person
The first type of leverage is ‘People’. The people that work for you, ones you work with, and the ones you meet- these all can be valuable assets to you.
Like it or not, networking is a huge part of becoming successful in any part of the business world.
85% of current positions are filled through networking.
But when you become as successful as Elon Musk you probably aren’t looking for a job.. But you should be looking for expert business partners.
By simply leveraging the asset of your network will bring about huge results.
Ask yourself these questions:
What people in your network can you utilize as you look at acquiring a company?
How can you leverage the people of the business you’re buying?
Knowing people could pay off BIG when you’re looking to buy a business, start a fund, or raise capital. Sound connections, rewarding opportunities, and potential profit all come from knowing the right people.
2. Capital, Capital, Capital
Leveraging Capital is basically just your utilizing your financial assets. This is the most common and well-known type of leverage.
Leveraging your capital entails using borrowed funds to amplify an investment or project.
Leverage is an investment strategy of using borrowed money—specifically, the use of various financial instruments or borrowed capital—to increase the potential return of an investment.investopedia.com
Financial Leverage multiplies the power of every dollar you put to work.
I guarantee you that every fiscally successful individual and company out there is leveraging their capital RIGHT NOW. Don’t get left behind!
3. Machines to Software to A.I.
If you’ve ever taken an economics class, you’d know that the first type of leverage used in increasing capital was machines.
A man could produce 1 unit of output, and a machine could do 2 units output.
However, we’ve moved on from machines to different types of software and, more recently, A.I.
Effective A.I. (Artificial Intelligence) can take your company from $100 Million in revenue to $100 Billion. By increasing operations you can increase your profit.
Consider business 100 years ago– Now think about if we went back and introduced Excel into their business operations. How much could that leverage their business?!
Especially in the tech-world we’re all living in today, Leveraging software and A.I. is necessary to stay up to date and compete in the growing market.
How can you utilize these three form of leverage to your advantage?
Pro tip: Particularly when completing your Private Equity deals, leverage everything you can! Don’t miss out on extra upside! When it comes to P.E., leverage can make or break a deal.
I give other Private Equity, Hedge Fund, and Leverage pro tips and tricks in weekly web calls. Sign up here and I’d be happy to answer any questions you have!
Thanks for the read!