Leverage in Business

Continuing from yesterday, there's a lot to leverage that most people don't get. I'm barely scratching the surface as I get into it myself. But as I mentioned secrets in business are what allow dominant players to reach that level. Leverage in business is what allows anyone to build. Strategic relationships as I called them, are a form of leverage.

Leverage is another way of talking about something you can use. Business people use things to get ahead. Money, labour, media, and technology are the core four. But within all of these, there's more nuance.

To leverage a strategic relationship is to make use of a relationship you have that's particularly useful. Funding lawmakers is a very strategic move that we can leverage. As is having amazing personal brands that bring us continuous deal flow. These are different ways of looking at people media and people. It's more than just labour and publishing opinions. The techniques are well thought out and lead to greater future successes.

To have leverage in a negotiation is to have more things you can use to make a deal happen.

If you're a business that desperately needs money, you don't have much leverage. You need it so badly because you don't have many options. There are no avenues for you to use something else to bring you that money. So whoever you go to, where's your leverage? Right?

Wrong.

The fact that you have banks, investors, family and friends with money are all forms of leverage.

The reality of leverage is that it's not always about what you have right now. It's about what you could have → as far as the parties involved are concerned.

We can use the fact that we have a house in our name as leverage. We can use that house to make up the money we need - but it's obviously a risk. Here's the thing. When someone knows that you own that house (or a whole real-estate portfolio), suddenly, they know you have things you can use to get ahead. That's what matters.

Do they want what you have?

Do they know you have other means to get what you want?

Here's a little story of a mother trying to set her son up for success.

  • The mother tells her son "I've found the woman for you to marry"
  • He says "I'll choose my own partner,"
  • She replies "but she's the CEO of X company's daughter"
  • So he replies "oh ok then sure"
  • She goes to the CEO of a massive conglomerate X company and says "I want your daughter to marry my son"
  • He says "my daughter is too young to get married"
  • She replies "but he is a vice president at the world bank"
  • The CEO replies "oh, in that case, we can make it work"
  • She goes to the president of the world bank and says "I want my son to be your vice-president"
  • President replies "I already have more vice presidents than I need"
  • She replies "She's the son-in-law of CEO at X company"
  • So the President answers "oh ok then sure"

And that's how it works in the beginning. We know they want what we have. They know there would be other options if they say now. The deal gets done.

This is obviously a joke but the example makes the point. It's never quite that simple. But it illustrates that leverage is not only about what we have. It's a matter of whether or not we have what people want and whether or not they know we have other options if they say no.

There's a lot more to leverage. This is only one example. More to come.