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Small Business Leverage

What is leverage? Do I have it? Why I want it!
Small Business Leverage

Small Business Leverage

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Business LeverageLeveraging my Small Business

What is leverage?  We’ve all heard the term applied to mega-businesses and Wall Street firms, but is it something that Small businesses can achieve?  The answer is a resounding YES!  Leverage is when your company has an advantage over your competition.

Does your business currently have leverage?

Here’s a quick 3 point assessment to see where your company stands.

  1. Predictability and consistency – business comes in cycles some weekly, some monthly, some even annually.  Whether your business hits the cycles consistently is important.  Recurring revenue allows management to predict how much will be sold and when.  Consistency is also a good indicator of having a strong customer base.
  2. Ownership – in a small business the investment is made into the ownership almost as much as the business itself.  Some questions to ask; does the owner have a proven track record of running successful businesses? What is the current momentum of the business and motivation of the ownership?
  3. Uniqueness – Special Sauce  Every business owner thinks of their business as unique in some way.  Here are some things that set strong businesses apart:
  • Great margins – doesn’t necessarily mean overcharging your customers but maybe you got a great deal from the distributor
  • Brand strength – is one of the most easily achieved aspects of small businesses.  Having   a well-defined brand will give your business leverage whether it’s like Walmart or Lord & Taylor, clients know what to expect in regards to service, quality and price.  What do your clients expect when they walk into your business or see your logo?  Is it defined?
  • Exclusivity – are you the only business around that offers a specific product or service.  This a quick way to get a lot of leverage.

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Why you want leverage –

Having leverage gives you a certain amount control and sway of your industry.  It positions you to be a market leader and makes you more attractive to investors and bankers. Depending on the type of leverage your business has you can negotiate better deals with your suppliers, set market trends, buyout your competition and even attract outside investors.

What does it all mean to your business?

So when you roll up the gates tomorrow morning.  Do it with a focus! Get all your employees on board with steering your company towards increasing your leverage.  Even small strategic investments can pay off big!

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Small strategic investments can payoff big!

Click here to find out more about financing for your business

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