5 Examples of How to Use Leverage in Your Small Business to Scale Successfully
Have you felt like your business is stagnating, yet you are busier than ever?
Successful entrepreneurs know that they must leverage every possible resource available to grow their businesses. But what does this mean? To answer this question, we're going to look at 5 ways you can leverage your time and resources more effectively to scale your business.
First, off understand that you do not have to be a big company to use leverage in your small business. In fact, the smaller you are, the bigger the returns for your business.
Leveraging is the idea of using a tool or strategy to gain more momentum, success, or big results. Leverage can also mean giving yourself more time by outsourcing work to someone else so you can focus on other priorities in the meantime.
If so, it might be time to start leveraging.
Learn why leveraging is essential, how it works, and what some common examples are. I'll share how to apply these concepts as an entrepreneur who wants success for their small business.
When you started your business, you are worried about getting things done, making your clients happy, and getting paid. As you continue on the journey of growing and scaling your service business, you notice you're getting so busy that your business is not growing as well as it once had.
This is normal. You have two choices of how to proceed:
The 4 Levels of Leverage in Your Small Business
Let's start by taking a look at the four levels of leverage in a business:
To give this a bit of context. Let's look at the job of managing your daily to-do items.
Leverage Level # 1: YOU
Level 1 is that you keep everything in your brain. This is easy to accomplish when things are simple. Yet, as your business grows, the ball starts to get dropped, so you grab a simple tool.
Time, effort, and cost-benefit: Little to none.
Leverage Level # 2: YOU + Simple Tool
Level 2 in this scenario is your notepad and pen; you create a simple tool by creating a to-do list. You still are an active participant in this area as you add things to the list, take things off the list and review it regularly. This works for a while until it doesn't.
(Note: You just as easily can use technology here. Basic versions of apps like Trello, Asana, and Basecamp all would fall into this category.)
Time, effort, and cost-benefit: You'll likely feel better, but the benefits will be marginal because you still must be involved, or the tool ceases to function.
Leverage Level # 3: YOU + Power Tool
Level 3 is when you supercharge your tool. An example would be using a project management system to save everyday workflow tasks and dates in templates. This platform (I use Monday.com for this) would allow you to bring in the tasks, set the beginning date, and then take care of the rest. This saves you time.
Another power tool in this area is automation, a way to apply technology to a process to happen without your direct input. Zapier or CRM automations help tremendously with this level.
Time, effort, and cost-benefit: While you'll likely pay more for the power tools over simple tools, you'll likely start to gain some efficiencies and a boost to productivity, leading to more revenue and an increase in capacity.
Leverage Level # 4: OTHERS + Power Tool
Level 4, you transfer the involvement of the tool to someone else. In our example, this could be an administrative assistant, virtual assistant, online business manager, or project manager.
Time, effort, and cost-benefit: You can notice significant gains and freedom in your day-to-day to take on more of a strategic and visionary role in your business. The one caveat is those benefits only occur if your role is to manage the results of your team member, not the actions. When you trade managing a power tool to managing the person – you've only switched out power tools and are stuck in level 3.
5 Areas You Can Leverage in Your Small Business
Some areas of your service business will be easier to apply leverage to than others. Here are five areas you can integrate into your leverage plans.
- Systems & Processes
- Technology
- Money
- People
- Efficiencies & Productivity
Leverage Example #1: Systems and Processes
Systems and processes are an easy place to start leveraging your small business.
Systems and workflows are the overriding umbrellas that cover a key segment of your business, such as marketing, sales, cash flow, operations, and human resources.
Workflows are often a collection of steps and processes.
Processes are the checklist and step-by-step instructions that create unity, reliability and repeatability within the system.
For instance, a client intake call initiates your sales system.
That initial gathering of information is often a process where certain bits of information are collected, and specific questions help determine client fit and project scope.
You can start implementing systems and processes on day one, but more likely, it will be after you've had time to work out your best marketing, sales, and operations process.
Even internal areas like strategic planning, hiring, and onboarding new team members can benefit from a defined process.
The idea is to create a simple process that anyone can follow.
The best processes are seen as living documents that can evolve and improve overtime. Keeping things simple encourages ease and adoption.
Leverage Example #2: Technology
Technology is a time and labor-saving strategy that can set repeatable parts of your business on autopilot.
One way you can use technology as leverage in your small business is to look for opportunities to automate repetitive but necessary tasks.
This is a great example of a power tool.
For instance, for many of our clients, we create sales processes within technology that makes it super simple to invite people to meet one on one.
Then through automation, we can have the system see whether they have scheduled and send follow-ups accordingly.
Then through automation, we can have the system see whether they have scheduled and send follow-ups accordingly.
In another instance, our clients had their operations specialists fielding inbound client intake calls, managing the project schedule, and answering the phones. During the work, the employee transferred information between 3 different systems. The volume of calls was large enough that the employee could spend 10% of the week just transferring information.
Using Zapier, we identified a way to automate the information transfer and created a template that worked for all the systems – making information flow smoother while increasing employee productivity.
Automation is a way to take simple tasks that get missed off the to-do list and into the done column.
Look for opportunities to bring technology to the table when you're not quite ready to hire a team member or notice that the ball is getting dropped, or things just aren't working as well as they should.
Leverage Example #3: Money
It is easy to think that leveraging money is a big business game, but it is very viable for small service businesses.
Consider the concept of leveraging other people's money, one of the most established examples of leverage.
You leverage other people's money when someone invests in your business, or you use credit options to invest in growth initiatives for the business.
Platforms like Kickstarter, Patreon, and GoFundMe all facilitate crowdfunding by micro-investors who buy into the purpose and mission of the business, for some level of reward, or often just out of a good will.
You also can employ this strategy when you receive funds from clients before you've delivered a service, especially in pay in full situations.
While you may not be seeing that level of sales, there still is the 'time value of money' that you can leverage when your clients pay in full. These more significant cash infusions can be used to increase cash reserves, pay down debt, pay ahead expense to get more favorable terms, and make investments into your business.
One of Amazon's core business models is that they can leverage buyer's money for 28 days before paying suppliers. To give this a bit of context, Amazon reported $125.6 Billion in revenue in the fourth quarter of 2020.
Imagine the interest earned in just one day.
Leverage Example #4: People
Scaling a service business is dependent on the efforts of others. In fact, in this article, we talk about the 5 types of people you can leverage in your business for tremendous success.
When it comes to leveraging the efforts of others, your relationship with the 'work' of your business must transform. Every successful business owner has figured this out, and it is the transformation you can bring into your business starting today.
The critical transformation you'll need to manage is to go from being the one who gets all the work done to being the one who ensures the work gets done.
The transformation requires you to go from worker to business owner and business owner to entrepreneur.
Other paths, solutions, and relationships can come into your business, making gaining new clients and opportunities easier.
Leverage Example #5: Efficiencies and Productivity
The four leverage strategies we've spoken of so far are all ways that increase efficiencies and productivity in a business when you successfully implement them in your business.
Yet finding the opportunities to increase efficiencies and productivity across the business is a strategy in itself.
The challenge that service businesses face is when you serve your clients in a highly individualized manner creating unique solutions, it is (seemingly) challenging to achieve economies of scale.
Yet, one of the key strategies you must master on your journey of scalability is the dance between getting work done and getting more done with the resources you have.
Look for areas in your business where you are dropping the ball, and where roadblocks, hurdles, and bottlenecks are happening in the organization. Often these are areas that can be simplified and improved.
There are also some strategies that you as the leader can utilize to motivate and inspire productivity in subtle ways, especially with your team. Two of the most straightforward tactics you can employ with your team are engagement and tension.
Engagement is a motivator that activates the internal engines of your team. When these engines are activated, your team's energy amplifies their efforts, boosting productivity.
Additionally, tension can create the same result. Healthy tension can be created through healthy competition, deadlines, goals, and targets. Tension can also be created subtly through timers, scorecards, and counters.
In both methods, we call attention to the result that is desired.
I always think back to the book, The E-Myth, which illustrates the implementation of these tactics.
In one story, the owner installs a large brass bell in the middle of the office for the sales team to ring when a sale is made. This uses engagement (let's see who will ring the bell first) and tension (I really want to ring the bell.)
Where are the areas where you can employ engagement and tension to boost efficiencies and engagement in your business?
Scaling a service business is not as simple as just thinking of ways to make more money.
These five examples help you start brainstorming how to scale your business with less effort. Are you considering scaling your business? We are masters at guiding unique businesses who are good at what they do to become better business owners by creating predictable profits to grow and scale without burnout. Curious about what we can do for you? Find some time to chat here.
