Make It Easy On Yourself – The Power of Leverage

 
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Do you remember the seesaws of your childhood playground? The thrill of being able to send your seesaw partner up into the air with ease?  Seesaws are often our earliest experience of the power of levers – the simple machines that make work easier by reducing effort.

Welcome to my Growth Metrics series of articles on building and growing your business. So far, I’ve looked at business purpose, change and foundations and structure. Now it’s time to look at growth. 
There are 6 ways to grow a business, and the one I’m going to focus on here is leverage. 

As described in ‘The Purpose of Business’, a successful business is one that offers the maximum value exchange with the greatest amount of leverage, whilst having the most amount of fun – or in other words uses leverage to reduce the work needed to achieve a goal.

 Leverage = Resource

We generate revenue to the limit of our capacity, so can only grow if we have the resources to increase that capacity. It is important to resource a business effectively, and to think in terms of moving yourself out of one job and into another. I speak to many business owners who want to spend all their time working on the business rather than in the business, and I explain that there is a very consistently proven point at which this can happen. Usually when the business gets to 24 people, one individual can step out and work solely on the business. 

I’m a strong advocate of the ‘you can’t manage what you can’t measure’ approach. Growth metrics – measuring, understanding and changing – are at the heart of my business practices. It is as true for resourcing as every other part of our business. The key to having the best resources for growth is knowing where you are spending your time now and where you need to be spending your time next. It’s about getting the right ratio between time and money.

I recommend a colour coding approach to categorising where you spend your time.  

  • RED tasks are back office support that costs money but don’t generate revenue. These might include HR, IT, premises, legal and admin.   
  • BLUE tasks are those that generate revenue today. They include managing your current channels, sales processes, marketing, training new staff, delivery and client service. 
  • BLACK tasks are about future profit. These include planning and strategy, setting objectives and working on brand, product ecosystem, new channels, resource, business model, culture, valuation and how you are going to exit.

Once we understand the relationship of time against function and how it impacts the ability to generate revenue against capacity, we gain an invaluable insight into the next level of resource needed to drive growth.

One important point to make here is about capability. Just throwing resources at our business is not effective leverage – we need resources with the right capabilities; with the skills and attitude to do the job. 

Again, the key is measurement and understanding – identifying what has worked so far, which tasks we can do effectively and then finding someone who can do the other tasks better than us.  

For example, if I’m energised more by sales, over full-time delivery, I will find people who love delivery and I will retain the sales activity. The essential is that I understand what the delivery role entails. Trying to outsource roles you don’t understand makes it very difficult to ensure you’re recruiting people with the right capabilities and empower them. When you recruit and empower capable people, they will evolve the role beyond what was handed to them. 
 
You’ll know you have leverage working when the people in your business are taking responsibility. Blame and distractions are a sure sign that you’ve still got work to do. If you can identify the resources you need and attract capable people, you will create successful levers for growth.


 
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Tim Dwyer is a business growth expert, who specialises in helping businesses strategically grow their assets, increase their business value, and improve their capabilities. Tim would welcome the opportunity to share more with you about Growth Metrics for business. You can contact Tim, and read more of his business insights and advice via his profile and learn more about Growth Metrics here.

Connect with Tim on LinkedIn here.