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The Importance of Leverage for Online Businesses

Leverage is the ability to gain a great gain from a small investment – whether that investment is time, effort or money.

We typically think of leverage as the mechanical benefit that derives from using a lever.  In fact, Archimedes once boasted, “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.”

But leverage isn’t limited to the laws of physics – it applies in many other situations as well.

In business, Change Agents regularly speak of changing one or more business “levers” in order to change the organization’s structure or performance.  Unfortunately, in today’s world, those business levers often have negative connotations and involve job cuts, down-sizing, bankruptcies, or other forms of corporate re-organization.

But leverage has many positive applications as well.

People apply financial leverage when they use borrowed funds to increase the return of an investment, or when they use calls or puts to control large quantities of stock at a cost far less than outright purchase.

home based businesses use leverage when they operate online.  Simply by being online, they’ve eliminated the boundaries of geography (and largely, time as well) and leveraged their advertising dollars, since it costs the about the same amount to create an ad that reaches only a small number of people as it does to create an ad that is global.

If we were running a small “brick and mortar” store, we might be satisfied with traffic that numbered in the hundreds, but as an affiliate internet marketer, we want traffic numbering in the hundreds of thousands, or even millions – and not just any prospects, but highly qualified prospects.

We are utilizing leverage when we use tools such as Google AdWords:  we use the power and reach of Google to identify targeted traffic for us and send it to our website.

The Internet provides us with many forms of leverage, but they basically all boil down to the use of technology.   Technology is one of the greatest levers ever invented.

Most internet marketers are familiar with the use of autoresponders and search engines, etc., but they habitually fail to make full use of the technology lever in their back office processes – including everything from managing sales leads to fulfilling the order and taking care of the follow-on billing and customer service issues.

Those online businesses that take full advantage of the leverage that technology provides are the ones who will succeed in this competitive environment.

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