How to leverage effectively -- save your time and money

Editor's note: This is the third column in a six column series giving advice to beginning entrepreneurs. Check out www.davidweisburd.com for more information about Weisburd and his business.\nThe ability to leverage effectively is an important part of becoming successful in business. Everyone seems to talk about leverage and leveraging, but what is it exactly? \nTo leverage is to use another person's resources -- most commonly, their time or money. \nVirtually every activity people partake in has been leveraged in some way. Going to the movies, reading and buying groceries are all examples of leveraged activities -- they all require people to invest millions of dollars into development. By leveraging other people's time and money, you are able to buy these products and services for cheap.\nThis is the biggest difference between being an employee and being a business owner. As an employee, you are being leveraged. The lower down you are in the corporate hierarchy, the more leveraged you become. Data entry is a great example of one of the most leveraged positions. If you can be replaced by a smart chimpanzee, there is a good chance you are being leveraged. \nBusiness owners are on the other side of leveraging -- they leverage others. They control their employees' actions and how they allocate their time and resources.\nSuppose you own your own business. A potential investor decides that he or she wants a summary of your company's earning report for the latest fiscal year. As a business owner, this might take you several days to complete. More importantly, you will have to put aside critical day-to-day decisions to complete this simple task. Suppose, on the other hand, that you have one of your new employees complete the task. The employee might grumble, but he or she will complete your assignment. By using less valuable resources to complete the same tasks, you are able to leverage effectively.\nKnowing how to leverage money -- another way of saying "use other people's money" -- is a valuable skill. If you're good at leveraging money, you will never have to risk any of your own money in a venture. In some cases, such as venture capital and angel investing (matching startup funds with startup companies), you will have to give away a part of your company in exchange for start-up capital. However, there are alternatives to these methods. Millions of dollars in grants and loans are available every year for entrepreneurs. Learning to utilize grants and loans can greatly enhance your company's chance at success.\nThere is a special trick I like to use to accelerate all my leveraged activities, commonly referred to as a win-win situation. These win-win situations can come in many forms. Examples include partnerships with other businesses, partnerships with investors and incentive programs for employees.\nWin-win situations are the ultimate lubricants in business because of a simple economic rule: When people benefit from an activity, they will have the incentive to do more of this activity. \nAn example of this is evident in affiliate programs, which have gained great popularity on the internet. They allow ordinary people to act as sales agents for companies and promote the sales of e-books, DVDs and other products on-line. In return, the promoter receives an affiliate or commission fee from the store owner for each product sold. Amazon.com has one of the most popular affiliate programs in the world. Anyone can sign up and become an affiliate right away. Believe it or not, there are people making a living online without their own product, service or customer base. They have a far more powerful weapon -- they're masters in connecting consumers with products they need.\nThe great thing about win-win situations is it doesn't take much effort to keep them intact. Once you have a great win-win relationship, there is very little that could happen to break it up. \nThere is also a lot of pride in knowing your company is positively influencing the growth and success of other companies and individuals. Cultivate these relationships, and you will soon become a master of leveraging. \nComing next week, how to benefit from keeping your options closed.