The Power of Leverage will set you free.

A great article by Emlyn Scott on the power of leverage. As mentioned on my previous post, Time Freedom is the main objective for most of us. We want to travel, spend quality time with family, charity & get into a hobby. These activities require time. Time freedom can only be achieved with Financial freedom. When you don't have to spend your own time making money, that's financial freedom. So what does Leverage got to do with all this? Read on...

It is absolutely necessary to use leverage if you want to become wealthy. In fact you need to use massive amounts of Leverage. The more leverage you use the more leverage you need to use. Before you think that I've lost the plot and only recommending that you borrow money until you drown under the weight of debt, let me explain myself clearly.

A common misconception is that leverage refers only to borrowing money (also known as gearing). Leverage is so much more than just borrowed money. In fact there are 7 forms of "leverage" and the more of the seven that you use and the more you use them the wealthier you'll become.

What is leverage?

Leverage is the ability to control a lot with just a little. It gives you the ability to utilize more than just you. Through leverage, you can effect change much more rapidly. Leverage equals speed, or velocity. The more leverage you have, the faster your journey to wealth.

The 7 forms of leverage
So what are the seven forms of leverage? Well, they are:

1. OPM (Other People's Money)
2. OPT (Other People's Time)
3. OPW (Other People's Work)
4. OPE (Other People's Experiences)
5. OPI (Other People's Ideas)
6. Scalable Production & Distribution
7. Scalable Customer Base

Let's briefly look at each of these in turn...

OPM:

OPM or gearing is simply the use of debt. It's what you put in the liabilities section of your personal balance sheet.

Why use gearing? Can't saving make you rich? The only way saving alone will make you wealthy is if you have a very good income, very low expenses, and the tenacity and ability to save over a long period of time.

For example, if you're 25 and plan to save until age 65 (40 years) and can manage to put away $650 per month and achieve a 5% compound return after tax on your money, you'd have a retirement pot of almost $1 million. While this is commendable, it's certainly not clever and takes an extraordinary amount of time and effort. Also, while $1 million may sound like a lot it really isn't, especially in 40 years from now. In fact, with 3% inflation your $1 million will be worth about $300,000 and produce an annual income of about $21,500 in today's money. Not a very wealthy retirement!

If you want to become wealthy you need to save hard and use money from other people to move you to your goals faster. OPM lets you buy assets earlier, at a faster rate, and control a larger amount than saving the whole amount. These three characteristics of financial leverage enable you to become wealthier faster.

If you saved $10,000 per year and borrowed at 90%, after one year you could buy an investment property that cost $100,000. If you waited until you saved $100,000 then it would take you 10 years and the price of the property would likely be much much higher.

It's generally true that "you need money to make money." However, it doesn't need to be your money. OPM allows you to fast-track your wealth creation program.

OPT:

There are numerous companies, small businesses and individuals that will sell you their time. These range from laborers to professionals specializing in a particular field.

I have an accountant, lawyers, insurance broker, mortgage agent, and so on. I use all these people, as they save me time and money. They save me money because they free up my time to make more money, and their knowledge helps me.

OPW:

This is similar to OPT, but now you employ people to leverage their time. Bill Gates applies enormous OPW style leverage. He leverages the time and effort of 65,000 staff. OPW (and OPT) essentially allows an individual to capture the time and effort of many. It allows you to produce quickly what you couldn't produce in one or more lifetimes.

OPE:

One of the best resources or leverages available to you is the experiences of others. It's an enormous waste of your time and totally unnecessary to try and learn everything you need to know by trial and error. You can learn from the experiences, knowledge and mistakes of others.

This may be via a mentor, OPT, OPW, books, seminars, CDs, school, college, etc.

There's no point learning by trial and error what someone else has already learned and can impart to you.

OPI:

This generally refers to learning and copying good income-producing ideas. Franchise and networking businesses are testaments to the power of OPI - learn a proven method and replicate it yourself.

The process of wealth creation is the ultimate use of the leverage of OPI. The system of wealth creation is the same today as it was yesterday, last week, last month, last year, last generation. Sure, the technology changes and systems become refined and improve, but the fundamentals don't change. The process is tried, tested and works every time without fail. You just have to learn it and diligently apply it. No trial and error. No wasting your precious time. Just OPI.

Scalable production and distribution:

Can your product or service be easily scaled for production and supply? A book can be easily scaled as it can be printed as many times as demand requires. Compare this to face-to-face teaching which isn't easily scalable. Can a book be easily supplied anywhere? Well until the Internet came along it couldn't. Now it can be bought and distributed easily via the post to anywhere. But that's nowhere near as easily produced and supplied as an ebook, which is just bits of information that you can instantly download from anywhere in the world.

Scalable customer base:

A restaurant or a corner store doesn't have a scalable customer base. It can only service customers in its local area. People from all over the world may want your product or service but if they don't know about you or can't get to you then it's as if they don't exist.

Let's look at the dot com companies of the late 90's. The internet gave companies a true global customer base for virtually no cost. Their potential customer base was highly scalable, which is why they were so highly valued. The problem was their production and distribution was not highly scalable as they still had to deal in physical products...they were very old economy after the "sale". People forgot this. Those companies that dealt in non-physical products had both scalable production & distribution and a scalable customer base. These are the real new generation companies that the internet truly empowers. You probably recognise a few of them - Google, Yahoo, Ebay, E*Trade, Facebook, and so on.

With leverage, you're not alone. You can tap the strengths of all the resources you need around you. You can vastly multiply the effectiveness of one person. Through leverage, systems of production and sales can run and grow independently of the inventor or owner. Leverage allows you to create systems that run themselves. Leverage is essential to create wealth. Those who want to become wealthy or are on the wealth path must focus on understanding, mastering and fully utilizing leverage.

Network Marketing course in the University?

Many network marketing companies have claimed that network marketing is being taught in universities in the US. I have done some research and found this decent article published by The Sheffield Group. If you have not heard of this group, you should visit their site at http://www.sheffieldnet.com. Sheffield group is one of the leading network marketing/MLM consultant. Below are some excerpts of the article. For the full article, you can visit http://www.sheffieldnet.com/srn_artice6.html.

The Academy of Network Marketing?
University Scholars Discover Network Marketing.
Network Marketing Lifestyles

By Michael L. Sheffield
Network Marketing Expert Consultant

Excerpt 1: 

The "MLM at Harvard" rumor is one of a handful of Baron Munchausen-like tall tales that made the rounds in the early 1960s. First published as an unsubstantiated claim by an over-eager author, the Harvard rumor soon took on a life of its own. Starved for recognition and respect, network marketers by the score circulated this falsehood. Finally, in 1992, Upline ran a story by founder John Fogg, entitled "The Lies of MLM, " that quickly became one of the journal's most popular, oft-reprinted articles in its history. "MLM taught at Harvard" was one of the first industry canards to fall under myth buster Fogg's ax.

Why was the article so popular? Because people want to know the truth — and more, people want to know that when they boast about this great business that they're connected with, that their boasts are factual. It's interesting that Harvard was the anchor of credibility seized upon by those inferiority complexed individuals who fed the Multi-Level Marketing (MLM) rumor mill.

Excerpt 2: 

Genesis of the Center for Network Marketing 
Today, there is a window of opportunity opening in the academic world with possibilities appearing for college courses devoted to network marketing and scholarly journals dedicating pages to it.

Excerpt 3: 

Early Academic Rumblings

Dr. Charles King of the University of Illinois at Chicago developed and has taught a seminar in network marketing since 1994. The class, which combines a functional approach to theory, methods, and practice for the network marketing distributor has attracted more than 1,100 participants.

The first college textbook focusing on direct sales (including network marketing) has been written and published by Dr. Keith Laggos, whose company sells a number of periodicals aimed at home-based entrepreneurs. This text has been adopted by Utah Valley State College for use in a network marketing program it hopes to offer on campus in the year 2000.

Why isn't network marketing taught in business schools? For one thing, business school professors are not businessmen, but academics. Their passion is theory, not practice. Their understanding is based on corporate statistics. Network marketing businessmen have never been seriously analyzed, statistically or academically.

Excerpt 4: 

Who's Doing What? 
Since 1973, the Direct Selling Association (DSA) has worked through its educational arm, the Direct Selling Education Foundation (DSEF), to foster awareness of the profession through distributing educational materials, sponsoring seminars, and initiating on campus visits between academics, students, and direct sales practitioners.

The academic world's interest in network marketing and direct sales was evident at a recent conference at Utah Valley State College. According to Ian Wilson, Dean of the School of Business, "We created this conference to create interest and enlist support for launching a course of study on network marketing in the year 2000." This one-day event was well attended by local network marketers and corporate executives.

Excerpt 5: 

About That "Harvard" Thing ... 
Has the day finally arrived when direct sales and network marketing are addressed in the classrooms of traditional business schools? Hardly. There is still a long way to go. But there is no doubt that this is a very exciting time for network marketing professionals: the industry is truly coming of age.

University of Illinois' Dr. Charles King has become a well-known figure to network marketers for his historic championing of the business in academic circles. He appears on Tim Sales's best-selling education-and-prospecting video, "Brilliant Compensation." King, a Harvard Business School graduate himself, recently addressed his alma mater on the subject of network marketing. For that matter, I was also recently honored to speak about our industry to a Harvard Business School Alumni Association convention. Is network marketing now being taught at Harvard? No, but we are making progress — it has been taught to Harvard.

What happen when corporate employees make decision for your franchise business?

There is always a clash in interest between corporate employees who work for the franchisor and the franchisee of the business. It's obvious that franchisee's interest will be profit; low cost and big profit margin. Franchisee relies on the experience of the franchisor for a great marketing plan and new product research. However, how will the franchisor able to gauge the effectiveness of say a new marketing plan which is put in placed? Well like any corporate, the franchisor uses KPI. The trick is the correct KPI to be used and measured. The problem occurs when employees of the franchisor focus on achieving their KPI instead of putting themselves in the shoe of the franchisee. Any KPI target achieved is considered a success to them. The employees have no interest in the profitability of the franchise business as it is not their money at stake. The KPI commonly used by franchisor to gauge the success of a new marketing plan is the number of product sold. Instead of focusing on cost reduction, better new product and operation efficiency, gauging solely on quantity sold may not be a good idea. Obviously, the ideal marketing strategy to increase quantity sold is to make the product cheaper. Done! Quantity product sold goes up and KPI target achieved. Job well done and bonus on the way! This scenario is very common in F&B franchise business due to the competitive nature of the industry. 

The increment in the quantity of product sold indicates a possible wider market penetration OR merely an increased in the frequency of purchase by the consumers. This strategy benefits the franchisor more than the franchisee. Lower price will drive up the quantity sold but may not drive up the total sales. With higher quantity sold, it's already a good sign for the franchisor. Higher sales is just a bonus. In order to achieve the same total sales, more have to be sold by the franchisee. Even with the increment of quantity sold, franchisee may experience similar total sales. However, cost will definitely goes up; higher labor cost, electricity bill, water bill and food cost. The end result, thinner profit margin with the same total sales even though quantity sold goes up.

Such strategy is a win win for the franchisor. Maintaining the sales means same amount of royalty collected by the franchisor. Wow.. same royalty collection with increased number of quantity sold. 2 pluses at the same time. 

Many franchisees face such problem with their franchisors. The decision made by the franchisor is often non negotiable. To make their work easier, the employees of the franchisors use same strategy for all market. Instead of trying to understand the consumer behaviour of each individual market, they assume that consumers in every market are the same. They fail to understand that consumer spending power, government policies, tax laws and market competitors are not the same. 

 

The Greatest Happiness is Gratitude

Our desire is our greatest motivation. Without desire we live a life wondering around without purpose. Without desire we will not fight for what we want. The fighting spirit is very important as it keeps us moving and growing. The desire to achieve status in the society, the desire to enjoy luxurious life or the desire to please love ones can be a great motivation.

Unfortunately, due to desire to have better things we often forget to appreciate what we already have. The peaceful country we live in, the love we receive from our parents and friends, the meal on the table and clothes we wear. I often hear people saying that if you feel down on your current situation, just think of all the good things happening around you. Be grateful of them and you will feel better. While it is so true but most of us find this practice useless. Hence, if you really want to feel grateful of your life, get out from your comfortable modern life. Go live a place with minimal modern facilities; such as electricity and clean toilet. Believe me, you will be grateful of your life when you return.

Recently, I have decided to take this challenge; leaving my comfortable life and stay in a remote village in Borneo Island. This village may not be the most remote one in the island but it does not have some basic amenities I enjoy in my city life. No internet connection, No electricity at night, No proper toilet and No hot shower! It' hard for me to explain everything in words here, just take a peep at the photos below:

No proper access road to the nearest town.

 

  
      That's the shower room.
 
                                                   That's the entrance to my "neighbor"

The entrance to house I stayed

                                                            That's the toilet.

During my 8 days stay, I sleep on the floor without soft cosy mattress. There is no fan. During the day, it felt really warm due to bad air circulation around the house. At night, it was pretty cold. No entertainment such as TV or the Internet.

This trip has really opened the perspective of the way I see my life. I have become more grateful to my life. Simple basic amenities like toilet bowl, sink, fan and proper bed can bring so much comfort to our lives. So, be grateful and appreciate what you have.

Happiness defined.

Modern science defines HAPPINESS as the positive range of emotions that we feel when we are content or full of joy. Great philosophers, religious leaders, writers and thinkers throughout human history have asked themselves this basic question. Through their wisdom we can learn and maybe take just one more step on our own happiness journey. Sometimes you'll find that happiness finds you when you least expect it.

“HAPPINESS"IS WHEN WHAT YOU THINK, WHAT YOU SAY, AND WHAT YOU DO ARE IN HARMONY”

– Mahatma Gandhi

source: http://us.coca-cola.com/happiness/

Cancer Illustrated.

This is great video illustrating what is cancer and how it develops and spreads in our body.

* Stay Healthy, Stay Happy. Cell mutation can be caused by the environment and food we take. In today's society, it is impossible to avoid food which maybe contaminated with pesticide. Mass production of food reduces the nutrient in the food we take. Having a balance diet is no longer sufficient as this "balance" diet is just our perception that if the meal we take has vegetables, chicken, rice etc, it is considered balance. We often forget that we eat what we like. Most of the time, our meal is not balanced enough. Even with perfectly balance meal, we are not even sure if the vegetable (for example) we eat is free from contamination. Hence, there is no doubt that we all need supplements to patch up all the missing nutrients. Many supplement manufacturer such as Unicity produces all natural supplements derived from fruits and vegetables which we normally don't eat. In addition supplements are produced in clean and controlled environment. A single capsule of supplement contains more nutrient than an entire plate of vegetables you eat.

Visit: https://www.facebook.com/myhealthylifeforever?ref=hl

Quote from a great Unipower leader

Don't save money for rainy days, use the money to create sunny days.

Time for a good laugh

This is one great comedy clip which you can watch a thousand times whenever you feel down. :)