The secret of leverage and the art of growing a business

There is a secret to growing a business and those who discover it are able to increase the size of their business in an almost exponential fashion; that secret is a thing called leverage. So what is this revolutionary thing called leverage that enables businesses to expand disproportionally? Leverage comprises of several parts, firstly it relies on using finance from somebody else. Most businesses even profitable businesses that have cash will still use other peoples finance to grow the business. What do we mean by other people’s money? This is simply organisations money it could be in the form of a bank loan, a loan to buy plant and machinery. In more recent times pay day loan companies have also stepped into the breach to help businesses grow and increase profitability. There are numerous pay day loan companies that have seen an opportunity to help businesses thrive, examples of how it all works can be found in a variety of places including who like several companies are providing a service to the business community.

Leverage is an integral part of business expansion and can take form in several different ways and is one of the ideas behind large public companies or corporations who sell shares in their company. This is a form of leverage, corporations and companies are in effect using the money of the general public to raise money to expand the business. In this instance, for buying a share in the company a dividend is paid by the company for each share the person owns. When a bank or financial institution lends money to the business or indeed an individual they usually charge interest on the money they are lending.

Providing that lending is responsible, with a business it is a healthy way of growing a business and means a company is usually able to retain some of the profits within the business. As with all forms of borrowing irresponsible use of borrowed funds is fool hardy and should not be done. Pay day loan companies in recent years have become well established as an alternative source to lend money to the public at large but more recently have established themselves as an alternative to the business community.

Short term business finance has become a popular choice for businesses wanting to lever their financial options and expand their businesses by using very short term finance options. The pay day loan is a great way of testing the water for a business perhaps before moving onto a larger more permanent loan facility. The finance can be used to increase cash flow to pay the bills of the business whilst waiting for customers to pay, or possibility of paying for small pieces of equipment to improve the efficiency of the business.