Yesterday, my older brother, Chiagozie Chiboiwazobiafm Agoawike visited.
We spent time talking about how someone can use leverage to run a simple but very profitable business.
We talked about how you no longer need to ‘do everything, by yourself’.
Just use leverage.
I was sharing with him how the most powerful skill I have now is not my accounting skill.
How the most powerful skill I have now is my marketing skill, especially online.
We discussed endless examples of how with just a great marketing skill, you can build a great business of leverage.
Here’s an example:
Mr. A pays 5million Naira plus plenty-plenty conditions to become a major distributor of Company X.
Mr A will then rent a massive warehouse – rent is 3million per annum.
Mr A will hire about 10 or more employees to run the business.
Mr A will buy like 3 delivery vans and some bikes to run the business.
On each carton of product, Mr A makes about 500 Naira profit (or much less sometimes).
Company X expects Mr A to hit certain targets as a major distributor, so they chase him around with these targets and their conditions.
Ofcourse, Mr A has several types of loans with different banks as a major distributor of Company X.
Monthly sales of Mr A is 300million. Monthly costs (cost of products, salaries, rent, vehicle-running and everything) is 297million. Profit for the month is 3million.
How To Start A Business Using The Leverage Model
Oya come and see Mr B who understands leverage.
Mr B is a young man who has mastered his marketing skills, especially online marketing.
No distributorship license.
No plenty staff.
No crazy targets.
No bank facilities needed.
He just understands leverage and marketing.
He takes pictures of the products and sells online in bulk.
His customers pay directly to Mr A who fulfills the delivery using his vans.
Mr B sells with far more margins. He determines his price as he chooses, but prefers his customers to pay directly to Mr A while he keeps records.
They reconcile at month end.
At month end, Mr A pays Mr B his margins on the total monthly sales.
Here are Mr B’s numbers in month 6.
Total margin paid by Mr A is 4.2million.
Total cost of marketing plus salary for one staff, plus other small-small office running cost – 1.5million.
Profit for Mr B is 2.7million
There are sooooo many ways to make money these days without owning too much tangible backend structure.
I call it the power of leverage, backed with a healthy marketing skill.
Let me drop one more example before I leave.
Imagine a makeup artist/hair stylist (let’s call her Lara) who cuts a deal with a photo studio to do a particular agreed photoshoot session for 30k.
The studio normally does it for 35k. She got a 5k discount because she wants to promote them.
She then goes on to advertise Photoshoot + Makeup + Hair Styling + Dressup advisory = 100k
Imagine that Lara understands marketing and can close 3 deals weekly.
She would be making 300k per week and paying the studio 90k per week.
Monthly, she can make over 1million and her costs of operation would be no more than 150k Naira.
The power of leverage, blended with an amazing marketing skill.
I told my brother that I do not envy the one who has so much knowledge in his brain, but doesn’t understand monetization.
I rather envy the one who understands leverage and is a badass marketer.
For this person can use the structure of other people to make millions with ease.
I know many people who are sitting and praying and waiting for 2million to register and become a distributor of XYZ company.
I know many people who are waiting to buy 10 bikes before they can truly say they are in business.
I know many people who need 10million Naira loan from anywhere, before they can launch out in business.
My word to them today is ‘Think Leverage, Think marketing’.
If your understanding of leverage is good enough, and your skill of marketing is great enough, you will lay on your bed and be pressing phone and make enough money like someone with a massive warehouse and 10 staff.
It was a very exciting gist.
We touched on several examples.
Our biggest takeaway was ‘IF PEOPLE CAN PERSONALLY LEARN TO BE GREAT AT SALES AND MARKETING, THEIR FINANCIAL LIVES WILL BE 90% MUCH EASIER’.
Truth is – They wouldn’t.
So I just celebrate those of us who will.
May you understand the power of leverage.
May you understand the power of being great at marketing.
Author: Chioma Eze