Would Be Entrepreneurs: Pick a High Leverage Business

The point of business is to create value, change the world, and make money to sustain the first two. I've noticed that different businesses offer a different amount of leverage in accomplishing these goals: Leverage being a measure of the results produced for a given amount of effort.

At the low end of the leverage scale is self-employment in a services business. There is only so much of one person that can go around. Examples: dentist, barber, mechanic.

In the middle are services businesses and mass produced goods. They offer leverage through standardization and automation. Examples, management consulting, making watches.

At the high end of the leverage scale is creating software, since it can be instantly reproduced ad infinitum and distributed all over the world for free. Same goes for creating and selling music or movies, or licensing technology or content for royalties.

The thing is: all these businesses require about the same amount of time to create and run (ie 50+ hours per week).

So if you want to create value, change the world and make money, I think it makes sense to consciously choose to create a high leverage business.

Business, StrategyWill Sacks