21 January 2011

The Importance Of Leverage In Business

21 January 2011
In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives ( Derivative, finance, a contract whose value is derived from that of other quantities). A public corporation may leverage its equity by borrowing money. The more it borrows, the less equity capital it needs, so any profits or losses are shared among a smaller base and are proportionately larger as a result. A business entity can leverage its revenue by buying fixed assets. This will increase the proportion of fixed, as opposed to variable, costs, meaning that a change in revenue will result in a larger change in operating income. Hedge funds often leverage their assets by using derivatives. A fund might get any gains or losses on $20 million worth of crude oil by posting $1 million of cash as margin. Leverage is essential for the medium to long term growth of any organization. That old saying “Never put all of your eggs in one basket” has never been more appropriate than in today’s business environment. What this means to a business is that it is simply not enough to just operate with your core business and it is important to explore other avenues of related business or develop other products in order to derive income as well as good will. Google leverages various applications such as Google maps, Google Chrome, Adwords, Adsence, Google earth and Android to name a few of the many technologies to keep it’s search engine relevant and ahead of the curve.

Many small businesses today are trying to exist on one core product or service. The name of the game today however is “What else can your company do for me?” this is essential for the growth of small and medium sized companies in a tight market. For example let’s just say that you are a local paint store and you have been operating in your local community for the past 30 years but you notice that your community is changing and there are allot of condominiums being built and big box stores coming in, a good move would be to develop an online store so that customers can order your products online which opens your business up to thousands of potential customers online and to perhaps even start to offer painting services to your customers in order to create additional revenue for your business in a changing business environment.

Here at Nexonta Technologies Inc we show customers how to leverage the power of the internet to help grow their business. Online marketing is a leverage platform that can open your business up to many different areas of business opportunity. For example; let’s just say that your company does real estate with a well planned out online marketing campaign you would be able to position your ads on Google under various different search and relevant terms in order for home buyers finding your business, home sellers finding you, renters finding you, or even someone who wants to lease a property.

Here at Nexonta Technologies Inc we feel that it is more important to brand your business as well as network than it is to do just SEO. the future of online advertising is based in social networking meaning “the people have the power” to decide who they want to do business with. As this trend grows we expect to see allot of new companies who have run their business with integrity and transparency jumping to the top of the fold. Social media marketing is the new way of branding and allot of this is as a result of the internet. Over the next few years as businesses and customers become more internet savvy( they have no choice) we will see a rise in the number of companies advertising online. Once online there are limitless possibilities as to how you can grow and leverage your business. Keep in mind that this is not a quick fix and it takes allot of time and a well laid plan in order to gain the results that your company is looking for. “Every single journey starts with one single step” Remember it is a new year and time to let go of all of the old unwanted dysfunction of the past year and start to grow your business with real companies and customers looking to move ahead in a healthy and profitable way. “Try to stop fishing in troubled waters”
Nexonta Technologies Inc