Entrepreneur Beginners Guide
“Be a Master at Leveraging Resources”
People with leverage have dominance over people with less leverage.
—Robert T. Kiyosaki, author, Rich Dad, Poor Dad
When I started my media company, very few prospects wanted to buy advertisements. They saw the tremendous value in my media outlets, but always tried to leverage what they had instead of paying. For example, I approached a Chinese restaurant near my college campus that offered me a semester’s worth of free food in exchange for advertisement. A few blocks -down from the restaurant, there was a shoe store. The owner there promised to give me six pairs of new shoes for each ad I ran for him. I could go on for a long time, listing the things that I was offered instead of hard cash. The perks were great—I was never hungry or barefoot—but they didn’t help me pay for operations. It would have been hard to pay for printing, web hosting, and distribution with a sweet and sour combo and a pair of Fiia.
Frustrated and perplexed I asked my mentor how to actually get money for my products and services. Frankly I never considered the possibility of such a problem. I assumed that everyone would pay me money. The whole idea of bartering or trading was new to me. It seemed unprofessional and somewhat shady. A part of me thought that people were taking advantage of me, hoping that I would take whatever they offered. My mentor had a different perspective.
When I approached my mentor for advice, the most recent re-quest for a trade deal was from a major movie studio. It wanted to place an ad for an upcoming movie in exchange for giving me several movie passes to the premier. This seemed like a terrible deal to me. I complained to my mentor that I had limited advertising space and that I wanted to reserve insertions for paying customers only. My mentor smiled and said, “Kevin, run a small ad for them and take the passes.” He explained how I could use the passes in various ways. I thought one was especially clever. He suggested that give some of the passes to a major radio station in the city. In exchange, the radio station would give away the passes to listeners on the air on my behalf. I would also ask the station to encourage listeners to consider advertising with my company. That way, I could increase my media’s brand presence, establish strong relationships with the station, and reach thousands of potential advertisers. When he explained all of this, I got really excited. I took his advice, and everything worked out just as he said it would. Mier receiving and taking his advice, my perspective changed completely. Suddenly, selling became more fun because I didn’t see myself as a salesman, per se, but as a person who creatively leveraged resources to get more of what I wanted. I learned that many of the smaller or local companies wanted to keep their cash, especially since I was a new vendor. It helped them to offset risk. Larger companies didn’t mind paying the cash. After realizing that, I began to use my local perks to entice the big companies for more advertisements. For instance, instead of taking all six pairs of shoes from my shoe advertiser, I would only take two. The other four pair I would use to secure long-term advertising contracts with Fortune 100 companies. In other words, the people responsible for signing the contracts would receive some nice sneakers for their children as a thank-you.
I have structured so many deals in which I strategically used products and services that companies have offered me instead of money. I have used professional sporting event tickets, tee times, lavish trips, concert tickets, and other things to find my way to a bigger check that justifies my approach. It is probably the most fun and creative part of what I do. Out of this practice, I developed a love of putting together deals, whether it’s a basic trade or a buy-out worth millions of dollars.
This strategy works the other way, too. If you want to conserve your cash, find Ways to leverage what you have to get what you want. For example, I was able to secure a deal with-b:multirnillionaire simply by offering to make a substantial donation to his charity. That check, while significant, was much less than the check I would have had to write in order to secure his involvement in the deal the normal way. This type of creativity pays both ways.
As you begin to implement this strategy, be very careful not to overdo it. Choose only certain companies to engage in this type of arrangement. You must be strategic about every deal and under-stand the motives and desires of all parties involved. A common problem is that once a vendor knows that you are willing to trade or do nontraditional deals, you may be held to that standard or less. Thus, you run the risk of being able to change expectations about types of payment and terms.. Also, influencers in the same circles may share the details of your deal with others who under normal circumstances would pay you.
Finally, entrepreneurs are great at leveraging resources to get what they want. When one competitor shuns the idea of a trade or nontraditional deal, another competitor accepts it and uses it as an advantage. This strategy has worked wonders for me over the years. In fact, I still have pairs of brand-new shoes in my closet that were given to me as part of a deal almost seven years ago. I won’t need a new pair for probably another seven years.