Leverage OPM (Other People’s Money): Use external funding (loans, investments) to grow your business without draining personal resources. For example, a business may use a bank loan to expand operations without sacrificing ownership equity.
Here are three examples of Leverage OPM (Other People’s Money):
- Venture Capital Investment: A tech startup seeks funding from venture capitalists to scale its operations and develop new products. Instead of using the founders’ personal savings, the company receives external investment, allowing it to grow quickly while preserving the founders’ personal financial stability.
- Franchise Expansion: A restaurant chain offers franchise opportunities, allowing entrepreneurs to open new locations using their own capital. The original business expands without spending its own money, benefiting from franchise fees and royalties while leveraging franchisees’ investment.
- Real Estate Development: A property developer uses bank loans and investor funding to finance the construction of a new commercial building. By using borrowed money and investment capital, the developer keeps their own capital free for other projects while still benefiting from the profits of the completed development.
