Chapter 41 Chapter 41 The Effect of Leverage——The Technique of Leveraging Leverage to Profit

In business, speculators borrow money (leverage) to invest in stock or commodity markets.They use borrowed money plus original money, so they can buy more stock or sign more contracts, so their profits will be greater. Using borrowed capital to make greater profits and enhance business success is part of many entrepreneurial success stories. From Aristotle Onassis using loan financing to purchase the first cargo ship, to William Zackendorf, a famous New York real estate tycoon, using financial leverage to make them billionaires through countless mortgages . Industries may vary, but the use of financial leverage is continuous and frequent.Speculators pay a small amount of cash to acquire ownership of an asset (such as buying a stock), and then find someone to refinance.The income of speculators, in addition to offsetting the loan interest, still has a surplus, and they still have the right to control the assets.He will benefit again.profit to acquire more new assets.The same game is repeated over and over again.In each case, the successful use of financial leverage benefits far more than can be achieved by simply using their original investment capital.The same principle can be used in the negotiating world.If you use your strengths skillfully, the benefits you get will surprise you.

To be successful, you must understand your own personality and your own strengths and weaknesses.Faithful self-assessment is the key to successful leverage. The key to a faithful self-assessment is a warning that was popular in the Middle Ages: "Having a good life - how to achieve good results in unfavorable and helpless situations, and doing what must be done well is commendable. Good thing.” It means, if you have a certain personality, acknowledge it and use it to your advantage. In order to use your strengths to your advantage, you must first isolate them and determine what they are.

Let's say you're negotiating the purchase of a home.The house you're buying isn't in the best location, and prices already reflect that. But you think you can still make a deal that is more beneficial to you. You know that there are other people interested in the house, but you feel that your position is advantageous. Because you want to buy this house, not as a residence, but as an investment. And those buyers who buy a house as a residence are as interested in the selling price as you are, but they are more interested in other considerations - such as the quality of the house, the floor, the orientation, the structure of the house, the environment of the community, the surrounding environment, and the traffic conditions etc.

In short, they are generally much more critical and deliberate. Based on this point, the speed of your transaction can be greatly increased. You bring into your negotiations a strong argument that you can close quickly, and landlords generally want to close as quickly as possible. However, like the vast majority of homeowners, he has an affection for his home and believes it is worth more than that.The price you offer is less than the highest price he is currently intentionally getting. You tell him you want to meet his requirements, but you calculated the repairs needed to restore the house to good condition, so you offered less than the highest price others offered, and you did a fair thing .Then you quickly end the discussion by telling him that naturally he needs some time to consider your proposal, putting the cost of renovations in the homeowner's mind, and you're making him worry about whether other buyers can offer a better price.

The homeowner is now uncertain about the true value of his home.The result could be that you get a call and the owner accepts your offer. Judo tactics are a type of negotiation technique and the use of leverage.It is using the power of your enemies for your own gain. In short, it means not confronting a powerful opponent to get what you want.Like a seasoned matador, lure the "pit bull" to rush in your direction. But at the moment when the two sides are about to collide, dodge skillfully and take advantage of your opponent's acceleration. If you're negotiating with a yelling, cussing, aggressive opponent, it's easiest to use judo tactics.

These guys, for whatever reason, are always trying to get a fight, and their conversations are aggressive, overly assertive, annoying, like it's a big deal that he's controlling the conversation. The most unwise way to deal with such a person is to adopt the same aggressive tactics as he. The result of this approach is a heightened or backlog of unhappiness, or worse. The best way to handle this situation is to use the opponent's power against himself. Don't be angry, just tell him calmly: "Mr. Smith, I assure you, I am here to do business, not to fight with you. I think I have some important things to do. I also know whether you like it or not." A reputation for wasting time. Why don't we get an agreement first and then, if we want, it's never too late."

Because of your humiliation, you will neutralize your annoying and aggressive opponent, and if he negotiates in good faith, you can negotiate business in peace. Don't forget that many people believe that the way to victory is to make the enemy fearful by adopting a strong posture. In fact the aggressive behavior may just be faking. But no matter what, the way you deal with it is to stand your ground first and express yourself. Remember, no deal is worth losing your self-respect. Using leverage to your advantage is a powerful negotiation technique and, like any powerful tool, must be used with care.

If you use leverage to get yourself a good position, never abuse your advantage.Instead, you have to reach your goals in a comfortable atmosphere and reach an agreement with kindness. For example, you are negotiating the price of a piece of real estate and you know the owner must sell it because of an urgent need. Anyway, if an advantage like this is gained by you, use it well, but don't abuse it. When the opponent feels humiliated and played, the negotiation will not go well. Even if a deal is reached, after signing the contract, your ruthlessness and lack of tact may bring your opponent back to pester you.

Never underestimate or humiliate your opponent, even if you have the upper hand.Be gracious, full of goodwill and sincerity, and don't let your opponent alone bear all the consequences in any transaction. "This old house is really nice, and I wish I had paid more because it's worth more than that. But my budget ends there, and I can't pay more." This statement is not to be compared with much better? "Let's face it! You don't know what to do with this piece of crap. It's going to collapse and it will cost a fortune to fix and put it back up. Now that you've heard my offer, take it or not! "Of course, the first way of speaking is better.

And the difference in handling doesn't cost you a penny more.As the saying goes: "What goes around comes around." There is another issue to be aware of.While everything is negotiable, not every negotiation necessarily leads to a final settlement.Pushing people too far may provoke the opponent to fight back. Remember not to overdo anything.Even a desperate seller may refuse to sell, breaking off negotiations if he feels that his opponent's offer is unreasonably low and that the buyer is hostile and disrespectful. For example, in terms of negotiating with opposing lawyers: most lawyers are very practical, and if they can resolve issues out of court, they usually do so.

But if the amount of money involved is worth their lawsuits, they will surely go to court with legal papers and subpoenas. And a lawyer who collects arrears, his goal is to make the debtor pay back part of the money.He knew that the collection could be helped through the courts, but the process was slow.And in some cases, even after the court judges, it is still necessary to find assets that can be detained and seized. Therefore, he is generally extremely friendly when he is in charge of collecting money.He knew it would be to his advantage if he could get the other party to pay something, even a small amount. However, this does not mean that he will not "entangle" customers who do not cooperate, because after some hard work, if the other party does not cooperate, it is useless for him to continue to reason. If the negotiation breaks down at this time, the subpoena will follow.This is natural. A collection lawyer is also a human being, and if he feels insulted or offended by the other party's bad attitude, he will take stern measures to appeal to the law. Therefore, it is necessary to ease the atmosphere of the negotiation with reason at all times, and not to do everything. Business people often think that most people are reasonable.Usually, this assertion has some validity. However, there are totally unreasonable people in the world.In fact, some people can successfully use their irrationality to their own advantage. In New York, many new homeowners want to convert their homes to look like older homes.That meant repairing the oak doors, fitting oak and cherry kitchen cabinets in the room, and doing other carpentry repairs. The beneficiary of this business was a Jamaican, George, a furniture and cabinet carpenter. A hardwood carpenter by training, he is extremely skilled in making hardwood furniture.Most of the carpenters in the United States can't do this kind of work, they can only lay the floor and do some simple carpentry.Although they also received some such business at the beginning, the roughness of their work was questioned by users.This increased George's competitiveness even more. It was precisely because of George's superb carpentry skills that he took over many businesses by himself, and all deals were made under the unique conditions he set. George's brilliance was not only in his workmanship, but also in his ability to correctly calculate the cost, time and materials required after seeing the work to be done. Each time he asked the user to pay first before he would do the work. Many of the new owners were young lawyers whose arrogance would not have tolerated such a business arrangement.They proposed to pay off the material payment first, and hoped to pay off the rest of the payment only after they were satisfied with the work. This arrangement made George very angry.He said excitedly, "To your liking? How much do you know about carpentry! Dude, no one is stricter than my old George, including you." George went on to say bluntly that he had hundreds of Highly recommended by satisfied customers.All of these customers are paid in advance.So, if you want George to work for you, paying upfront is the condition. It is unbelievable that these budget-minded lawyers couldn't stand George's rhetoric, and they all agreed to this extremely unreasonable request.In the eyes of these young lawyers, compared with George's outstanding skills and good reputation, his unreasonable demands are simply not worth mentioning.After all, George's request caused them far less trouble than hiring a poorly skilled carpenter. Of course, George didn't know he was negotiating, he thought he was just doing the right thing to be fair.At the beginning of his woodworking career, a customer refused to pay him, and George made up his mind that he would not allow this to happen again.Because he has a very special skill here and now, he can use leverage to overcome obstacles. It is indeed an extremely unreasonable demand to pay first and then work. But the carpenter George in the story did it. This is because George knows that he has special carpentry skills superior to others, and he can implement this unreasonable request when he sees the situation of young professional couples pursuing an old-fashioned house style and requiring fine carpentry.He successfully used leverage to overcome the irrationality of the demands being made. The use of leverage is quite powerful in all aspects of negotiation. As a manager, you should carefully weigh the relevant factors of both parties in the negotiation, practice and figure out repeatedly, and become a master negotiator with rich leverage. .