Leverage

From Zanecorpwiki

In physics, leverage means to trade distance for force or vice versa. A pulley that provides two-to-one leverage means you have to pull 2 feet of rope for every foot of travel, but you exert twice the force. Leverage does let you move heavier loads, but there's a tradeoff. When you use to engineer an improvement in one aspect of the equation, another aspect degrades by equal proportion. Through clever engineering, you can still come out ahead, but only if you understand the cost.

Financiers and executives seem to forget this. The usage of leverage in business parlance implies a costless multiplier. This leads to very bad decisions.

When you leverage investments, you can multiply profits only because you're multiplying risk. Leveraging a personal relationship might open doors that would otherwise be closed, but it also makes you beholden and dependent.

Leverage, in-and-of-itself, is a zero-sum operation. It's neither good nor bad. Because business folk tend to focus only on the positive side of the equation, their plans to leverage are almost invariably naive and often ill-advised. Remember, leverage is never free.