Business Models

 

There are only two basic types of business: Corn Framing and Apple Farming.

 

Corn Farming (non-equity businesses): Every spring you look out at your acreage. What do you see?   Barren earth! Every year you have to recreate at least 95% of the same work to earn a living. Every day you do not “go to work” you lose money.

Some examples of non-equity businesses: Contractor, restaurant, accountant, lawyer, printer, doctor.

 

Apple Farming (equity businesses): Every spring you look out at your acreage. What do you see?  Trees with blossoms! Every year you only have to prune and fertilize the existing trees. If you miss a day of work here and there, no big deal.

Some examples of equity businesses: Publishing, author, income property investing.

 

Plan for the Future

Equity businesses typically sell for 7 to 8 times annual net + assets – liabilities.

Non-equity businesses typically sell for 1 to 3 times annual net + assets – liabilities.

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