The rest of the world is constantly comparing their investment price performance with the S&P 500, friends, family and money managers. If you’re thinking like a real business owner, however, you don’t really care much about what everyone else says your company is worth. All you care about is that it remain a profitable business and generate cash for you.
Let’s say you own a private company called “Larry’s Lemonade”. Your business is simple: it makes and bottles lemonade to be sold at local restaurants and grocery stores. In your hometown, Larry’s Lemonade has become iconic. Your signature ingredients and highest commitment to quality have given your lemonade a real competitive advantage compared to other lemonade brands.
Now let’s say a friend of yours wants to buy Larry’s Lemonade from you. Every day, he comes by your office and gives you a new price. Some days, the price is really low. Other days, the price is really high. The only thing you know is that your friend’s price will not be the same today as it was yesterday.
If you are the owner of this business, would you ever sell to your friend? Continue reading