Equity is a concept that is very often misunderstood. It’s a term that refers to someone, usually a business, that is given ownership of a property or a company and has a right to use that property or company as they see fit. As long as it is in their best interest to, the company or the property owner can’t just say “no”.
Equity, in the simplest sense, is the benefit that someone else receives from their ownership of a business. An owner can choose to rent a car out to someone for $8 a day, or they can provide a business with a portion of their income, or they can pay an employee for their work.
Equity is a very real concept. In fact, it’s the basis on which many successful businesses are built. In general, those who have more equity get a bigger piece of the pie. But the fact is that many companies make money through debt, which is when the owner of a business borrows money to pay for a certain amount of work. If the debt is repaid, the owner gets the value of the company, plus the interest rate for that debt.
So, for instance, here’s what happens with a clothing company like Zappos: The owner of the company makes a big profit through selling merchandise. He makes a bunch of loans so that’s what’s left to pay for the product. That’s fair enough, but then he goes to the bank and says, “Hey, I need to build more equity, because I’ve made so much money through selling this merchandise.
Thats what this website is all about. Everyone who visits equitycontribution.com is looking for an opportunity to contribute a certain amount of equity to the owner of their business. It usually works pretty well for those who can put in a little bit of extra money and then call it in when their business is making real money. But for everyone else, there are no guarantees.
You can contribute a lot of equity by selling your product, but the more equity you have the more likely you are to fail. In the past, the best you could do was buy into a business and hope for the best. The worst you could do was buy into a business and hope for the worst. Both are pretty much worthless strategies.
For our money, the best we can do is sell equity to investors and hope for the best. The best we can do is sell equity and hope for the worst. Both are pretty much worthless strategies.
We’ve long had the advice to sell equity and hope for the best. Some of the most successful investors in our lifetimes have done it. Even Warren Buffett has. But the way you do it matters. The way you do it is by selling equity to people with cash that you can’t get back. Investors with cash you can’t get back are one of the best ways to make money since you’re not using it to fund your business.
In our case, selling equity to someone who already has equity is pretty much worthless. We don’t want to sell our equity to someone who already has equity. But since we already have equity, we can’t just give it to someone who already has equity. Also, you can’t just sell equity to someone who already knows the value of your equity.
In our case, we sold our equity to a guy who already knew the value of his equity. But the value of his equity isnt that high so we still cant give it to him. The reason is that if someone is really a good friend you dont give this person something for free, you want to see them use your money to further their own business.