Capital
Revision as of 07:57, 25 August 2020 by Dirkjan (talk | contribs) (Created page with "In The Personal MBA ''capital'' is the purchase of an ownership stake in a business. If you have resources to allocate, you can provide capital to busines...")
In The Personal MBA capital is the purchase of an ownership stake in a business. If you have resources to allocate, you can provide capital to business owners to help them expand their business. It is one of the Twelve standard Forms of Value (Form of Value #11 of 12).
Key Points:
- Capital is the purchase of an ownership stake in a business. If you have resources to allocate, you can provide capital to business owners to help them expand their business.
- To provide capital you must:
- Have available resources to invest.
- Find a promising business in which you’d like to invest.
- Estimate the business’ worth, its future growth, and the possibility of negative scenarios that would cause the loss of your capital.
- Negotiate the amount of ownership to receive in exchange for the capital.
- By taking on investors, business owners can gather enough funds to expand quickly.
- By acquiring a certain percentage of the business, investors benefit from its activities without active involvement. Investors hope to receive a higher rate of return than other methods, like leaving the money in the bank.
Questions for Consideration:
- Does delivering value via offering insurance make sense for your business idea?
- If so, what do you need to plan for to make it successful?
