Ted finds the perfect business to take advantage of his unique passion and abilities. It is the business of his dreams.
And it is for sale.
He meets with the owners, negotiates a great price, and heads to the bank to get the money. But no bank will finance him.
Ted is the second person to be refused financing to buy the business. Before him, the business’s general manager had also failed.
The owners are eager to sell, but their potential buyers have more smarts and desire than they do money.
How do you make it possible for those who are poor, driven, and smart to become owners?
Fortunately for Ted, he has an Uncle Theo who is older and wiser in such things. Uncle Theo is also driven and smart. But unlike Ted, he is not poor.
Ted’s Uncle Theo agrees to buy the business and comes up with a plan for Ted to be a 50/50 owner by bringing “sweat equity” to the table.
“Sweat equity” refers to the labor, effort, or expertise given to a business, instead of monetary investment. It refers to the value added through personal effort rather than financial capital. It acknowledges personal labor and expertise can be just as valuable as financial investment.
It allows individuals to benefit from the value they help create.
Sweat equity can take various forms, including:
Working long hours and taking on multiple roles
Contributing specialized knowledge, experience, or professional skills that directly benefit the business
Sharing or developing intellectual property such as patents, trademarks, or copyrighted materials that enhance the value of the business
Leveraging personal networks, relationships, and connections to attract customers, partners, or investors to the venture
Contributing to the development and growth of the brand, reputation, or customer base through marketing, public relations, or community building efforts
Ted needs the general manager’s skill and expertise to make the business work. Ted and his Uncle Theo make a deal with the general manager to give “sweat equity” until the business pays the original investment back. After that, the GM can buy up to 20% of the business at the original price of the business. It is an outstanding possibility. The prospect of being an owner in the business is a great incentive for the general manager to make the business profitable.
In a few years, Uncle Theo sells his part of the business to Ted and his general manager. It is a sweetheart deal for everyone involved. And the two smart and driven owners are no longer poor!
When potential owners are poor, driven, and smart allowing them to bring sweat equity to the table can give them new opportunity.
Speaking of opportunity, I have one for you! We are offering six free one hour masterclasses on succession planning, based on the proven Cultivating Impact 6-Step Method for Succession planning. You will learn how to:
Step 1: Recognize Your Impact Tuesday, September 26, 11 a.m.
Step 2: Develop Your Business as Mission Tuesday, October 10, 11 a.m.
Step 3: Build Your Team to Maximize Impact Tuesday, November 14, 11 a.m.
Step 4: Exchange the Baton Tuesday, December 12, 11 a.m.
Step 5: Multiply the Impact Tuesday, January 9, 11 a.m.
Step 6: Finish Well Tuesday, February 13, 11 a.m.
You can reserve your spot in the first class, Tuesday, September 26, 11 a.m. EST now. The masterclasses are free, my gift to you. Space is limited. You can sign up for the first class now here.
I believe in you!
Harry T. Jones
P.S. While you are thinking about it, CLICK HERE to sign up for the first of my six-part masterclass, Tuesday, September 26, 11 a.m. EST, on The Six Steps to Succession Planning.
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