Two weeks ago, we asked you about investing in a local business. A local pizza place/microbrewery is looking for investors to help open a new location. While I’m intrigued, I also know that we must proceed with extreme caution. This is something that the Mrs. and I know almost nothing about. However, we received great responses. Here are some of our favorites.
Dave from New York Budget made a couple really good points that resonated with me:
- …my investment in the business (should) constitute 5% or less of my net worth (unless I was an expert at investing in small businesses)
- …I (should) care about the community that I live in and believe the business will help
If we move forward, our investment will be very small. Dave threw out 5%, but I’m thinking less than 2%.
The Silver Maple Leaf knows his stuff. All of this information was really good, but these 3 points stood out:
- Do I understand the business?
- Does the business possess an attractive intrinsic value and/or durable competitive advantage?
- Does the business have solid management that acts with integrity and honesty?
I like thinking about numbers, but I’d argue that these subjective points are just as important. Maybe even more.
I like the way A Brunette our of Debt thinks:
I feel way happier handing my money to a small business owner – who I know will use it to feed his family, give his kids dance lessons, or music lessons – instead of to a Target cashier, knowing that money helps to fund a $20 million salary to their CEO.
Reader Wayne may have had the most important question of all:
Is free beer involved?
Same goes for reader Silvercreek Farmer.
Anyway, our meeting with the owner is this Saturday. So much to think about. We’ll keep you updated.
Now, on to this week’s question; how do you keep track of your spending? Our challenge for April is to keep track of all spending. So far, we’ve just used a plain old paper notebook. We log any purchases as soon as we get home. This seems a bit archaic though. We both have smartphones, so perhaps there is a better way. Readers?
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