In recent years, we’ve witnessed a series of severe problems within the world’s great financial institutions. These led to a dysfunctional credit market, tumbling home and stock prices, a freefall in business activity, bankruptcies, corporate and government debt default and, subsequently, massive government fiscal and monetary intervention. Once-unthinkable levels of stimulus spending will almost certainly result in unwelcome aftereffects, enhancing risk for nearly every business.
Our country, of course, faced far worse trouble in the past. In the last 100 years alone, we’ve seen a dozen or so panics and recessions, two world wars, inflation, 25% unemployment, and many other challenges. Despite those obstacles, the real standard of living rose seven-fold. Predicting winning and losing years in advance, however, is something that no one is able to do. So, to grow your business, in good years and bad, we would emphasize focusing on four primary goals:
- 1. Enhancing the durable competitive advantage of your products and services
- 2. Expanding and nurturing your cadre of exceptional operating managers
- 3. Acquiring and developing new and varied streams of earnings
- 4. Developing a “Rock of Gibraltar”-like financial position, with excess liquidity, modest near-term obligations, dozens of sources of earnings and cash, and very little debt.
We also believe in measuring everything, including what has and has not been done. The goal is to help our clients own businesses that are worth far more than the values carried on the books, whose per-share book value is increasing at over a 20 percent compounded annual rate. If you are purposeful in your planning, execution and corrective action, you’ll end up being a supplier of capital, not a supplicant, in the tough years, taking advantage of opportunities to buy materials, services and even entire businesses at below intrinsic value prices. Let us show you how.
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