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Lesson 08 - IF YOU FAIL SEVENTY PERCENT OF THE TIME – YOU’RE STILL A LEGEND E-mail
Expert Answers - Richard Parker - How to Buy Undervalued Business

 

 

Expert Answer
 

Richard Parker:           We discussed sports and free agents so let's continue to use that analogy if you will. Anybody in professional baseball a hitter who fails 70% of the time, they fail 70% of the time gets into the Hall of Fame. So you take a look at it. One idea that took off, I mean no one wants the idea of failing 70% of the time but if you take a look at all the greatest success stories throughout history from Edison, to Colonel Saunders, to Bill Gates, to whoever it may be. Their path is littered with failures, okay? But the entrepreneur has the ability to dust themselves off, and keep marching on because they're marching towards a goal.

                                    It would have been very easy for your grandfather to pack it in with the grain grinding business collapsed. Or it would have been very easy for him to pack it in when the chicken raising business collapsed. And it would have been infinitely easier for him to pack it all in when the egg business collapsed.

                                    There are stages along the way where anybody could understand that would make sense if you will, for them to pack up and go home once the grain business or the raising chicken or the egg business collapsed. But you know what? He was just of the mindset that, we've just proven another thing that won't work. That's just one more thing on the path to understanding what's going to work."

                                    I guess it's the classic example of when you get lemons make them into lemonade and so just take those eggs and you buy a pasta processing machine and go into that business. Within a short period of time, and yes it may have taken ten years but you start seeing light at the end of the tunnel and the light isn't an oncoming train. The business starts growing and fast forward a little bit and suddenly he sells out to a big corporation and has enough money so that he or his grandson is able to do what he wants to do because of him having enough gumption to dust them self off and keep going. I mean, it's an unbelievable story. I mean that's a classic, classic entrepreneur.

Lance Hood:               Yeah. After all those years of hard work the next company came in and just bought it after it was already making millions.

Richard Parker:           Yeah. And they bought a proven business. They would rather overpay - a big company will rather overpay for something that's proven. And that's why I love buying existing businesses and especially ones that you get at great prices because you build that business and when the time comes to sell you'll sell it to someone who's going to be more than willing to overpay because they're buying a proven entity.

 

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