Restauranteur A and B both have profitable restaurants and $1 million in savings. A invested his profits in stocks. B invested his profits in the building that houses his restaurant. A's resto is bankrupt. B's is on sabbatical. Vertical integration as a de-risker.
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There is a very powerful lesson here. It looks like vertical integration but it's not. The removal of obligations is an ingredient in long-term success. Once you have a profitable business you should seek out your obligations and remove them:
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- Debt - Pensions - Promises to purchase - Leases This is the stuff that kills you.
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Replying to @Molson_Hart
Amen. Most of my obligations are owned by partners in the business.
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