I’ve got this cool small business going: all
natural juices. Strawberry is my biggest seller. It’s super sweet and delicious! I make and
bottle them in my garage! And I’m selling my juice in two stores in our town now. It’s
going pretty well! But, I realize if I want to make more money, I need to get my juices
in more stores. It turns out, the next-door town has a couple of diners that would love
my stuff! Only problem: my little clunker hand-me-down is barely running. I would never
fit all of those boxes of juice! So there’s this cool used pick-up I’ve got my eye on,
but there’s no way I could afford it. At least, not without the extra money I would get by
expanding into the next town. So, I go to my grandfather. Ask him for some money and
he tells me, he’ll issue me a bond. A what?? It’s an IOU he tells me. A loan. He gives
me the money today, and I have to pay him back later. Plus, a little extra. Extra what?
It’s the interest, he tells me. How much interest? Well, he gives me a choice. Pay some of it
off every month for a year and pay 2% interest or don’t pay at all until year later. Then
pay the entire amount for 3% interest. He shows me that for $2,000 car 3% is only $60.
Wow! Not a bad deal! I’m all ready to get the loan, when my uncle calls me up. Turns
out, he heard what was going on and he offered to buy my pickup for me! Plus give me some
extra seed money to get better packaging for my drinks! Really? You’ll just give me this
money, I ask? He says, yes! In exchange for something called equity in my business. So
whats this equity? Basically, he says he thinks my business is gonna make a ton of money,
so he wants to own part of it. 5% to be exact. So every year I make my money, I would have
to give him 5% of my profits. I don’t make money, I don’t have to give him a dime. Sounds
like kindof a sweet deal if you ask me. So, I take him up on it. And guess what? That
pickup and his extra seed money helped my juice business grow bigger than I ever would’ve
imagined! What’s more, since my uncle is part of the business, he’s been introducing me
to all sorts of new people that can carry our juices. So, I’m paying back my uncle very
well but I’m also making more money than ever. Now that’s sweet.