How To Make $10k/mo+ By Buying A Business #TheOnePercent

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Hey. Here on the show and inside our community, which is called the 1%, we make a point to highlight a business that even, even if you're just starting out, you can use and copy to get to at least $10,000 a month and go full time. And this month we've talking about buying businesses. I think this is the most overlooked opportunity even if you're just starting out. Now, if you're a full time entrepreneur already, you should absolutely be looking at buying businesses. But if you're just starting out, I want you to at least consider this as your ticket to becoming a capitalist. So today we're going all I'm talking about how you can buy a business even if you don't have a dime to your name, doesn't take any money. We'll talk all about it. So grab a seat, let's have some fun. Hello, my friends. I'm so excited to tell you that my first book, 12 months to 1 million is available for pre order on Amazon.com and it comes out on May 5th. This is the entrepreneur's field guide to hitting seven figures in a year or less. I've proven it only a few hundred times, so if I've ever done anything that helped you move forward in an area of your life, it would mean the world to me if you went over to Amazon.com and pre ordered. A copy of 12 months to 1 million comes out May 5th. It's the thing I'm most proud of maybe ever in my career and a lot of podcast guests and students are featured in it. I hope to feature you in the second edition a decade or so from now, but for now, go over to Amazon.com and pre order. 12 months to 1 million. It would mean the world. Thank you. All right, so before we jump in, quick story. This company right here, the thing I'm usually drinking because my neurotic brain needs something to do so that I'm not doing this the whole time. I'm not looking like Beto o' Rourke on stage. You do have a lot of hand movement. Yeah, I am who I am. This company right here, Zevia, was not started by the person who owns it right now. About 10 years ago, a nice little white boy by the name of Patty Spence. Actually, I just assumed that he's white. Is that, is that not okay? Whiteness confirmed. Anyway, Patty Spence, whatever race or ethnicity he is we looked it up. Super White acquired Zevia and reformulated the actual way that the product is made, and the business really took off. The interesting thing about that is Patty Spence didn't come up with the idea. He didn't prove the concept. He instead saw an opportunity. And he said, I like that. I want to do something with that. I get a lot of questions from investors or entrepreneurs who have like $10,000 or sometimes $20,000 asking, what should I do with this money in order to generate passive income? And we could have a long conversation about the ways that I invest for passive income. In fact, we've done a whole lot of content around that here on the YouTube channel. But instead of answering the question of how do you use 10 or $20,000 as your lump sum to try and generate passive income, I'd like you to consider instead using.

Using your skill set to go acquire a business that makes the type of passive income that you really want. You see, if you've got a small amount of capital when you're starting, you have a couple options. You can either start something from scratch, which is great. That's really what I have done as an entrepreneur. And it's what most people think of when they talk about entrepreneurs. People who are starting something from scratch, bringing it to the marketplace, working like mad in order to make that successful, and taking on all of the risk of that succeeding or failing. That's great. I believe in those people. I am one of those people. But there's another way, too. You can also go look where the ideas are and simply acquire them, even if you don't have a lot of money. We hold our yearly event called the Capitalism Conference, and we had a panel that was about buying businesses. Because I had my eyes opened a few years ago when I saw that a lot of the real money was being made by people who were waiting for the opportunity, acquiring it, and then growing the business. And they got paid along the way. They had immediate cash flow from day one, and they didn't have to put up any of the money or the risk. And here's my favorite clip from that panel at the Capitalism Conference. Putting anything in to try and have upside is risk. And when you have 100k or less to invest, a conservative return isn't as sexy. Right? So. So since we're talking about risk tolerance, there's a couple questions in the group about, well, with a smaller pot, shouldn't you just roll the dice on something and hope that there's a lot more upside? Because the conservative route isn't as enjoyable or as sexy. Ace, you're grinning from ear to ear.

So I'm a big believer that I think it's a combination. When you've got a small pot, you've got to invest more time. You know, in those early days of me doing deals, it was, I've got to find an amazing deal because I barely have any money. So I've got to do a ton more work. It may take more time, more effort. Today I've got more cash, and so it's more important for me to get that cash to work as quickly as possible. And I don't have as much time, so I can't put that time into find the deal. So whatever the space is that you're in, I think that putting that time in is important. And then something that was alluded to earlier.

You know, and this is my thought on savings as well. I think the initial goal should be whatever expense you have, trying to go and buy cash flow first and then have that asset pay for your expenses. So that is a little bit of a different concept. I don't really believe in savings. I'm more about I don't want to pay any expense. I want to go and find the cash flow that can pay for that expense and then buy that cash flow.

So you're saying using the cash to buy assets and living off the return and using your time to generate more of the seed capital to buy more investments. Is that what you're saying?

Exactly.

Now, in a second, I'm going to introduce you to a friend of mine here in Texas. But before that, I want you to see that you can actually start doing this on a really small basis if you feel some tenseness or some hesitation around the idea of buying a business. In fact, early in my career, this is back in like 2013, I used to buy and sell a lot of websites because I made my first money. I actually made my first hundred thousand dollars as an entrepreneur from my college dorm room building websites and selling advertising on those websites. Now, when I built all of that, I had this thought of, how can I get as many of these as possible so I can have a portfolio of passive income that just sends money into my bank account and me not have to build the whole thing. And so what I started doing was buying websites that followed the same strategy that I had been doing while I was grinding away, you know, to the wee hours of the morning, building these passive income websites. So I started browsing marketplaces of websites that I could buy for a thousand dollars for $5,000 for $500. In fact, check this out. One of my best deals was I bought a business that had 50,000 customers that ranked in Google that sold a product and I bought the whole thing for six or eight hundred dollars.

It was less than $1,000. And so that money came back like this. And later I flipped the business, you know, for a pretty nice payday. So you don't have to start, you don't have to do this on a big scale. You can start really, really small by buying websites, which are businesses. And one of my friends has a big portfolio of websites. And he explains one why that's his focus in building businesses. Because websites are tiny businesses, whether you build them or you buy them. And so I want you to hear how he describes his approach.

So what is a revenue generating website? If you have ever opened a site and it's been around for more than say 12 months, the statistical chances, there's 99% chance there's some form of an ad mechanism. Whether you click on them or not, that site owner is going to get paid. Current rates, about $1.50 per thousand page views. Whether you click on that ad or not, that website is going to receive some cash at the end of the month. Again, whether you click on it or not is a passive revenue stream. So websites make some money. So here's some quick examples. Ebay bought rent.com for actually a half a billion in cash at 32 times earnings. Intuit, which owns QuickBooks, paid this kid 172,170 million. It had never made a dollar. This kid makes a million a month. Two employees in his mom's basement. Yahoo bought Tumblr for 1.2 billion. This year, Unilever bought Dollar Shave Club for 1.1 billion, 34 times earnings. And LinkedIn bought Lynda.com 1.4 billion for 42 times earnings. So here's the question. This is what floored me nine years ago when I started poking at this stuff. Why would Unilever pay anything more than three times earnings for any kind of business? The average business sells for 3.3 times earnings, 3.3 times EBITDA. Well, the answer is this. Think about this for a second. Unilever has 52 main product lines and 48 of the 52 of those product lines are purchased by the exact same customer that buys a dollar. Shave Club. You guys follow that. So Unilever, who now owns the largest concentration of males that shave, they own the largest concentration in the world and they own the audience. They will never have to spend a dollar advertising to those people again for their 52 other products.

Ads are just one way of making money from a website or a business. There's lots of ways to make money from a business. So if you know what to look for, if you know what types of things make money within a business, you can look for those underpriced opportunities, acquire the business, get it, making more income, and then you can either sit on that and go buy more, or you can sell it at a later date. Now I want to go into some actual tactical pieces of how you can start doing this. Okay, so now I want to introduce you to a friend of mine here in Austin. His name is Shaquille. And I follow first met Shaquille because he reached out to me because he listened to the capitalism.com podcast. And so when I moved to Texas, he reached out, we had lunch, and we became friends. So he had really benefited from listening to a bunch of our podcasts@capitalism.com and he had used that knowledge in order to educate him on what types of businesses to buy. Now, this is really interesting. In the clip you're about to see, Shaquille talks about the fact that he started a business at one point and he said, man, how do I skip this part? How do I cut out all of the coming up with the idea and the. The late nights, grinding and hustling. How can I just completely get rid of that and still have money? And I would like to be paid from day one.

So I'm Shaquille. I started my first company in 2014. And you know, just like all you guys, there's a lot of sweat equity that goes into it. It's a lot of time. You have to build your story, you have to build the experience. You have to get suppliers, products. You have to test a bunch of things out. And what I realized is it took a lot of time to really do that. So I thought, how do I hack that system and buy a business in a box? So in 2014 or 15, I bought my first business.

Through actually Quiet Light brokerage and made my money back in three months. And the way I did it was I always look for a good opportunity to buy. There's a lot of sellers out there that are not utilizing digital marketing. Their email list, Amazon, for example. So in the last three years, I've bought over a dozen businesses. The last one profit include close to a million dollars. So I'm just, you know, I buy any product, any niche, as long as. As long as it's making good money.

Shaquille, tell me why you buy instead of build.

For me, it's saving time. As, as you guys have heard, all the presenters, it's, it's, how do you build a brand? How do you build a story? I want to build. Buy that story. I want to buy that brand is what I'm trying to do.

You're buying those SOPs, the IP, the failed strategies, what's worked. I want to use that and really propel the company. Going from a 0 to $100,000 in revenue takes a lot of time, but to go from the 100,000 to $500,000, it gets a little easier. And that's where I come in and I automate. I build processes. I'm not afraid to spend on digital marketing. But yeah, the whole point is it's really just to make my money back and have a high ROI on the time I'm putting in.

I love how he says there that he'll buy anything that makes a lot of money. What he's really saying there is he buys businesses that sell on Amazon. He buys content sites, he buys e commerce websites, he buys lots of different businesses. He doesn't have to be an expert at any one thing. He doesn't have to have a specialty at a certain type of business. He simply looks at the numbers and buys those. Now, he obviously wouldn't buy a business that conflicted with another one or took his attention away from another one, but he's building a portfolio of assets that make monthly income. And so he gets to play. He gets to come up with ideas that he wants to test in the business. He gets to take over businesses that are already making passive income. That's really empowering for a lot of people who are saying, how do I get started? Well, you might not have to start anything at all. You could completely cut that piece out, which is what Shaquille did. Now, at this point, the question always comes up, okay, well, how the heck am I going to get the money to buy a business? Because if it's making money, I'm going to have to pay for that. Well, good news. There's a lot of different ways to acquire a business without putting up any of your own cash. Sometimes you might choose to put up your own cash, especially if you're starting with a really small business and buying something that for a few thousand dollars. But if you're going after one of those bigger deals, something that's making $10,000 a month, then you might want to consider other forms of acquiring that business without putting your life savings at risk and without putting your future at risk. There's a bunch of different ways to do this, but Shaquille shared some of his favorites in this clip. Shaquille, you wanted to comment on this? You want to come on. On funding the scale?

Yeah. So I am not backed by VC or anything. Everything that I buy is through leverage or my own savings. So besides debt, I mean a lot, what's really popular right now is SBA loans. So, and that's the number one reason why I like to buy cash flow businesses is because you get financing on it. So with the SBA loan, you could put down as little as 10%. So on a million dollar loan or a million dollar purchase, you put down $100,000, $900,000 loan over 10 years. But if you look at the calculations of that on a business that you buy for a million bucks, it should be making $300,000. So you're able to make your down payment back fairly quickly within the 12 months.

And have you ever had the fear of what if something tanks?

No, not really. I really try to buy the right opportunity. It's funny, I joke with my friends that some of them say that they make six figures per month. I say I carry six figures in debt.

I am not really risk averse. I'm not really scared of taking on leverage, but it's really buying the right opportunity. I think we're all lucky to be living in the day and age we are right now where financing is super cheap. You could get financing from anywhere from 5 to 7%. And usually for a small business, they're going for a 3x multiple or even lower. And that's a 33% return on your money. Borrowing at 5%, getting a 33% return on your money. It's a great time to be buying something right now.

So I have a little bit of an exercise that might be fun for you. Think about the life that you want to live and then think about how much that might cost in order for you to live it. For a lot of people, especially when you're starting out, $10,000 a month is the number that comes up pretty often. So just imagine that you could live your ideal life for $10,000 a month. And then instead of saying, okay, how do I make $10,000 a month? What if you simply ask the question, what businesses already make $10,000 a month that I can go acquire? And when you get practiced at this, you can see a business that is making $10,000 a month and immediately know that it could actually be making $30,000 a month. And if you start to play with this idea knowing that you don't have to take a risk doing it, you don't have to put up your own money doing it. You don't have to spend, spend your whole life savings. It creates more flexibility in the way that you make that $10,000 a month. That's why this is so important for people to understand. It doesn't have to be you late at night building something. You can simply look for the opportunities and acquire them. If you'd like some help, we have a community called the 1%. And we have a lesson inside of there that is all about buying businesses with myself and with Shakil. And inside you'll discover how to find opportunities, how to make sure they're the right ones, how to fund them without risking your future, and how you can make this your primary focus in business. We'll link to that in the description. Or if this approach isn't your favorite approach, every month we do a new feature on a different way that you can make $10,000 a month or more here on the channel. So make sure you're subscribed. So you see all the goodness here at Capitalism tv. Hey, I believe that once you're freed up financially, you can pursue whatever it is that you want. And the fastest way to do that is to just take over the income stream that somebody else has built. And this is one of the ways that you could do that. Hey, if you like this episode, please follow us on social media. I'm Ryandaniel Moran on Instagram or apitalism.com for all our business related stuff and make sure you subscribe to the channel and we'll see you on the next episode. Thanks for watching.