How to Buy a Business With No Money in 2024

I'm going to tell you guys the hands down smartest way I've ever seen to get to five figures in monthly income. And it is the best way to hit your first $10,000 a month, especially in 2023. According to me, it has the lowest failure rate it allows for income on day one. And it's how people like Warren Buffett made his millions. I know it's not the stock market. It is how the largest percentage of people on the Forbes 500 list made their money. And yet it is the only strategy that you and I can do that. They also do believe me. They aren't doing Shopify stores or Amazon, FBA or ad agencies. No, they're not for you. It all starts with two words that I made sort of famous. Boring businesses. Boring businesses. Boring businesses. Boring businesses. So your first 10,000 in monthly income or your next million can come from one thing. Buying people's businesses and using other people's money to pay for it. What if I told you right now that not only can you do this, but owners need you to do it? There are too many businesses for sale and not enough buyers. It's not my opinion, it's just math. So by the end of this video, you are going to know how to completely replace your W2 income by buying a business. You're going to learn how you could finance a business using other people's money in order to buy a profitable business. You're going to learn the four different ways that we cash flow and buy businesses. And there's no better time to do this. Why? 75 million baby boomers, 10,000 retiring a day. We are amidst these waves. Harvard did a case study of who earns more post college consultants, bankers, etc. Or those who buy small businesses. Guess who wins? Sorry, Harvard. It's going to be those who acquire businesses. Entrepreneurs win by a long shot. How long of a shot? This long of a shot. Also, people who own small businesses typically have a higher net worth. 91% of all people with a net worth above 5 million bucks own their own small business. The next reason is the average small business is profitable and has been for more than five years. In fact, there's a famous study called the Lindy effect, which basically means that the longer something's been in existence, the the more likely it is to continue to be in existence. Except obviously perishable goods. So owning a small business that's been around for 10 years is actually less risk than that startup you're thinking about starting right now that you're Gonna blow a bunch of money on, you're gonna spend a bunch of time on, and you're gonna hope and dream and pray that it becomes the next big thing. That is the next big thing. That actually is very unlikely to happen. But there are four things that stop people from achieving all of that. The first reason is they don't know about this opportunity. Why? Because Wall street, kkr, Carlisle, they don't want you guys to know about it. They want to buy all the businesses instead of have little guys like you and I do it. Two is people don't know how to find businesses to buy. They don't know that all around them are actually small businesses waiting to be bought. But nobody thinks about it. You have to learn to reframe your mind. Three, they don't know how to buy a business. They don't know the actual process from 1 to 10 to acquisition that I teach, that I built from my 15 + and private equity. It's not complicated, but it is work. But the number one reason why people actually will not buy a business is this last one. It's one word that stops everyone else and triggers most people and it's money. So how do you buy a business when you have little money? I don't have any money. Let me show you exactly how I did it. I just bought this Internet business called approachment.com for $0 down. That will do $300,000 this year. It was doing about 60 when we bought it. We bought it for 60k over multiple years. I bough this laundromat for $100,000. That cash flows $67,000 a year for 0 down. But it's not just me. Hannah Ingram publicly talks about a car wash she bought that makes 140k a year. She did it when she was like 22 for $0 down. And then Johnny, who's an absolute stud, he's in his 20s, he didn't finish college and he bought a biz that makes $250,000 a year. That's top line revenue. I don't remember what the profit is, but he bought it for a couple thousand dollars. And I could go on and on. So let's go where most people won't, but you will because you're here. There's four main ways to cash. Second, bank or SBA loan. Third, finance through seller. That's called seller financing. And fourth, outside capital raise. So let's break them down. Cash. You use all your own money to buy a business. Pretty straightforward. You can do that if you're rich cons, you're out the money. You can't use it anywhere else. You have all the risk. Couple pros. Maybe you get a better deal. Probably just like with real estate, and you get it done fast. But this is my least favorite way to buy most businesses. Second is the SBA loan. This is the government giving you free money. The government will give you up to 90% of the purchase price of a business to buy it. Like, pause on that for a second. The government will pay you to buy a business. Yes, they will. The cons are it's debt, which means you're on the hook if the business fails. Well, it's the US Government love. More risk, interest rate involved, very structured, less flexibility. And getting a loan from a bank is like a colonoscopy. Can I say that on YouTube? It's annoying. But the pros are it's like free money, basically a straightforward process. Lots of people help you in the SBA, in the actual government organization. Still my second least favorite way. I hate working with 90% of banks. I mean, don't. Don't you? Also I find that sometimes you lose the deal because the SBA takes too long. Now, third way outside capital. You go ask friends and rich people to give you some cash. The cons are it's hard to do at first. Most people don't know how to. And how rich are your friends? That's the constraints. Pros are less risk. You're not the only one on the hook as you are with debt. Faster to close. And potentially you get a better deal. Also because you're bringing cash to the table, even though it's other people's cash. Now this one's actually my second third. I can't decide least favorite because I'm selfish with good deals. I hate giving away equity. That's a whole different subject we can get into. It's kind of technical. If you guys want to go deeper, hit me in the comments and say, I want to understand why equity is more expensive than debt. I'll tell you my favorite, my favorite two magical words. Seller financing. This is where the seller pays you through future profits of the business to buy his business like a loan. But the seller is the bank. This happens for 60% of all small businesses that are bought, meaning super common. Now, cons can take longer to do to negotiate it. Some sellers won't do it for sure and you have to know about it. But you're here, so you got that part. Now the pros is you need way less cash. In fact, sometimes Zero cash. There's less risk on you. The seller gets great tax benefits, you get a ridiculous deal, and you make up any terms, unlike with a bank. Pause for a second there. People will tell you this is not possible. That's because they don't know what they're talking about. You don't know what you're talking about. People love to tell me on Twitter why these deals won't work. They've probably never done a deal. It's as common as a mortgage for a house. Not going to work every time, but it will work over time if you're saying you're looking to grow your bank account and not deplete it by using cash upfront. So I love doing zero cash deals all day long. In fact, in private equity, my old world, we call this lbos Leveraged Buyouts. It's a fancy word for saying we have banks that pay for us to do deals. But then people say to me, okay, if it's so great for you, it's got to suck for the seller, right? Not the case. Extra profit from interest, meaning they get their purchase price, plus they get like a little check in the mail from you every month or quarter. It's just the interest costs faster than loan financing. Taxes from the sale are spread out because it's annuity. They don't get a lump sum. They agree to seller financing, which can mean the difference between actually even getting their business sold or not. We already know this. Most small businesses will not sell. Crazy statistic is that most small businesses that get listed in the US Will never sell. They'll close. So why are so many business owners out here trying to sell the five Ds? Divorce, departure, disability, dissolution, death. Then you can guess what most of those are. They're tired, they're sick, they're ready to leave, they've had some sort of legal event. They need to sell, and you are their answer. So let's go through an actual deal in seller financing so I can show you how this works live. Okay, revenue, you can see here, $332,000 and we've got the profit of $112,000. We bought this business for 2x the purchase price, which means $224,000 as the cost. Now, in this one, they originally wanted a 10% down or $22,000 down to pay for the business. And the rest of it they would finance. The seller would give us $204,000 to buy this business. That means under these terms, we would make a monthly profit of $9333. And if you add the interest payment that we would have to make for the seller financing loan of 212 bucks a month, we've been making about $9,121 a month profit in our pocket, or about $109,000 a year. Now that cash on cash return number and cash on cash return really just means with the money you put down, aka $22,000, how much money do you make on it? But in this instance, let's say we didn't have the $22,000 down like the person who actually bought this business did not. Instead of taking the offer of 224, he said, what if I pay you 245, I increase the price of the business. But I want $0 down. You finance the whole business for me, I'll pay you a little bit of a premium for that. And I'm going to take the whole business. Beautiful way to negotiate seller financing where you put $0 down to acquire a business that's going to make you $100,000 a year. And this is just one deal. Look at this next deal. I won't go through every single section of it, but probably take a Screenshot. This is $1.5 million deal that netted us $35,742 a month. This is a real deal we did, or $428,000. This actually is a plumbing company. So that means we make 188% cash on cash return for this deal. And look at that. The seller finances the business. The seller pays for me to buy this business. This is not only possible, it happens every single day. And now you know how to do it. Next up, let's teach you how to negotiate it. Alright, so the real key to seller financing is this one word negotiation. It's trying to say, hey, this is Samuel. Samuel, I want to buy your business. But instead of me giving you, I just threw a bunch of cash at him. A bunch of money. I want Samuel to give me the money to buy his business. How do we get that to happen? It's pretty straightforward. If I was to have this conversation, it would go something like this. I'd say to the seller, you've already been talking about buying your business and I think you have a business that could really fit in with what we do. But I just want to make sure we're on the same page for something. Most businesses are bought and sold with something called seller financing. I'm sure you already knew that. That's what turns me on about you. And so because of that, to get this deal done quickly and at the best terms possible, how about we do this deal with seller financing, which basically means you're going to use your profits of the business for me to buy it. I'm going to give you an annuity over the course of the life of this deal. So for the next three to five years, you are going to get an annuity, a payment every month or a payment every quarter in order for me to take over the day to day operations of running your business every single day. And because of that, we don't have to involve a bunch of banks or the government to see this deal not go through. I just wanted to make sure we both understood we were on the same page with using seller financing. And what you're going to find is most business owners are going to go, oh, okay, yeah, I'm sure we can figure something out. And right there, my friends, you took the first step in learning how to negotiate seller financing. What do you need to do now? Well, the truth of it is, you've already learned the opportunity in buying small businesses. You've seen this 10 steps it takes to buy small businesses, and now you're starting to learn how to negotiate seller financing and using other people's money to buy profitable businesses. Think about this for a second. Maybe you are going to be the solution for not one more Starbucks on a corner, but instead your coffee shop on the corner. Oh, and if you're selling a business I'm always buying, I'll take it.