The RICH don’t want you to know this

If you guys don't know how to buy businesses, if you don't know acquisitions, if you don't know deal making, I think you're up. We are at all time low levels for ownership in this country. The big keep getting bigger and the little guy gets hammered. What do you think that does to our society at large? We allow only a few to own. We are putting ourselves, our kids, our future generations in a really difficult place. These are the 10 steps you have to learn. Most people on the Internet just want to entertain you. They want a dancing Barrett up on stage. They want to give you that thing called motivation, which actually is pretty worthless. I'm here to do one thing for you, make you money. We're gonna talk about how to make more of it, we're gonna talk about how the big boys do it, and we're gonna get technical as basically that's what this whole thing is about. And all I ask of each of you is you're gonna have a moment here where, I don't know, some words sound different. Maybe it feels a little bit technical. Maybe there's some tactics here that are getting a little bit deeper than that dancing bear on the Internet we've all gotten used to. And what I want you to do in that moment is pull out your pen and paper and I want you to actually buckle down. Because here's a secret. I realized really early in my career of working in high finance that all of the money is made on the classes we hated in high school. Accounting, all the money made finance, all the money made calculus. Okay, probably not. But everything else besides calculus is where all the money is made. And yet it's the very thing that bores us that we'd rather just Netflix and chill instead of. So we're going to dive into that today and let's see if we can figure out this PowerPoint. Okay, these guys. Anybody know everyone on this screen? Who's this guy? Do you guys know who this is? Yell his name. Carlos. Slim. Nice. My Latino out there is like, of course. Ok, this guy, this guy's the richest guy in the world. Lvmh. Anybody know this guy? Charles Koch. That's exactly right. What about this guy? Ah, yeah, I love it. We got an Indian in the house too. Okay, Richest guy in India. What's funny about this is one, you don't see these people on the Internet. Why? Because they get rich pretty quietly. Two, these people all have one thing in common besides their giant bank accounts. What do you think that is? The men, they're Men. Okay, that's right. They have penises. There's a penis attached to every one of those, I think. Okay. Anything else besides that? Growth through acquisition. They own holding companies. You think Bernard came up with Louis Vuitton? Does this guy look like a fashion icon? No, he bought that thing for pennies on the dollar. Same with Dior and a bunch of the biggest brands in the world. They followed this playbook. And that playbook is what we're going to break down today. It's how a bunch of guys that look like this take your blood, sweat and tears as entrepreneurs and just at the moment where you can no longer tolerate running your business, they buy it from you and they 20x it. That is what we are going to change here. We're going to stop. One thing I see happen to entrepreneurs again and again and again is that you sell at the point of pain for you, which is the point of profit for somebody else. And instead we're going to talk to you about the private equity playbook and growth through acquisitions as opposed to one client at a time. I have this one overarching truth, which if you believe this, you can believe most things I'm going to tell you today, which that is easier to buy profits than it is to build them. It is way easier. Why? At contrarian thinking. I've always had this. This purpose of I don't buy into people's hopes and dreams, AKA venture capital. I buy into facts and realities, AKA private equity. And if you can believe that, then you might be interested in what the rest of this presentation is about. The second truth that these guys know that most of us don't is the exact opposite of all the books that we read early on. The Power of One. The. The one thing, I mean, the richest guys in the world tell us you must focus on one thing, right? Otherwise you won't be successful. Well, do you think the richest guy in the world. Bernard's pretty successful? Yeah. And yet he has a holding company of more than 20 individual companies. It's all about how can you acquire, add, leverage and scale and combine so that the parts are greater when they are summed. That is the goal today. The other thing that people typically get to at this point is they're like, that's awesome, Cody. But I am not Carlos slim. I don't have access to millions of dollars or tens of millions of dollars. And so how am I going to go out there and buy these businesses? How am I going to buy profits? I can acquire a client for basically zero, theoretically, if I go do it door to door. If I go do it by cold calling. But how could I do this at scale if I don't have a ton of money? And the secret word there is really three words and three letters. It's called lbo. Leveraged buyout. Which is a fancy way of saying I'm going to use other people's money to buy some shit for myself and they're going to get a percentage of it, but I am not going to put my skin all the way down on it. And once you realize that there's this word LBO out there that nobody in private equity wants you to know about, and you look at any deal that's done in private equity, you'll realize, oh, wait a second. These guys didn't put a bunch of their own skin on the line. They didn't do what entrepreneurs today tell all of you guys to do. And how many times have you heard this story? I slept on my couch for two years to pull this off. I mortgaged my house. I barely made it. I'm so tired of that narrative. We've all done it. It is hard. Don't get me wrong, being in business means that we're all in this room a little bit. We're masochists, right? Like, it's not that fun actually, you know, when you run a business, it's hard. Payroll doesn't get made all the time. Your employees are always the solution, but also the biggest problem. And we know that. But I don't want to get over this hustle porn nonsense mentality that you have to sleep on a cot or in a couch to make your millions. I actually just think that meant that those people weren't very good. Because guess what? I've accumulated a giant portfolio, happily never slept on a couch, even though my parents came from nothing and they were immigrants. So what if we could just work smarter instead of harder? That's my idea. Now, before I get into the tactics, let me tell you why I'm even open to talking about this on the Internet. Just like Ryan said, most people who've had some sort of success in private equity, you don't see us up here on stages, YouTube channels, blah, blah, blah. We leave that to the 24 year olds that pretend that they've ever done anything and really haven't. Right now, the reason I'm willing to do this is because the people that then listen to this advice and apply it. I have a mission for you. The information is free, but it's actually not comes with strings attached. What is the number one reason people leave jobs? Boss. Categorically, by a scale of three, their boss. Now if you guys buy these businesses, take over these companies, what do you become? Boss. So don't suck, huh? Be better to the next generation than you were treated yourself. How about when you're an owner, give your people skin in the game. How about as you build your business, you also build up your community? How about you do right by those that help you profit? That's my ask. I think the world today is a little messed up. And I think our country has a lot of difficulties in front of us. And the solution is not shopping local because it turns out we're incentivized, short term monkeys running around that only do the things that are easiest for us. What actually changes communities and what could actually change our country is more of us getting skin in the game and us locally owning the businesses that serve us. That's my belief. I think if we do that, we can change everything. And that's why I'm willing to yell about it on the Internet all the time. So if I hear that you bought a business but you're part of the problem, I don't know, I don't really have anything I can do to you, but I won't like it. And I hope that you hold the other people around you accountable to that. This isn't one of those things where I go out there flexing a Lamborghini or fast cars or jets. I can't stand any of that. Instead of doing that, maybe help the other people surrounding you. Because when all of us are a little bit wealthier, when all of us have skin in the game, the world gets a little bit better. Speaking of helping you guys out, the most valuable resource a business owner can have, it's not money, it's actually time. And being a business owner means that your attention is getting pulled in a million different directions. And if you own multiple businesses like I do, you don't even want to see what my calendar looks like. That's why we're partnering with Roll by adp because basically they have this AI technology that takes the guesswork out of when you're supposed to pay your employees. By sending you automated notifications, you basically complete the payroll. Freeing up that mental space means I get to think about my next move, not the last pay period. Even better than getting paid on time is getting a bonus for a job well done. With rolls24.7 in app messaging, you can request off cycle payments super easy. So check out Roll By ADP click the link in the description below and you get a three month promo offer just for you guys so you can get back to what's important. Speaking of which, let's get back to the video and my calendar. We're gonna do what the few will do, and that is not just own a business. It's that we are going to be empire builders. This used to be a thing back in the days of Rothschild and Rockefeller, right? The they took these hard, dirty businesses and they proselytized them across the country. That's what we're going to do today. And the reason we're gonna do it is because I think you guys are ready for that Warren Buffett level shit, okay? I think we're gonna break down something in a way that this guy, the sage of Omaha, might relate to because I've stolen many of his ideas. Now, one thing you should definitely do before you listen to anybody on a stage is you should question them. You should question everybody, including me, maybe especially me, according to my husband on some days. And what I only want to tell you this. I don't want to come up here and talk to you about all my accolades. All I'll say is this. There's plenty I'm bad at. If you ask my head of marketing, Chris, who's over here, It's. I hate details and operations like, I'd rather slit my wrists than do that. I need somebody else to take care of it. Many things I'm bad at. Don't listen to an operational speech from Cody Sanchez on details. Now, a couple things that I'm pretty good at is I've done a ton of deals. So I've closed hundreds of different businesses. I was at Goldman Sachs. I have the PhDs and the MBAs and all that jazz. So I know a thing or seven about buying businesses. And what I think could apply to all of you that might be interesting is that it's been cross vertical. And so as you're listening to me give an example of a car wash, a Laundromat, a SaaS company, I need you to take a step back. And usually most people on the Internet can't do that. They go, well, she said buy a car wash, so I'm gonna buy a car wash. And I'm like, it's called an example. Doesn't mean everybody needs to buy a car wash, right? This is an example. Now I talk about some of these lower level businesses, what I call the gateway drug businesses, because they're simplistic. It's like, if you can't understand dirty clothes plus change plus washers probably shouldn't own any business. Not even a laundromat. Right. So that's why we talk about them. But, but I want you to think about this idea for whatever your sector is. So if you're like, but I own E Comm. Okay, yeah, apply it to E Comm. And if you're like, well, I own advertising businesses. Great, apply it to advertising. We're gonna use the frames to cross sectors. I've bought SaaS companies. So this company is part of what I call my satellite acquisition strategy. So I own 26 ish boring businesses. Now we closed on, we're about to close on two, so maybe it'll be 28, but let's say 26 businesses. I own three media companies. And those three media companies all talk about boring businesses and they talk about how to acquire them and how to buy them at contrariandthinking co. And I was like, wait a second. Not only do I wanna educate people, I wanna solve another problem for them. I wanna help them deal source. So I bought this company called Bizkout, which helps people find small businesses in local areas. So one SaaS acquisition down, then I actually bought out my partner@unconventionalacquisitions.com, because I wanted to scale it like crazy and he wanted a lifestyle business and so I bought him out. So you could use this strategy to buy out a partner to buy out vendors. I also bought this company, Approachment. Now Approach Mitt. What does it do? The number one reason small businesses close one versus the other. What do you think it is like plumber a, plumber B. They're both exactly the same. One's going to close a client more than another. Does anybody know why it's response time? The number one reason you will close a lead is your speed to respond across any industry. And I've looked at thousands of deals across every sector in private equity. You think it's your marketing, you think it's your price? No, no, no. It's literally can you respond faster than the others? So when I realized that, I bought this company, approachmit, that was one of my vendors and I put it into our satellite acquisition strategy. Because 5, 26 businesses and they all respond faster. I make more money, right? So this is a service businesses. And then of course Fauci Laundromats, because I love laundromats. I own a few here. And this has led to 26 companies all coming together. Those three companies I just mentioned to you are also not part of that they're part of our media strategy. So you can use these things across whatever sector you want to grow and build. Now, right about now is when people are like, yeah, but the world's getting really tough. A recession's coming. It's going to be difficult out there. I'm not sure I should buy. And I always, I have this on a screensaver on my computer. It's Barrett Rothschild's quote, buy when there's blood in the streets, even if that blood is your own. There's something in equity, private equity and funds called a vintage. You guys know what a vintage is? It's basically like say you have a fund that comes out every single year. Each year is a different vintage. That's what they call it. And so the best vintages or fund years are win in a recession. In a recession, you do not want to invest in a private Equity Fund from 2020, 2021, 2022. Why? Valuation's at all time highs, difficult to find opportunities in the market. When you actually want to be putting money to work is when everybody is fearful and running. So there's about to be blood in the streets, which means if you guys don't know how to buy businesses and if you don't know acquisitions, if you don't know deal making, I think you're up right now is the time to do it because you're about to see a lot of stuff go on sale. Good indicator of this is what's already happening in the real estate market. You're starting to see it across the industry. That is a forward leading indicator. So the interesting part that I think most people don't realize is it's not just that a recession's coming. It's that we have a generational tectonic shift happening in the world and that's this. It's that baby boomers are retiring at all time high levels to the tune of trillions of dollars and 11.2 to 12 million small businesses being on sale. The vendors that you work with, those owners typically want to sell in some way, shape or form. The people who service your home in varying ways, they probably want to sell too. We are having a massive shift from the fact that baby boomers got accelerated by Covid. These baby boomers got tired after the businesses closed down. And in fact, 80% of all restaurants on Yelp that closed ever for Covid. What did they do? They shut their doors for all time. This is fascinating because how many people in here own a business? Raise your hand if you own a business. Okay. Most people. Now keep your hand up. Sorry, Keep your hand up. How many people in here would sell that business at the right price and terms? Shocking really. If you look around the room, there's hundreds of you. And in every single room, do you know what people say to Chris and I on my team? They go, well, Cody, no deals to be found. I'm like, mother, look around, there's deals everywhere. Anybody that owns a business, if you catch them on the right day, at the right time, with the right offer, what will they do? Sell, of course, because we're masochists. And running businesses is hard. And so if you can find people at the right time to, you too can acquire a bunch of companies and become an empire builder. But it's more than that. It's more than just let's get rich, let's make money. It's actually a little bit. And this is where you guys can cry if you want to later. Cause apparently I hear people were doing that earlier. This is where actually there's something really interesting happened where profits can actually meet purpose, which doesn't always happen. This is what I don't wanna see in the world. Big corporations on every street corner. The big keep getting bigger and the little guy gets hammered. And slowly, although we started as a nation of owners, we've become a nation of serfs. We are at all time low levels for ownership in this country. Ownership of our homes, ownership of our companies, ownership in equity and stocks. Overall, only 15% of Americans actually own equities. Just public equities listed on an exchange. And so instead, what do we have happen? The few that know become the only that own. The few that know become the only that own. Think about that for a second. What do you think that does to our society at large? What does absolute power do? Corrupts, doesn't it? And so if we allow only a few to own, I think that we are putting ourselves, our kids, our future generations in a really difficult place. And here's why. Look at these stats. We did an analysis. So this says more hardware, grocery stores, car washes, are owned by conglomerates, not locals. Here's the analysis we did. Across 12 subsectors, such as hardware stores, car washes, laundromats, even landscaping companies. We did an analysis of how much of the industry is owned by the top 10 players. 25 to 33% of almost every industry is owned by the top 10 players in that industry. We have a real opportunity to do what the bitcoiners said they were going to do. But we're actually going to do with ownership, which is decentralized. I already mentioned this, but think about this for a second. As those 60% of all businesses who closed during COVID closed permanently. As those companies are closing down, what happens? Who's buying those? The big boys. So the big companies and the big government are forcing companies to close. Target stays open. Your local corner store has to close. Walmart stays open. Your local corner grocery store has to close. And so as they close down, these guys steal their market share. We're gonna make sure that doesn't happen anymore. Because most small business owners look nothing like this crowd. They're 65 plus years old and they have very little cash on hand and they use fax machines. And they are not the future of business ownership. But this crowd actually could be. Think about this. In November and December of last year, we did analysis to see how much cash on hand small business owners have. They have 27 days on average. 27 days. How long were the shutdowns in 2020? A lot longer than 27 days across the board. On average, at least 90 days, if not 120 days. So with only 27 days of cash on hand, these businesses are wiped right now, instead of those businesses being wiped out, what if there was something else? What if you were the answer to these small businesses all over the world closing down and feeling pressure to close down? When I get out there and say that I like people to buy small businesses, it's not that I want you to take advantage of some owner and you're going to rape and pillage his legacy. It's that if you do not buy, that business will close. And let me tell you how I know that. Because not only do these small businesses close down in this specific instance, but these small businesses also then have a rippling effect across the industry. One small business closes, that's one less vendor to on average 10 other small businesses. And so that takes away one of their clients, which might be relatively a large percentage of that 27 days of cash. So sad story over. The idea now is, if you believe me, that tons of businesses are on sale right now, that this is going to continue, that you can grow through acquisitions faster than anything else, that you don't need a ton of cash to do it. I thought we'd walk through how we grew one particular business. We mess with some of these numbers since typically my businesses have operators. And so I don't share always who the businesses are and their exact numbers because they don't love that. But how we took one business and acquired seven businesses to take it to $1 million in revenue. We're going to break that down for you and we're going to break down the profit numbers. So this is where we get a little technical. Bring out the pens, bring out the paper, and think about with each acquisition. How could you do the same exact thing in your business? Before I get into it, I want you to play this game for me. I do something called a personal P and L review. What does that mean? I want you to think about or write yourself a little to do list note after this. What is every company I spend money on personally or in my business that has a CEO I can get to, aka not a Fortune 500 company? Bezos probably isn't picking up your phone calls. And who is also a company that you would potentially want to own if the profit is there? For instance, Man, I'd love to own a landscaping company. Yeah, I got my landscaper over here. I've never talked to him before. He looks like he's 65. Okay, there's one. Huh? My video production team. I would love to in house and turn that liability into an asset. Maybe I should talk to the owner of that company. Huh? I spent a lot of money on ppc. Right now, actually, I wonder if I could just own that agency instead of outsource it. The thing is, graphic Design is like $12,000 a month for my company. What if I just. In house the graphic design? That's where I want your head going. And then I'm going to show you how to do it in action. All right, you ready for that Bezos level? Shit. You guys ready for it? Not that Bezos. This Bezos. This is where we're going instead. Okay. Ooh, this is tiny. All right, first deal. The first deal that we did this for was a laundromat profit. $67,000 a year. Price to buy the laundromat, $100,000 money down. In this case, 0% down. But usually you'd have to go somewhere between 0 and 20%. Method Seller financing. And then you could finance down payment with investors. So this is what I call a platform acquisition. So I buy one business so that I can layer others on top of it. It's like Legos, right? You start with the big Legos on the bottom, and then you think about how you can add others. This specific deal, I bought this Laundromat not because I actually was thinking about it from a platform acquisition perspective, but. But because it was really cheap. It was opportunistic at the time I had some. Some spare time where I wanted to understand the laundromat game. But this was step one. You start with a platform acquisition, something that you can build on. What does that get me? That got me $67,000 in profit and one income stream. And I talk about income stream, but really this is a revenue line. You could change the two terms interchangeably. Then we do what's called an add on acquisition. So I got my laundromat and now I'm like, huh, I'm 30 days into the business. The business is sort of motoring, but I'd like to have more revenue. How could I acquire more revenue? In this case? We added vending machines. These vending machines included soap vending machines. They included little toy vending machines. They included typical snack vending machines. This was bought all in. Our first vending machine was about $3,000. We bought it online. I think we spent about $25,000, one all in on the costs of this business. And what did that then net us? That gave us another. What is that? So $50,000 in profit for $117,000 in total profit. So I have my platform acquisition. I do my first little add on acquisition after 30 days of being in business. Now we're at $117,000 in profit and two income streams. So now I'm like 90 days in, let's say my business is sort of standardizing. I'm rocking and rolling. I'm ready to do my next acquisition. The next acquisition is called a vertical acquisition. This is, I buy my competitors. Somebody's going out of business. In this case, his name was Bob. Bob was older. Austin's too. Hipster, full right now. They roll up their jeans. I got to get out of here. I want to go out to the country. Bob says, Bob happens to run a large laundromat. This laundromat was about $300,000 in profit. First I would go to Bob and say something like, bob, incredible operation. Oh my gosh, I just bought a laundromat. We don't really know what we're doing over here. We're not competitive. We're way over there. You're over here. No different. But man, can I take you out to lunch? Learn a little bit. I get to know Bob. Bob tells me his hipster feelings. I say, bob, would there ever be a world in which you'd sell at the right terms and right price and go buy your ranch out in. Wherever in Texas? At which point Bob says, yeah, actually, I might do that. So we acquire Bob's company $300,000 in profit, and we use seller financing. Typically for a seller financing deal, if I have cash, I'm giving them somewhere between 20 and 50% down. If I don't have cash, I'm trying to have them finance it all. Does everybody know what seller financing means? Not okay. Seller financing means you take from future profits of the business to buy the business. This happens with 60% of all small business acquisitions. So if I own a business that does that, I'm gonna buy for $100,000, and that business does $30,000 a year in profit. I'm gonna ask the owner, hey, would you be willing to finance me this business over a five year term? I'll pay you the $100,000 in chunks over five years. Very, very normalized. All right, so I buy out Bob. Now we're at $417,000 in profit through this vertical acquisition. Next stage, asset acquisition. So now I'm like, man, I know how to run laundromats. I got two of them. Things are motoring. What if I could add more capacity to my laundromats? I don't need another one per se, but I could probably add some more machines, and then I could have more people come in here more frequently. So I go out to the market and I start looking for struggling competitors. If you owned a gym company, you might go out to gyms that are struggling and say, huh, what if I was to buy up some of those bikes because you aren't using them right now? What if I was to buy up some of your barbell equipment because you're not using them right now? So we buy machines for pennies on the dollar, and with those machines, we add another 100k plus or 50k plus in profit to this business by stretching out how much more we could do at capacity. Over the year now, we've done four acquisitions. Do any of these acquisitions feel unattainable? Do they feel super hard and onerous? If you guys can't figure out how to buy a vending machine online, like, yeah, this could seem tough. But in fact, these acquisitions do not have to feel the way we feel typically when we hear that big word. Now we've got our fifth one. This is what I call a satellite acquisition. So I'm basically like, okay, so I've got these laundromats. But laundromats run on average with 20 to 30% capacity. Like, my team could do more. The team at approachment that I bought, they were running at 30% capacity. Every time I buy a business, the first thing I do is do a capacity analysis. How much more work could my people, machines, things be doing and how can I get more work to them? Because I hate paying for stuff that I'm not using. And so I'm like, wait a second, we have all this extra capacity because we're only running at 30%. What if we could run all night long when nobody's doing laundry? Oh man. Okay. If we could do that, we'd probably bring in a lot more revenue. How could we do that at a wash and fold delivery service? So what do we do? We go and buy a bunch of vans through acquisition of a company that's not doing well in the wash and fold space. We buy them out for basically the cost of their vans, plus a little bit for the owners to stay with us for six months. And with that we've added $250,000 in profits. We acquire their machines, we acquire the owners for a period of time, and we acquire their SOPs and software. How do we do the van delivery process? That's the difference between starting a new revenue line where you're just buying the vans outright and buying another business. So you get all of that inherent knowledge. The cool part about that knowledge is it's worth zero to them because they're closing. And it's also typically valued at zero. Any businesses below 5 to definitely 1 million in revenue, you don't really value that. They have systems and processes in place. You say, you guys make $100,000 a year, I'll buy you for 2 to 5x profits. That's what a small business trades for 2 to 5x profits almost every time. Below the 10 million mark pretty much 100% of the time below the 5 million dollar mark. So we buy this company and we add $250,000 in profit. Now we're at $717,000 in profit. This is coming out. Let's call this like 200 days in something like that. Step six, horizontal acquisition. This one just really, this really did it for me. We bought a soap company. We did not buy this soap company. Cause you E Com people are clever like that. We bought a no name, brandless, no marketing soap company. And we did that because the second thing I do after a capacity analysis is I go, huh, where am I spending a ton of money? I hate spending money very cheap. I want to turn everything that is a liability into an asset. So I look at where I'm spending money and I go, oh, wait a second. Soap is one of my biggest expenses besides my lease. How could I turn that into a profit center for me? And so we buy this company that has mixers for commercial grade soap. We brand it a little bit differently, we bottle it and we cut our costs 30 to 50% within that soap line item. This adds another 200k in profit because we go, well, wait a second, now we know a bunch of the other people in the area, why don't we. And we know what the prices are for soap. Why don't we undercut the main providers of soap that they're going to with cheaper stuff? Because we're locally based, plus there's some like goodwill between us. And so we're going to sell out into the marketplace, which is how we get 200k in profit. So now we're at like 917 in profit. Step 7 hard asset real estate. This is a real book, by the way, which I just think is fantastic. Could you imagine putting that on your book cover? We buy real estate, we buy the commercial unit that we're in, the commercial building that we're in. Why? Because for your laundromat that is your most expensive cost besides water and utilities, which you can't buy. And so the most expensive is our lease. In Laundromats I typically require a 12 year lease because it's expensive to like build out all this stuff. And so we buy our commercial property, which if you guys haven't been tracking the commercial real estate market, probably is going to become a really interesting play in the next one to three years. I think arguably the commercial real estate downturn will be worse than 2008 for that market. And if you're not up to speed on that, it's worth taking a view at. Now we buy our little landlord or our little commercial strip and we become landlords not just for myself, but for the other properties on hand. So we then use other people's money in the form of a mortgage to get another 100k in profit, which takes us to a million dollars in profit inside of one year. The cool part about this, how many customers did I chase? Zero. How many times did I try a new revenue line and plow a bunch of money into it with a hope and a dream that a customer would come. Not once I was buying things at their cost value or at a multiple of profit and using the profit from the business and other people's money in order to acquire more customers. How many of you guys can use other people's money to spend on ads? Can you do that? Not really? You can do that all day in acquisitions. All right, so this is Typically people say something right here. I don't know if it is too soon or not, but it's just his face is so pathetic. I love putting it on there. Then people go, well, I have no cash, right? And I think in this audience, there's plenty of people with a mind capable of thinking of how to get access to capital. But if you have that sneaky little voice in the back of your head saying that you can't do acquisitions, it's too scary. I want to keep acquiring my customers one on one. I want to talk to you about what I call the get rich, tripod, super clickbaity name. But basically what it is is there's three legs of the stool to stand on. If you don't want to use your own cash and you want to do acquisitions. I think about it like this. The highest leverage activity is cash, right? Cash is something that once you have some of it, you can make it work for you. How much more expensive would an hour of Jeff Bezos time be than the cash you would be willing to pay for it? It would be very, very expensive. He has a limited amount of them. So if you have money, I like to use money, or I like to use really smart deal terms so that I can use at least the seller's money to buy their business. But say that you don't have any cash. The next leg of the stool is experience is in this room right now. There's a bunch of you that basically have businesses that operate as a glorified vendor service business. So you provide consulting for X, you provide X service for Y. This is pretty common from the group that I've looked at. What I bet you're not doing is using your experience to take distributing equity. Not straight equity, but equity that cash flows to you when you do a deal with somebody. So you could do that. You could say, hey, from now on, 10% of all clients that I take on board. When I see this little thing that I know is going to mean that that company is going to be successful, I take a little bit of equity and I take a little bit of cash instead. And we could talk later in the part where we have Q and A about how to structure that, but that's the second lady of this tool. It's going to take some of your time, so it's the least leverage. And then the third is just sweat. So for any of the young guns in the room or for people with spare time on your hands, There are people like me all over the world who do a couple different things. We pay something called a finder's fee. So if you give me a business that I want to buy, that's in my deal box, AKA the things that I buy, based on my parameters, I give you typically somewhere between 1 and 10% of the purchase price of the business. This is super normalized across the industry. People that don't have time, AKA me, also give operators equity, right? So I, all day long hire people who run my businesses for me. Those people could bring me the deal. They could just bring me their time. And for that, you could get sweat, you could get equity into a business without having to put any cash down. So either use cash, highest leverage, use experience, second highest leverage, or you use your time the other way. To get cash are three things. The sba. How many of you guys know about SBA financing? Okay, a decent amount. Perfect. The sba. Getting a loan from the sba, similar to a colonoscopy, just, just so we're honest about that. It's like, doable. You know, everybody. It happens all the time. Does it feel great? Not really. It is very detailed. They are going to ask for a bunch of information about you and the business. But SBA loans happen all the time. And the SBA or the Small Business Administration will loan you up to 90% of the purchase price of your business, which is pretty wild. They also just started for the first time doing fractionalized loans, which means before you had to buy the whole whole bad boy out, you had to buy that whole business. But now let's say you want to buy part of one of your vendors, or you want to buy part of a company and the guy's still going to run it. You could actually use an SBA loan to buy 20% of the company, 30% of the company, which is totally new. Couple things that suck about SBA loans. Personal guarantee. That means if this deal goes sideways, you have to pay it up, whether that's your house or some assets that you have, whatever the case may be. Second is life insurance, something lots of people don't talk about, but they make sure that you have a policy in case you croak and they're stuck with this business. Right? And the third thing about the SBA is they have some specific terms, so interest rates are set, the payback period is set, there's some prepayment penalties. All these things that sound super boring, but if I was to tell you, if you were my student, I was going to tell you how to do a deal. I would tell you to put it all in a model with all the options. And the model doesn't have to be fancy. It can be a little Excel spreadsheet that basically says, here's what it looks like. If I buy at Y Z A B. Right. The second way is seller financing. My favorite way to do deals because it happens all the time, and people on the Internet love to tell me that it never happens. And the truth of the matter is, is that if you're a business owner and you come to me like that Laundromat deal, and I'm going to buy your business, and I tell you I'm going to buy it with future profits, most people think, why would a business owner do that? And let me tell you why. Because if there are 11 small businesses for sale inside of one calendar year, how many of them do you think sell within one year? 11 businesses. How many will sell in one year? One. One. That's right. One small business will sell. So it's the opposite of real estate. You got 10 people that are looking for a way to close a deal. Of course they're going to negotiate with you. Of course you're going to have to prove to them that you're not going to run their business into the ground and then give them no money. Of course. But this is totally doable. And we do deals like this all day. The last thing is opm. So say you're in an audience like this and you want to do a deal. You want to get it done fast. So you don't want to do an SBA loan you. The deal's a great deal. So it's kind of competitive, AKA they won't sell or finance you. What do you do? Raise from some friends and family and buy the business. This is a really underutilized way to do deals. Because how many of you guys have ever had somebody come to you and say, hey, will you invest in this business? I'm gonna buy? Probably, yeah. Tons of you. So many. It's not that normal. Yet people will come to you all day and they'll do what. How many people have come to you and asked you to invest in their startup? Raise your hand if that's happened. All right, let's call it 20%. Still really low. Fascinating. People have normalized the. Let me give you money for an idea that you think might work. Maybe. Although it turns out about 90% of the time, these things fail horribly. They flame out and you'll never see your money. I think Angel Investing is a bit like taking a dollar bill, lighting it on fire and then throwing it off a cliff. It's not a great way to make money over the long term. There are a few outlying experiences, but for the most part you lose your first 500k. Buying a small business is the opposite of that because there's profits inherent in the business. So I think OPM or raising from friends and family is an interesting way to do it. The reason I don't do this a lot is because if I love a business, do I want to give away equity? Do I want to give away a portion of that business? No way. I want to do debt, where my profits pay for me to buy the business and I don't have to give away a percentage ownership. How do you do deals? We're going to go through this pretty quickly. It looks the opposite of how Shark Tank does it actually, and it feels very different. And this is an important part because we have to remember that we're taking somebody's little baby in our hand, their little business baby that they've spent years building and we're saying we're going to take care of it. Like you made a baby, it's now a toddler or maybe it's a teenager. And I'm going to continue to take care of of this thing. It's a really important perspective to have. And the reason why I think this is so important is because this story that sometimes I tell about my Uncle Eb. So EB owned a company called EB Homes Plumbing in Phoenix, Arizona. The company did five to six million dollars in revenue a year. And one day Uncle Eb got the phone call that nobody wants to get right? Six letter word that ruins many people's lives in this country. Cancer. He gets this phone call, he goes home, he talks to his wife and he's like, I want to spend not one more minute in the business. So this business that did 5 to 6 million dollars in revenue and 2 to 3 million dollars in profit, what do you think he did with that business? He closed it down. He didn't sell that business. He didn't know he had an asset that was worth 6, 9 $12 million that now since he has passed away, could have alleviated all the issues that now his family has to deal with. From a monetary standpoint, this happens every single day. Then the opposite part of this coin happened. One of the members of our group at Contrarian thinking they were talking to me about a business that they worked in. They were a high level manager and operator For a small business also located in Phoenix, Arizona. And that business, they had never thought of buying it or offering to buy it. You know, they made like a nice 250 a year. Took their kids two weeks on vacation, didn't have a lot of extra cash, Wanted to send the kids to college, liked to play softball on the weekends kind of guy, right? And when we taught him how to do deals one day, Larry went to the owner of his business and basically said, hey, you know, this business is amazing. I love working for you. You know, you're 66 years old. I don't know how long you want to keep running this business. And it doesn't seem like your kids are that interested in running it. Would you be open to at some point selling this business to me? When Larry went to have this conversation, I mean, let me tell you guys, he was emotionally distraught. He thought, maybe I'm gonna get fired from having this conversation. He thought, there's no way this guy is gonna sell to me. He thought, I have no cash. He's like, this is not gonna happen. And instead of that going down, the second that Larry told it to this guy, he didn't tell him, yeah, maybe one day. That'd be nice. Whatever. Of course, like you potentially, I guess we'll talk about. He said to him, oh, this is amazing. You wanna start next week? We can have like a couple month transition period. And what are we gonna. Are we gonna use seller financing? I swear to go, God, you guys, we have it recorded. Chris can back me up. The guy literally was like, I love this. I didn't know that this was a thing. You want to come in and I'll, like, help you for the next six months. His only parameter was that he'd still like to work three days a week. What if there had been a Larry for my uncle Eb? I think about that a lot. It still gives me goosebumps, but maybe full circle with, we can save more people's families and these small businesses. So when people ask me where to find deals, this is what I tell them. I tell them, buy the company you work for. Buy the company you pay to. Buy the company you compete with. Buy the company that you get paid by. The best way to find deals is your personal ecosystem. We teach 12 different ways to do it, but that's where I like to start. Sure. You can do what everybody on the Internet loves to do, which is like, go to the MLS of business buying and go search a small business and go cold call owners. Or you can stack up and Talk to people every single day that you engage with anyway and ask them if they want to sell their business. Nobody does this. And this is why there are millions of businesses for sale right now in the us. Now if I was to tell you the type of business that I like to buy, this is my strategy. I call it Sal's Stale, Old, Weak, Simple. I buy businesses that are stale, Old, Weak, Simple. Why? Because I'm lazy and I don't want to work that hard and I don't want to overpay for an asset. And so I buy these type of businesses like this. Remember that company approachment I told you guys about? They had had stale revenues for the last three years flat. They are 12 years old. They were weak aka no marking was done. The guy said he only worked on it three hours per week. I ended up believing them. They're simple. It's an outsourced chat group. Look at what we got this business for 150k a year EBITDA business. We bought it for $75,000. Now we're doing about 300 thou. We think we'll do about $300,000 a year EBITDA with this operator in place if we grow this business correctly. Like think about that for a second. That's a no brainer. I actually only paid 60% down and then I paid 70. I'm sorry, I paid $15,000 about 90 days later when I confirmed it was everything that he told me it was going to be. These businesses are all around. I also like this strategy. Buy boring businesses in recession resistant asset classes, raise the prices, add technology. The average small business hasn't raised their prices in how long? Anybody know? 12 years? It's actually eight. Close eight years. Think about that for a second. Inflation this year is what, 9.1%? So you are immediately buying an asset that you can raise prices for. And typically people don't raise prices because they think what? Oh my gosh, all my clients will leave me. There's no way. How many times have you gotten a plumber and they gave you an offer for that broken sink that you have or that toilet that your child decided to flush something down and said yeah, sorry, I'm going to have to shop around. I'm going to compare for this. No, it doesn't happen. Of course you're going to pay the 150 bucks or 175 bucks and you probably don't even realize the prices were raised. That's why I like to buy these businesses. Right about now is when people Go. Okay, what do I need to run this playbook? And what do I mean by a playbook? I mean a holding company with a bunch of businesses within them. This is what you need. You need a right hand chief of staff. Could be something like a CIO that's more expensive. Could be something like a business development person who could be something like an M and a expert. You need a head of each business. So these are gonna be your operators of the underlying businesses so you don't go crazy eventually. I do like to have a CIO of the overarching Holdco, but you don't have to start there. And then at some point, if you wanna get real fancy, you can buy the ugly houses on the block. But I don't like you guys to start with bad, failing businesses. I like you to start with profitable, consistent businesses that are kind of motoring along year after year. They're not the ugly kid on the block. They are actually the businesses that are doing pretty good and you can make them a little bit better. Now, eventually you might wanna get crazy and you add a turnaround specialist that can take really bad businesses and make them awesome. But I do not recommend you start with that. If you guys want to buy businesses, These are the 10 steps you have to learn. You basically go from the foundation, which is what you already learned today. This is like, oh, wait, I could buy a business. How exactly does that work? They're for sale everywhere. Check one, you've already done step one. Two is called deal clarity. Lots of people ask me, but Cody, so which business is the best business to buy? And I'm like, wrong question, totally wrong question. The right question is, what is the right business for you to buy? So we take you through a bunch of steps so you can figure that out. Number three is origination, which is a fancy word for how do I find a deal or the deals, how do I find them? Give me some mechanisms to do that. Step four is selling you. That's where you basically need to go through and make sure that when you take that little baby over from the business owner and that you're explaining yourself right, that you put your best foot forward, that it's like you know how to date properly. Next we have negotiation. Negotiation is basically how do you get the price that you want in a way that's going to consistently have results? And there's an art to that and a little bit of a science. Then we have financing. So how do you get the money for the business? Then we have closing. How do you. What are the right deal docs who should be on your team? What about accountants and attorneys? And then we have your first 90 days where you take over the business. Now this little deal process that we have, we use again and again and again. And I like to show it to people because I think just about anybody inside of 90 days can learn how to buy their first business. Can you do a multimillion dollar deal within 90 days? Probably not, but you could certainly do your first couple six figure acquisitions. And if you want to get technical on the part that kills most deals, which is how much do I pay? Is this really worth it? Are you sure that I should financially buy this business? Then you might want our deal calculator, which is here, it's free and in it you can basically take a bunch of the different numbers of the businesses and you can plug it in and you can see varying outcomes. So if I change the interest rate here, if I do seller financing instead of SBA there, then you visually can see is this a good deal for me to do? I think it's really useful. If I was you, these are some of the questions I would be asking. I don't want to seed it too much because I want to answer what you have. But the most important steps are the ones we've talked about today and these. So that's my suggestion. Lastly, let me end with this. I think we are about to have, in fact, we already are having one of the most difficult markets probably of our careers for most of us. I was at Goldman SACHS and in 2007, 2008, when the world was falling apart. I saw what happened to retail investors then and I think it'll be worse this go round. I think it'll be worse and it'll be worse because the way that 2008 played out had a lot to do with government intervention and it also had a lot to do with a V shaped recovery in something called mark to mark accounting, meaning 2008's V shaped recovery was completely manufactured. Completely manufactured. This one I do not think will be. I think between interest rates, commercial real estate and the fact that we have to also battle inflation, we are going to come into one of our most difficult markets in our existing history of investing. It is also not going to be only isolated to, let's say startups like it was in 99. This is going to be a pervasive downturn for a period of time. And that's scary and it should scare you, but there is a silver lining which is that there will be blood in the streets. And in fact, the money is made when most people are fearful and greedy. And you can choose the opposite side of the coin. And so I hope you do this one thing. I hope whatever it is in your business, you make it a moral prerogative to learn deal making and business buying. There is one thing I can guarantee you. I can't guarantee you your first deal will work. Can't guarantee you your second deal will work. I can guarantee you that if you learn how to do deal structuring and if you learn how to do deals, you will never go hungry. Because this is the outlier effect. It is where asymmetric risk meets asymmetric upside, which means the amount of time that you put in is completely dwarfed by the amount of value you will get out of it. So I hope you guys do the boring thing, pay attention to the accounting, ignore the TikTok dancing bears, and I hope you invest in your community and in our country. I can pretty much guarantee you you will not regret it. All right, thank you so much for having.