This Is The Ultimate Guide To Buying A Business (Main Street Millionaire Summary)

In this video, here's the thought. I'm going to take you through each chapter of my book, giving you a unique glimpse into the strategies and insider knowledge it offers. There are million dollar opportunities hiding all around the country and around the world. And they're not sitting in Silicon Valley, they're not a tech startup, they are living on Main Street. These are the boring businesses that you walk by every single day, that you really don't think much of, but they've been profitably making money for decades. This is a book for doers and it's for those who want to have these four main steps to buying a business and then the 10 steps underlying to taking that business, making it profitable and growing your own little piece of an empire. So today I thought we'd get into it, live together. So let's start with chapter one, which is all about research. Here we've got a couple cool ideas. The main idea is the cooler looking your business is, the less likely it is to make money. We call this the cool but not profitable matrix. The second idea in this book is really the Lindy effect, which is that the longer a business has been in existence, the the higher the likelihood the business will continue to be in existence. This is true across the board. We tend to think that AI startups will last for a long time and those AI startups will be the companies because they're new and they're cutting edge. That will make us millions. But the truth, what the numbers tell us is that very, very few people will make a ton of money in AI startups and the rest of us will not. So what you actually want instead is a business that's been around for quite a long time. The next Effect is the 3912 framework. If you want to think about how long will it take to buy a business? Well, it'll take about three months to learn, nine months to find a business and close your first deal, 12 months to stabilize the business, and then you're off to the races. And so we give you some frameworks for thinking about how to actually grow this business and do it continuously once you've bought it and how long that will take. Then we've got 150, 10 to 1 rule. So the idea is you'll look at about 100 businesses. You'll go to Bizcout maybe, which is where I buy and sell businesses. You'll scroll around looking for silo on which houses and in this case businesses you think are better or worse, you'll pull out of Those hundred about 50 that you want to look in more depth. Maybe you're plugging them into a calculator, seeing if you like the location on Google Maps. Then you're going to go into a deep dive on 10. That means financials, due diligence, P. Ls and finally you're going to buy one. You're going to go through our whole process. We talk about in this. The idea is really that you have this big vision for you to buy a business. You start small and add every single day. But most importantly, you start now. A lot of times people ask me in this chapter, like, why would sellers ever sell? And I can never remember all seven of the Ds, so I'll actually look at them here. But they are divorce, death, disease, distress, dullness, departure, disagreement. These are the things that lead sellers to sell their business and to be ready to move on to the next thing and for you to get cash flow on day one. Then we start with one idea that's a little hard to take early on, which is that competition is for losers. I think it was Peter Thiel that famously said that you don't actually want to compete. And the truth of the matter is in buying businesses, you don't have to compete as much when you're playing in the lower end of the pyramid. So in this section, I talk about the five types of businesses. There's three sort of levels to this game that exist in business buying, and we really only want you to play in the top four businesses. So I'll break down for you if you really are thinking, hey, I want to dabble. I want to take a small step into business buying. That might be like micro acquisitions for a solopreneur. If you're like, man, I'm a stud. I've done huge transactions, well, then you might be looking at actually doing a small business acquisition in more of the corporate battleground space. So we go through each level so you can figure out what size of business is right for you. Kind of like Goldilocks and her soup. We go through in here a few of my favorite types of businesses to buy. Overall, I talk about this as labor molded businesses. So businesses where you have some sort of license or certification for the businesses. And then I also talk about businesses that are home service and professional services that are easy for you to start and don't have what's called a lot of capex, meaning you don't need a ton of money to do them. Now, not all businesses are created equal, so part of this chapter is talking you through Some of the businesses I hate the most most, to get the seven of them, you're going to have to get the book because we are talking about that here. But I'll give you a few. Let me give you one in particular. Dry cleaners. If you're like, Cody, you like laundromats, but what about dry cleaners? Wrong. Wrong answer. You want to know why they have a high failure rate. They have asymmetric risk. The asymmetric risk means this. In a laundromat you don't have what's called remediation, like toxic chemicals that you might have to get rid of. In a dry cleaners, the stuff that they use to clean the clothes often is toxic and can bleed into the ground, become a really expensive mess for you. So that gives you something called difficulty to transfer. Nobody wants to clean up that mess and tight margins. So bye, bye dry cleaners. Next we get into your zone of genius, which is really about how do you find a business that speaks your love language. I talk about passion or really obsession, network and experiences and skills as your overlapping sort of Venn diagram here. But I think that the goal is basically this. A goal properly set is one halfway achieved and that is what you are going to do. Here we walk you through step by step, how to steal my homework and find a perfect fit business just for you. And I give you examples of a few people that have done exactly that. Then we get into something called your deal box. The deal box is interesting because you can't go after and search for what you don't know you even want, right? So a lot of times in the beginning you're like, Cody, I just want money. I want cash flow in my pocket. That's the business I wanna buy. But we gotta go a little bit deeper than that and we're actually gonna break down what's our frame. Finding a deal that is perfectly fit for you and you're going to get a deal clarity worksheet, which is what we use to determine, hey, just like you might, you know, you're going to buy a house, you're like, I need it to be two bedrooms, I needed to be two baths, I want to walk to work. I don't want it to be more money than this. Same thing we are going to do in buying a business. Which is why you get a nice little example of a deal box here and then a downloadable deal box for you to use because we're givers around here. Then we're going to start some brainstorming and we already Talked about how we're going to get into sort of the hundred all the way to one rule. So now you know what you're looking for, and you know how long it's going to take you to find it. Some of the other favorite parts of this chapter for me, how do I find motivated sellers? So, remember, we Talked about the seven Ds, the seven reasons why sellers will sell their business. You also want to try to follow up with these guys on a consistent basis. So we're going to give you a rundown of every single step you should take to stay in touch with these sellers. I'm also going to give you a list of questions to ask. You know, I think one of the biggest mistakes you can make in buying a business, and we talk about it here, is that you don't want your first meeting to feel like the Spanish Inquisition with this seller. You don't want it to feel like a colonoscopy. As I put in the book, sometimes I'm surprised they let me put these things in the book. You want it to feel like a nice little conversation where you get to know the owner. And so I give you some nice little questions here so that you don't feel, like, totally inappropriate with the amount of questions you're asking. We give you four ways in this chapter, and I'm not gonna go through all of them to buy a business creatively or what I'll say. Without using a ton of your own money, how can you use your expertise, your experience, your sweat equity to get a deal? One of those is called the Venmo Challenge, and it's pretty cool. We break it down in depth, and then we break down definitions that matter for you. Income streams, for instance, it's really important that you don't just think about the money you'll make from the business, but also the money the business needs. So we break down the four things that are inside of an income stream in this business. A lot of times when people start buying businesses, they think about, how do I reach out to a business owner for them to take me seriously? And I don't know about you, but I'm a sucker for a flow chart. So you'll see a ton of flowcharts in here that basically says, all right, if I go and talk to an owner and the owner's young and hungry and the business is growing and he never wants to sell, is that a good seller to potentially target? Well, the answer is no. And so what step do you take? If I find somebody that's 65 plus. But they got a son that wants to take over the business. Is that a good seller maybe? No. And what steps the next one that you take. So we'll take you through a few flowcharts on that. Specifically there are more than 12 ways that we teach in order to find a business for you to buy. Of those 12, one of them that I don't think a lot of people talk about are the four A's which is how can you use the people who have the highest likelihood to already know sellers of a business at the moment that they are selling to feed you deals. And so this would be things like accountants, attorneys, insurance agents, advisors. These four types of people are the ones who deal with the small businesses money. They might be helping them with their taxes, they might be helping them with their sale and you're going to get to know them. I thought I'd end this chapter with some fun which is how big of an idiot is Cody? So how I lost $12 million in 90 days. And I think the goal with this is that I make sure that I show you in this book all the things you can do to make a lot of money, but all the things you can do to lose it too. Let's protect your downside and let's be honest about it. So often people on the Internet are not. So I talked to you about a man in Oakland, California, pre rolls of cannabis and how he stole all my money and I got some of it back. For the last three years I've put literally thousands of hours into this book. And to celebrate, we're hosting an exclusive in person book launch event on December 12th. An evening where everybody who comes gets hundreds of dollars in tools and resources for people who want to buy a book. What's it cost? Just an order of the book. Order Main Street Millionaire right now, today. And you come to the free live event. It's going to be amazing. Now we get into part two, which is I is for invest. This is where I get into something called profit paybacks which is how to get a seller of a business to sell a business to you if you don't have a ton of cash. And there's actually a famous story I started off with with David Foster Wallace. I don't know if you guys have heard it. He told a joke about two young fish who passed by an older fish one morning. And the older fish says morning boys, how's the water? And the two young fish swim on for a bit. Then they looked at each other later and say what the hell is water. And the point is this is that if you don't actually know how to do creative financing, if you don't know how to buy businesses using different structures, you don't even realize that all around you at this very moment there are opportunities for small businesses. You just can't see them because you didn' know the water was there. And so we talk about a couple different ways to do profit. Paybacks. This is where we get into why you should get somebody to help you finance a business using their business profits, what's common in them, why it benefits the seller. Really three reasons why. But I give you guys some nice, specific graphs you can use with the seller. You know, first, a graft on how you can actually give them more money for their business, but it could be better for you. Second, how you can get taxes to be deferred over time. And then third, how you can close deals faster. And those are three reasons why you could get a seller to sell you a business way. We also go through some of the cons because if you already know the obstacles the sellers are going to have, you're going to be able to waive them off more easily. We also talk about some really limited beliefs around debt. As Americans, we were actually really, well, not even Americans as humans, we were really told and beaten into us that debt is not good, that it is actually bad. What's interesting is, I mean, I was looking at some of these quotes we have in here that debt has like biblical history with people saying that they don't like debt all the way back in the Bible. But I think it's actually a misinterpretation of the Bible. And so we go through what is good debt versus bad debt. And how do I define that and why does that matter? We also go through about five or six, six different ways to buy a business or part of a business. Using your mind, using your intelligence, and using future profits. Really important part in this is how do you start negotiating and pull together what's called your deal team. So this is where we talk about how to find the right attorney with a couple truths, such as, you know, how to find a pro. Well, pros refer pros. So you find somebody who's already doing the thing that you want at a really high level and ask them who might work with you. And at a lower level, there aren't that many documents that are needed to buy a business actually. And so we talk about three documents that I like to use every single time. And what those mean. I think words have power and so do definitions. The more you can understand the definitions of money, the more money you're actually going to get. It's really powerful when you can look at a contract and know if the contract is good or not for you. And so we have lots of examples and graphs breaking down how does a contract work in buying a small business or doing deals overall, Then we get into pretty in depth. One of the most important lessons of the book, which is how do you choose a partner? And how do you guys not hate each other later? And how do you actually get a partnership that can be for the long game? I have 12 rules on partnership that I think are really important. And the reason I know is because I've had partners steal from me, lie to me, defame me, everything that could go sideways, go sideways. But that was actually all my fault for choosing a bad partner to start with. So maybe you can steal my homework and skip all of that pain. It's also a big reason why we have the contrarian community, because I want to have people together who can say, whoo, I don't like those terms with this guy. Let's watch out for that. This part's really fun. We start talking about negotiation and closing the deal. So I've learned from some of the best negotiations out there, from Evie, who is a former CIA and FBI case officer who wrote the book Bulletproof Blueprint. There's Chris Voss, who is the master from Never Split the Difference. And so how do we take these ideas that started in their realm and apply them to small business? We do that in depth. And then we get to step three, which is C is for command. Now, inside of each of these steps, as you've probably noticed, there are a lot of micro steps. I think there's about 10 steps to buy a business overall. Those 10 steps then fall into these four different overarching steps frameworks. And inside of those 10 steps, there's more than 26 tools and resources we use. One of the first things in command is how do you actually own a business, not a job. And this comes down to hiring an operator and having a key player in your business. You know, I remember really being inspired by the idea about how, you know, sport is about how much we practice and business is about who we hire. I mean, we don't always have to practice the right thing if we get really good at hiring the right people. It's why coaches create teams and they don't do all the roles on them. And so we talk about, you know, the bright and the dark Side of operators, how do you know when to hire them? How do you get them to buy into your goal? We also talk about how do we get the money to pay for somebody else to run our business? That seems kind of crazy. I have a couple of rules on that. And the main one is that you should always be generous in paying those who make your life easier, because coups start with shallow pockets. And so we break down very specifically ways you could pay your operators. From performance bonuses to equity to longevity payouts to milestones. I think this is how you figure out not how to chase talent, but draw them to you by really attractive compensation strategies. We also talk about how to find new talent to hire with, like some kind of sexy, if I do say so myself, job listings, which only us nerds are going to be into. You and me. Tell me, are you also into job listings? We also want to talk about screening candidates. So this is so important over time. There's something called a hiring filter, which is basically, how do you find like, kind of like, like picture. The picture in here is like, you know those, those gold miners that are like panning for gold in the river and they've got like a sieve in it, and they scoop a bunch of water and rocks and they go like this and they shake out the sieve and. And at the bottom falls the dust are the particles, and what's left are rocks and pieces of gold. And so we have a process for you to kind of figure out how do you find the gold. Really, really in depth. Things like a candidate hiring matrix that tells you specifically what does a key player look like and what does a key player look like for your business? And then how do you rank them and score them? I think that tools limit mistakes. So in this book, the idea is not only do I tell you stories and hopefully entertain you, and I give you advice, I. But I give you very specific tools so that you can skip my mistakes. There's a lot of things in hiring and doing deals that matter, such as the questions that we ask. So I have a couple questions I ask all the time when I am hiring somebody. And they're my little tricks to find out if they're going to be a good person for us or not. If you want to hire somebody and you're a public company like me, like, you know, you're on the Internet, one of the best questions to see how much they actually want the job or a job is what do you think we're doing wrong as a company right now? What are we Messing up. If they're like, dur, duh, duh, that means they didn't, they didn't analyze their company. They don't really want to work for you. You got to sell them on your thing if they're good, but otherwise they don't really care. A good answer basically shows you that they've done the homework and they are ready to hit the ground running. A bad answer is like they don't have any idea, you know. Another really good one I think is, is walk me through your last project. What should have been different? So this one tells you a good answer is like, you know, hey, this didn't go that well. So we changed this, this went well, so we did this again. A bad answer is like, well, Charles didn't work well and what happened is the leaders of the company kind of went sideways. We don't want to look for people who blame. That's an immediate red flag. So right about now we're getting to the point where we've, in the book at least we've figured out what type of business is right for us. We've searched for that business, we've talked to the seller, we've started to negotiate. We've done our seller financing for the business or our creative financing. We've done the due diligence to make sure we like what we're buying the business for. We figured out how to price the business and make sure we don't pay for it too much. We have now thought about closing the deal, but we want to make sure that our operator is good to go so we don't have to run the business all day, every day. And so this is where we start to get into 90 days. What do we do with our operator on a 90 day basis to make sure that they are crushing it. And very importantly, what do we do when we take over the business? How do we actually take over the business? So the transition is smooth and we have a system that's very specific here. So the first 60 days are called transfer and transition. So this is where you're documenting everything. You're following the person around and you're really not changing much. Then the next day, 60 to 90 days, that's called stabilize and systematize. That's where not only are you documenting, but you're putting it into a system. You're like, okay, I understand what's happening now let me put it into SOPs and let me figure out what the standards are. How could I stabilize the business? What's the baseline for this Business. Then we got days. 90 to 120 is power up. This is where you're like, all right, how do we accelerate the cash flow? Who needs to stay at the company? Who needs to go? How do we have small changes? And then 120 days plus is harness. So this is like, we're moving. We know how to run this business now. Let's. Let's start running. And so you're grabbing the harness of the business, and you're starting to get the horses to move. This part's really in depth. So, like, a really important way that you can never run out of cash in a business and in your life is what I call Friday finances. That's how I finish the week, each week by looking at the financials of the company. To be fair, right now it's Tuesdays for me. I've just called it financial Fridays for so long, but we changed it to Tuesdays because one business can't get their together by Friday. So now it's Tuesday. That's the real talk. But you know, Nicholas Nassim Taleb said one of the quotes in here, don't tell me what you think. Just tell me what's in your portfolio, because that'll actually show me where the money is. And so in here, we're breaking down all the financials. Did you hit your goals? What's your base salary? This little section should tell you how much money you need the business to make for you, how much money you have to play with. And is the business successful and still going to make money? Because as Carl Icahn says, happiness is positive cash flow. Hysterical. Side note, if you've never seen the documentary on Carl Icahn, famous activist investor, kind of a psychopath, and he has this, like, embroidered grandma pillow, if you could imagine. Can you picture that? Like, the little embroidery, like a little flowers along the edges. And the embroidered pillow says, happiness is positive cash flow. And I just. I want one. So if anybody wants to Send me one, YouTube, do it. All right, next we're gonna go to. What types of businesses are we moving our businesses to? There's two types of businesses. A cash suck business. This is where the cash is sucking money. The business is sucking money away from you. And a cash flow business, and we break down what those are. The idea is this. I'm thinking about my business like a boomerang. I want to send my business products or services out, and I want the boomerang to come back to me as fast as humanly possible with cash paying for those services. It's even better in some businesses is if before you fulfill, before you give the service, you get the cash. Those are the best kind of businesses. But that's how you, when you take over business, we focus a lot on how do you shorten the cash flow cycle. We also talk about in here, which is pretty important. The, you know, if you're going to run a business and you're going to do anything in life. I like to steal the Cato process, which I didn't come up with this. This is from somewhere originally, but I changed it and made it my own. So I came up with this idea of Cato which is like we want to cut what doesn't drive revenue. We want to automate anything we're doing manually. We want to delegate to those who earn less than us and we want to outsource to those who can do it better than us or at a cheaper price than us. So I use Cato in all of my businesses consistently. You'll hear me. If you're ever like around my team, I'll be like, is that your job? Are you doing that job or is that somebody else's job? Because creep from our precious hours to something else that is the least of our ability is one of the ways businesses die. All right, now we get to step four H is for harness. This is the last stage and the idea here is mastery. So it's how do we take a business and 10x our profits in year one? And we give very specific examples of a business that we took from $100,000 all the way up through seven steps to million dollars in revenue. And the idea is not just do we go and get more clients, which is most what people most think about when they get a business, but how do we use smart acquisition strategies to get more money in our businesses without as much effort as it takes getting each individual client. There's a couple different fun things in here. So if you like making money, you should know about pricing. Pricing is the thing that allows you to have enough margin, AKA extra room in your business for you to take some money home with you. And so, you know, some of the pricing strategies that we use often are the sandwich method. So for instance, most small businesses might have one price for a service. They might only offer transactional services, meaning one time, nothing recurring. We want you guys to instead think about in every single business, what's your low price item, what's your high price item, what's your mid price item, the one that you actually really want to sell them. And because it has price anchoring, AKA a high price and a low price anchoring, like a cheap price. Typically, people pick the one in the middle. So most small businesses should have three prices for everything. And they should also have a recurring option, allow people to keep spending money with you if they want to. Most small businesses do not, which is crazy. As you get a business going, eventually you want to run a business on autopilot. You don't want to have to be the one doing the work all the time. You know, Elon Musk also famously said, my mind is a storm. I don't think people would want to be me. They may think they'd want to be me, but they don't know. They don't understand. That was real. I remember when I saw that footage of him going, oof, that does feel like a storm in there. And a lot of small business owners are like that because they don't use scorecards and monitoring metrics that allow them to be like a. Like a coach watching his team perform on the field, but not having to be involved in it every single day. And so we have a couple of different tools we use for. This one is called the deal driveway. So what are the steps that it takes for you to make money? For instance, in, let's say my. My laundromat business, it might be put out a sign on the street that says, you know, discount laundry services today. Put a wavy guy out there next to the. To the sign, have customers come into the shop, greet them, offer them additional services, or. Or products such as soap if they want to, to toys for their kids, and then make money. Right? So it's like my front end, top of funnel is wavy guy sign out front. I know when I do that, I get more customers to come in. If I get them to come in once I try to get more from them, AKA increase my basket size, my average order value of each customer. And then once they've come in once, the likelihood they're gonna keep coming back is higher. Right? And so that's my deal driveway. I know all the way from wavy guy to closing quarters how to get money in my business. And everybody needs to do that, and most people do not. The other thing that's really important in business, and I try to not just tell you, but show you. Like this shows you. For instance, our referral program in one of the businesses. Every business, you really want three things. You want good customers who say nice things about you, buy more things, and thus bring more people along with them. And so the way you Get a referral program going is you have a great product, you get your people that are already buying from you to tell other people about your product and you get them to buy from you again. That's how you have a healthy business. If all you have is a lot of people buying something, once your business is in trouble, if all you have is people saying nice things about you, but they don't keep coming to buy from you, your business is in trouble. And so we break down a system for you on how to do that. One of my favorite lines in here is it talks. People sometimes say, like, what if I don't want to run a business? Like, what if I don't want to do the operating of it? What if I don't want to own multiple businesses because I'll always be working well, Charlie Munger has this incredible quote, Warren Buffett's partner, and he says the thing is, when you get a dog, you don't do the barking for it. And what he means is, is that when you hire employees and operators, you let them do their job. I sometimes am bad at this, you guys, for sure. I, I have to ask my employees often, where am I in your way and where am I doing something that like you should be doing? And I'm bothering you basically getting in your way because your best performers actually get annoyed by you meddling with their underperformers. Love it. Because they're like, just do more of my work. Top performers are like actually like, I'm good at this, stop it. And so stop doing the bargain for your people. A quote in here that I think is good is he that hunts two rabbits, chases neither. So in the beginning, please don't buy six businesses at once. I know you overachievers out there. I see you. I want you to know that your lack of focus will kill you before your competitors do. So in the beginning, you're going to buy one man, you're going to buy one. And then you might buy other businesses to stack on top of them, but you're not going to buy 50 different businesses all at the same time. This idea of seven income streams. If you're getting all hot and bothered by income streams, don't stress. On page 230, we tell you how you can do seven acquisitions inside of one business to scale up to that seven figure number. That alliteration is kind of sexy, but it won't distract you like non strategic acquisitions would. Which is something that I really want to hammer home with you. This is the idea of how can you make every acquisition that you make be worth 10x more than what you paid for it. And you do that when the acquisitions are strategic. Now, you can't bake a turkey by putting it in for one hour at 900 degrees. This is a timely Thanksgiving joke. The reason why is because good things take time, man. They got to take what they take. And one of the most important things for you to think about as you buy this first business is one day you're gonna sell it. And so the second you buy it, I want you to start thinking about how can I turn this business into something somebody else would want? How is this a sellable asset? And so we talk about this a lot from valuation boosters. So how to increase your business's value. You know, a segment like this two going in depth into what buyers need to see in order to have a business that they want to buy. I call this the cash out cake. Also, tell me you want me to do a whole nother book on how to sell your business. I think a lot of people leave money on the table, even having little tiny businesses and just shutting them down. So it's a passion project for me. But since there's only 6% of America that own a small business, it might just be me and you, you, friend, that care about this. There's a couple different ingredients to this. My lucky number. Seven again. But really, seven ingredients to sell. Four millions. And we go through each one of those. If you want to sell for maximum profit, we get a. We get a little spicy here. And this is where we think about increasing the profit of the business so that you can increase your profit upon sale. There's really a few steps to do this, but one of the most important steps is what I'm going to tell you guys again and again is always a who, not a how so. In contrarian community where we teach people to buy businesses, we obsess on getting your deal team together. Your accountant, your attorney, and your subject matter expert. And you are going to do that when you sell a business, just like when you buy a business. All right, final thoughts. You got to keep going after it gets hard. You got to keep watching the YouTube videos. You got to keep reading the book because at some point, this will feel like it's too much. And I'm honest about that. I don't think that you get really rich without a ton of work and pain and suffering. It just doesn't happen, friends. But what I do tell you in here that I think is very true is that if we don't do this. If we don't buy back our local businesses, if we don't get ownership and skin in the game, then we become this nation of serfs, always asking for crumbs from those who own. I want to put you and me and all of us into the ownership circle. And the way you do that, picking up this book also, I think the book's pretty good, but I'm slightly biased.