Codie Sanchez: This Is the No. 1 Way To Get Rich
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J. Arky
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Codie Sanchez is the founder of Contrarian Community, CT Venture Cap and hosts the podcast “Big Deal,” but it’s on her YouTube channel where she shares the top piece of advice for getting rich, which all comes down to one word: Acquisitions.
In her video, “How To Buy A Business” Sanchez breaks down the best way to obtain wealth and keep earning it time and again, starting with creating your own company and then bringing others into the fold. In conjunction with best practices from the U.S. Small Business Administration, here is how Sanchez recommends doing it, even if you do not have money or think you cannot afford to acquire another business.
Find a Business Owner Ready To Sell
Sanchez pointed to the fact that the average age of a small business owner is 67 years old, meaning that most are looking to get out and retire. That can give you an opportunity to buy their business, then turn it into a money maker your own way.
Other avenues to finding a business could involve owners who get divorced, pass away or are looking to focus more on their personal life, meaning they are actively hoping to sell.
Use Seller Financing
As Sanchez highlighted, seller financing can actually make the seller more money in the deal.
In this type of financing, you would put a down payment on the purchasing of the business, then the seller would give you the money to finance the rest of the sale, using future profits once you acquire the business. No need for a bank to finance a loan, but all parties obtain their desired goals in the transaction.
Search for Business With Less Than $10 Million Revenue
Per Sanchez’s suggestion, you as a buyer want to be on the hunt for a business with less than $10 million in revenue each year, as well as profit to cover the cost of income, operating fees, working capital or growth, and debt service, otherwise known as the price you pay to buy the business.
Finding businesses that generate under $10 million in revenue, according to Sanchez, means there is less competition from private equity investors.
Looking at On-Market and Off-Market Deals
Sanchez makes the distinction pretty clear: On-market deals are businesses already for sale, off-market deals are ones that are unlisted, but could still be purchased if the seller is willing to part with it.
Per Sanchez’s calculations, there are 11 million businesses listed for sale on market at the time of her video’s release and upwards of 40 million businesses that are not advertised as being for sale, though could potentially sell if the right buyer came along with an offer.
“Every single business owner at some point will take a deal,” Sanchez reiterated.
Be Consistent With Deal Sourcing
Once you start to acquire businesses, scale up at a pace that’s right for you, but that remains steady over time. Sanchez noted that this is the most important, yet time consuming part of gaining wealth: keeping your eyes peeled and on the lookout for the next big opportunity.
However, it starts now. Sanchez urged anyone looking to get rich to start to plant the seeds now and take the actions of building their business in the present so their future wealth is acquired down the line. Sanchez recalled that once she hit an inflection point and bought a business, her life and financial health started to change in ways she never predicted, leading her to the success she has today.
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