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Action Academy | Millionaire Mentorship For Your Life & Business
BUILDING Businesses vs. BUYING Businesses (Which One Is Better???)
00:21:34
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- [00:00]
A
Brian, I have to ask you about something that goes against everything we're taught about entrepreneurship. All right, Everyone talks about building from scratch come with the next big idea. Being the founder, right? Everybody wants to be a founder, but you teach people to buy existing businesses instead, and that feels almost like cheating. Why go against the grain of the founder led kind of perspective and jump straight into the. The already buying something that's operating and working.
- [00:29]
B
Cool. So first, to provide context. I've built for, bought for. So I don't think there's anybody that's even better positioned to give advice on this than me. Because to my core, to be honest, I'm a builder. I am a business builder. I am a start from scratch guy. That's just how I'm cut, how I'm built. I enjoy it. If you took everything away from me, I would probably build something from scratch again while I'm buying things at the same time. Now, with that being said, that's not most people. Even entrepreneurs like, that's not most people. So first let's, let's perhaps share the benefits of building and what it looks like and feels like to build a company from scratch. And then we can talk about the juxtaposition of what it's like to buy a company. Because now you guys will have context of what's required to build a company. So the reason that most people can't make a decision and they just think, oh, I'm just going to build a company instead of buy one, is because they don't have context into what it takes. Right? Right. So it's like path one, path two. All right, so let's talk about path one right now. So how do you build a company from scratch? Right? And I've talked a lot, a lot, a lot about what this process looks like. But I'll share it briefly here. This isn't the point of the video, but this is how you start a company from scratch, not what's required. Right? So how you start a company from scratch is number one. You solve a problem yourself. Big part that a lot of people tend to miss. They just pick an idea and they try to solve a problem for other people that they have not yet solved themselves. You see a lot of personal trainers that are fat, weird. A lot of people are doing that with financial education online. Cough, cough. So it's, you see it a lot. You're like, brother, that is rented in least not online.
- [02:05]
A
Did the whole, the whole like financial advising industry where it's this college student that just got a degree or they've.
- [02:12]
B
Got like, financial advisor. I have never once met a financial advisor that's financially free ever in my life. They maybe make six figures on salary, in commission selling you shit.
- [02:22]
A
It's crazy.
- [02:23]
B
Yeah. So, all right, so let's talk about how do you start a business, right? In a perfect world. So here's how I started every single one of my companies over and over and over again from scratch. Number one is you solve a problem, you go out in the wild, you solve a problem for yourself, okay? It's the best business to start. And so for me, I was like, okay, I figured out how to leave corporate, especially a high paying, $252,000 a year corporate job. So you solve the problem. Number two, you document the process of solving the problem and you talk about it, right? You go out and you say, hey, cool, I just did this for me. Here's what I just did. Here's how I did it. You're not prescribing how other people should do it. You're just sharing how you did it, right? That's how I did it. As I just did it. And I talked about it for free on the podcast for a year. Okay, cool. Part three. Now what happens? Now if you want to make that into a business, you start helping people for free. What I see a lot today is somebody goes and buys a hotel and then they go start a $20,000 a year hotel buying Mastermind. That is the biggest crock of bullshit I've ever seen in my entire life. You should not do that. You should start off low and slow like I did. So what you do? What do you do? Free. Free. F R E E. You go do it for free at minimum five times. Help somebody else, even just once. You need to be able to demonstrate that not only can you solve a problem, but you can duplicate the solving of the problem for somebody else. So I went and I did a hundred free coaching calls and I helped a hundred people for free, right? Now, after you help them for free, and they say, holy shit, that was really valuable. And that's something that I can immediately apply into my life and business. Great. Now after that, you want to race to your first dollar as fast as possible because now you have validated that. Number one, you have the ability to solve a problem. Number two, you have the ability to solve the problem for somebody else. And number three, now it's time to make some freaking money. Okay? So you're not going to make a crazy, crazy offer, in which case you're like, oh, this is 5000-10-000, 20 000. This is what my time is worth. And again this is just from my specific perspective. Apply this information to any other business that you're starting. But this is a done for you like service business that I'm talking about here in the coaching business. So then what I did was, I did a, a stupid irresistible low offer. It was like $1,500 lifetime access. I was like, here's this thing. I don't know what it's going to be yet. I need a, I need some people to help test this out. And I'm going to, it's going to be this amount later. That's going to be 10x right now. This is the amount if you guys want to come. My only, my only ask is that you guys are going to help me with feedback. You're going to give me feedback, tell me the good, the bad, the ugly so I can change and iterate the company, right? This is called your mvp, your minimum viable product. Every single company should do this. Even if you're doing like physical goods or services or anything, like just start low, start slow, right? And then you start to build up some testimonials because now you've, you've got some dollars, you've got some customers, you're doing the service and it's really hard to f that up because they're paying such little money, right? So you, you deliver the result, you get the testimonial from the customer and then you have now earned the ability to go raise your prices. So now you raise your prices. And now that I have experience in this, I, and I know exactly what the hell I'm doing, I'd be able to raise it much faster than I did. But then you raise, raise your prices. Raise your prices. Raise your prices. To what point should you raise your prices? To the point where you're closing 30% of your customers? If you're closing 60% of your customers or 50% of your customers or 40% of your customers on a sales call, you are priced too low. You should be having 10 sales calls that you're taking for your product or service, your business, you should be converting 30%. That is a banger. Banger sales conversion. 20% is still amazing. 30% is banger. If you're converting 40 to 50%, double your prices. That's a great rule of thumb to know like a. Um. I think the best position way is if you're converting 40%, double your prices. If you're converting 30%, you're doing great. If you're converting 20%, get better at sales to convert to 30%. Right. So cool. So now you've got all this and now you're starting to have some capital coming in because you're, you're doing what's called bootstrapping. So you're, you're starting with cash. And so now you have to go through the process of. You are every single department. So I was the sales rep, I was the, so I was first I was the marketing guy that put the call in the calendar. Then I was the sales rep that closed the call. Then I was the onboarding director and the customer service rep that brought them in and then I was the fulfillment rep that was actually taking them through the fulfillment of the service. So you are everything. Oh, also I'm finance and HR in legal. So I'm, I'm generating the marketing to, to generate the lead, to convert the lead, to service the lead, to collect payment from the lead, to upsell the lead and to increase the lifetime value of the lead. That is all me.
- [07:06]
A
Yeah.
- [07:07]
B
And then you're making 10 points.
- [07:08]
A
Can I just, can I interject for a second? What I want to, I want to highlight for people. I think you're doing really well is you've identified that the, the hold up for people is that they start on ideas and they think I need to have this amazing idea.
- [07:20]
B
You're never going to have the idea. That's the business. You need to just throw it out.
- [07:24]
A
Exactly. You just, you went to customers. Yeah, yeah, let me see what customers want.
- [07:29]
B
Dude, inspiration has a shelf life. Ideas have a shelf life. And if you have an idea, you need to get that idea out into the world as fast as humanly possible. I have friends that they'll have an idea for a product that doesn't even exist. They'll just go put $200 of ad spend towards a fake landing page, a fake website, everything. And they'll, they'll put it out just to get demand. I look for my for Action Academy which is going to be an eight figure company in 2026. I made my first hundred thousand dollars living in a house in Brazil with barely any WiFi, no bank account, no business, no LLC, no website, no landing page, no marketing. My entire offer was a four line email that said, Yo, 1500 bucks sound good? Like I'm making this online course thing. 1500 bucks question mark. And I put my cash app in my zell. I made a hundred thousand dollars in 48 hours. I was like, well Got a hundred thousand dollars now I guess we got a business and that's what we started. Okay.
- [08:20]
A
And then a six figure business after 48 hours.
- [08:22]
B
A six figure business after 48 hours with zero brand, by the way, I. I had about 3,000 downloads a month on my podcast, and I think I had maybe 10,000 Instagram followers at that point. So, like, this was just me just serving my people that were already listening. Right. So cool. So you do that. The reason, and then you go hire people. And then my first couple of hires, I was like, I have no idea what I'm doing. So I got. I have to learn everything on the fly. And then you just, you hire and you figure it out. And you hire and you figure it out. It's just so much effing work, dude. Um, and I built it from scratch. Now that I've built it once. And then I built my events company the exact same way. Said, hey, do you guys want to do Mastermind retreats in Costa Rica? I've got this couple mansions in Costa Rica. Do y' all want to do that two grand? Which, by the way, we lost our ass doing that. But yeah, we sold out. Cool. We fulfilled it. We did it ourselves. Then we went up and we did another event, then we did another event, and now we're booking out five star resorts every single time. And that's a multimillion dollar company in. In and of itself. Another. Another company. I did the exact same way. And so the building process is the most difficult thing you will ever do in your life. It is the hardest path to entrepreneurship. But if you're so inclined and everything I just said sounds super sexy to you, and you think you have what it takes, Good. Go do it. You will make millions and millions and millions of dollars. I own 100% of Action Academy. Own 100% of the company. I make millions of dollars. Take home now my tax bill, My quarterly tax bill is like hundreds of thousands of dollars. My quarterly tax bill. It sucks. But I mean, like, that's. I mean, because it's not just about revenue, it's about profit, right? Yeah. So there is a result on the, on the tail end of it right now. My result isn't necessarily indicative of. Of everybody's results. I'm decently good at this and I'm curious and I take feedback well, all right, so now everybody knows how to build a business from scratch, like, period. And here's. Here's the number one thing before I tell you guys about buying businesses the way that startup companies in Silicon Valley work that's different than how I just described, and I didn't understand it before, was they will go take on investor capital. They'll, they'll raise what's called seed money. So series A, series B, series C. And these are just like rounds of investors that come in and fund the companies because they're, there are people like me that understand how to build a company, right? They need talent and they need to hire and attract and pay, you know, quarter million dollar people out the gate or people with even higher skill sets than that out the gate. Like OpenAI, like meta right now is paying billions of billion dollar salaries to people. They're, they're signing them on like multi year deals for hundreds of millions of dollars. Like that's how much talent matters. So the biggest, biggest, biggest discrepancy between buying a business and building a business is you can have talent. Day one, buying a business versus building a business. So not only do you have talent that's already in place, that's already been hired and already been trained, but they, to that point, they're already trained, they're already doing the thing. They've been doing the thing for three to five years in their position. So it took me, it took a year or two to even hire my first six figure employee and now that's all I want to hire, is six figure employees. I'm looking for my first seven figure employee now. Yo, what's up guys? One sec. You're listening to a podcast right now and I freaking love that. But this is not making you more money. What makes you more money, more wealth, more equity, is being in the room with the people that you're hearing on today's episode. If you want to be around hundreds of other people like you leaving corporate America, doing big deals in business, commercial real estate and land, check out actionacademy.com, go in the show, link the show description and click the link to book a call with our membership director team. We'll give you the resources, the connections and the community to actually pull off the stuff that you're learning about on this podcast. And we'll hold you accountable to the actual implementation of the information that is actionacademy.com now let's get back to today's episode.
- [12:17]
A
Well, I'm saying to your point though is like not only does the infrastructure for the team exist, but after point one, the customers always already exist.
- [12:24]
B
It's the customers already exist. So imagine, imagine like, so imagine you get a. So if you really want to illustrate the difference between building and buying a business that's already existing. You can describe it like you're, you're doing a kick return for, from like a football game, right? So like building a business from scratch is you get, you're all the way back in your end zone and now you, you're, you're charging and you've got this entire team coming at you and they're already like smack at you at like the five yard line. And you got to bully your way through these people and like make sure you don't get tackled. Right? Whereas buying a business is like you're starting on the opponent's 20 yard line. Like that's where you start the game is like, okay, cool, now I just need to make a few tweaks and run a few trick plays here to, to get into the end zone for.
- [13:09]
A
20 yards with, with, with a team.
- [13:12]
B
With a full team.
- [13:12]
A
Well, so it's not just.
- [13:13]
B
Whereas before, it's just you by yourself running. You don't have anybody blocking for you. It's just you versus the opposing team. Whereas now you've got like some, maybe one or two like four star receivers with you. You've got an offensive line, you got a running back. You have options, man, you. So when you buy a business, you're buying something that is already proven. It's already gone through the hard stages. That's why I tell people, do not buy something beneath a million dollars. Beneath a million dollars is still a hobby. It's a side hustle. I'm sorry. For people that have smaller businesses, like, I'm not buying your business beneath a million bucks. It's, it's not, it's, you're too still in the weeds below a million bucks. It took me 13 months to go from zero to a million bucks, by the way, in our, in our company from scratch. And so when it comes to buying the company, you're buying something that's preferably been already operating for like three to five years plus they're already doing a couple million bucks in revenue. They already have like multiple six figures in profit, preferably over $400,000 in profit. And most importantly, they have a full team in place. Does this mean that this is yet passive yet for you? No, not necessarily, but damn near closer. Like I said, you're on the 20 yard line instead of starting all the way back in your, in your end zone. So you come in and you have a GM that's probably running things. You have a couple of service techs that are going out and servicing you have some processes in place. That's why when people look at a business between that's priced $300,000, which is a joke, by the way, it's a fricking hobby versus $3 million, you go buy the $3 million one and you figure out the fricking cash because they have processes. At that point, you have a $3 million company, you have a process and a workflow for things and you have people doing it. Um, so you can come in day one, you already have profit, you already have marketing, share marketing. Yeah, you already have market share, you already have everything running. And now you can just come in and make whatever tweaks and add whatever flavor you want. The Alaska tourism company that we just bought for like 2.1 million, I put $150,000 down into it. They're doing, they're like, if you go on TripAdvisor or you go on to like get your guide or Viator, I think is the websites. If you Google what to do in whatever city, those are the three things that come up. And our company that we purchased was the number one ranked in five star reviews and all of them like by thousands of five star reviews. That's not something that you're going to be able to build in within two years, busting your ass. Like, that's a huge competitive moat. And so we're the first number one that comes up on there for doing Northern Lights tours. And so I bought that company and I'm starting at the like the five yard line. I've never even been to Alaska, dude. And so my, my operators that are running this, like they're taking this thing that isn't even open during the summer, by the way. The owner shuts it down during the summer and just operates it during the winter. And I'm like, dude, we can just open it during the summer and do tours and double the revenue within a year or two. And so you get to benefit from that out the gate. And it's just way different, dude. It's so much cooler.
- [16:10]
A
Well, let's, this, let's. I think this is the, the last thing I want you to hit on on this, which I think is the big one in comparing these two is how long before someone building from scratch actually gets paid versus someone who buys. Those are the two biggest differences in my opinion.
- [16:27]
B
Well, here's the difference. So if you're building from scratch, like a cash flow business, like I was, you know, I was able to take some money from that out the gate. Like I've always Done what's called profit first. So I've always taken money from my companies, but the difference is I was also working a hundred hours a week. So I'm basically just doing a really highly PA job at that point. So I was maybe making like a hundred thousand dollars, like first year. I think we did like $729,000 in, in revenue and I think we did like 200 something in profit. So I mean, like on top of like. So I mean, I probably took home $300,000 the first year I did it. But I mean, I was doing everything right. And that's not, again, not indicative of other people's. Like a lot of people will be doing a company for 10 years, especially in the restaurant industry and the food industry. Like you're running a company for 10 years and you're barely making anything.
- [17:15]
A
Yeah.
- [17:15]
B
So that's another thing is you're most. The biggest thing that people talk about online of why you should buy a business instead of build is most businesses, like 98% of businesses fail within five years. So it's like you're already beating that curve through purchase. You're already buying something that already is rocking. So I mean, that's a whole other can of worms right there is. You're like, okay, this is proven. It's already been doing this for years.
- [17:36]
A
Yeah. My assumption is if you're building from scratch, you might have access to the dollars quicker, but they're smaller dollars versus if you're buying a business that delayed gratification is probably much larger.
- [17:48]
B
Okay. So the real real is you get the cash flow faster upfront when you buy a business. When you buy a business, you're buying a deal that prints you out a hundred to two hundred to three hundred thousand dollars. Take home to you, day one, year one. Okay. Now if you can delay gratification again, and this is saying all the stars are aligned. Like this is me three years deep into my company, but I can make a million dollars. I don't have any debt. So if you could delay gratification, you're cool eating dog shit for a couple of years. Like you can. That's what, that's how you know you should build. Because now you can, you can take the upside benefit of it later because I don't have any debt. These companies that I'm purchasing, like they have debt on them, 90% debt. So it's like we have to do the debt payment, which if you buy a company correctly is, is 50% of your profit goes to your debt. And that's a great deal. Yeah. So that's why it's like, if you're buying a business for $400,000 in profit, you're taking home 200 and you're splitting that between partners after debt. Whereas if I, if I build something where now if I do $400,000 in profit, I'm taking home the 400,000.
- [18:53]
A
Yeah.
- [18:54]
B
So that's the difference. There's benefits to both. It just completely depends on your personality. I think most people are significantly better off buying a business, but they can make their own decision from this information.
- [19:03]
A
Buying, building, I guess. Who is this? Not for either or when. Yeah, like let's say, let's say buying one instead. Let's end on this. Who is buying? Not for who should instead just be building? Someone sitting at their desk right now, they're listening to this, they're driving or they're driving home from work or driving to work, and they hate their situation. How do they know whether they're in the position where I should be looking to buy something or I should just be looking to build something?
- [19:28]
B
If you have to ask, then you shouldn't build. That's, that's the answer. Like, if you're asking the question, should I do this? Like, it's not you as cryptic as that. I mean, it's just the, it's the real, real dude. If you're asking, should I do, should I, should I build this business? Then you're already like, no, you already lost. Like, the people that are the builders are the ones that are like, this needs to happen. This needs to exist in the world and I will bend the earth and reality to my whim to make it come true. That's a builder. Most people are like, hey, I want some passive income. I want some cash flow so I can leave this job. You know, I'm still cool with working hard, but I want to work hard for something I own so I can go travel four weeks a year with my wife and kids. Yeah, you should just. You should buy a business. You should just buy something. Already working for me, dude. I'm just like, I see something and I'm like, this must exist, and I will bend the world to make it happen. I'm going to figure it out. You have to have, you have to have an ungodly amount of confidence because everybody in the market, in your friends and your family and maybe sometimes your, your co owners and sometimes your employees are going to be like, dude, you're insane. You're not going to, you're not going to do this. You're like, yeah, I am. Watch this. Like, that's a builder. That's. That's a builder. Boom. Thank you guys so much for listening to another episode of the Action Academy podcast. My one ask real quick before you go, if you enjoy this episode, if it brought value to you, please share this episode with one to three friends that you think could get value from it. This is how we grow the show. And at minimum, if you could leave us a five star rating and review on Apple podcasts, Spotify or whatever platform you listen to, that would mean the world to us is how we get in front of other entrepreneurs. If you're done sitting on the sidelines, you're done listening to the podcast and you want to be the freaking guest on the podcast, go into action academy.com, go in the show description, the show link, and book a call to speak with our Action Academy community. We have hundreds and hundreds of people just like you buying businesses and commercial real estate with full coaches, full mentors, full support, full capital, everything. ActionAcademy.com is where you'll find us.