← The Amy Porterfield Show
The Amy Porterfield Show
#738: Creating Financial Freedom: Building Wealth Through 'Boring' Businesses with Codie Sanchez
00:58:22
Buying and scaling “boring businesses”, building life-changing wealth, and unlocking financial freedom.
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- [00:01]
A
Your bank account is a direct correlation to the size of the problems you're solving and the amount of risk you're taking. So if you don't have as much money as you want, you aren't taking enough risk and you aren't solving big enough problems.
- [00:13]
B
I'm Amy Porterfield, ex corporate girl turned CEO of a multi seven figure business. But it wasn't all that long ago that I lacked the confidence, the budget and the time to focus on growing my smart, small but mighty business. Fast forward past many failed attempts and lessons learned and you'll see the business I have today. One that changes lives and gives me more freedom than I ever thought possible. One that used to only exist as a daydream. I created the Online Marketing Made Easy podcast to give you simple, actionable, step by step strategies to help you do the same. If you're an ambitious entrepreneur or one in the making who who's looking to create a business that makes an impact and a life you love, you're in the right place, friend. Let's get started. Welcome to another episode of Online Marketing Made Easy. Thanks for joining me today. This episode is going to be nothing short of amazing because we're about to hear from someone who will truly blow your mind. I am such a fan of this woman. My guest today is Cody Sanchez. Cody is an entrepreneur, investor and founder of Contrarian Thinking, a movement that encourages people to think differently about wealth building. She's the author of a brand new book, Main Street Millionaire and in it she teaches you how to build generational wealth by buying small, everyday businesses. She also has a digital course, you know I gotta love that Main Street Accelerator, which walks you step by step through how to find, evaluate and buy small businesses that generate real cash flow. So in this episode you'll learn how Cody went from a career in finance and journalism to acquiring boring businesses that now fuel her financial freedom. We'll dive into how she's helping thousands of people rethink what it means to be an entrepreneur to create steady, life changing wealth. Even if you're not looking to buy a business in the near future, you will learn from Cody's expertise when it comes to building a lasting, successful and profitable business. And we also touch upon buying online businesses, not just what she calls Main street businesses, which would be businesses local in your community. And here's what I love. Cody takes what seems like an intimidating, complex process and makes it totally approachable. I know you're going to get so much value from this conversation that will help you in your own Business and beyond. I had the privilege to spend time in real life with Cody, and I have to tell you, she's the real deal. I'm so impressed with everything she's doing in her business and how much she. We're very similar in the sense that she cares deeply about educating people to help them find freedom. So with that, we are 100% doing the same thing in terms of educating people in specific areas that are different, of course, but to help people find more freedom. So I won't make you wait any longer. Let's bring on Cody Sanchez. Well, hey there, Cody. Welcome to the show.
- [03:39]
A
Thanks for having me. I'm so excited to be here.
- [03:41]
B
I am, too. I'm such a huge fan of everything you do. So I was excited for this, and I was doing all my research and diving into all the things, but I kind of want to start at the top because you've had an incredibly unique career across different fields, so finance, politics, journalism. So over the years, you've built a reputation from there buying and scaling boring businesses. So, first of all, I want to ask you, how did you get into buying these businesses with the background you have? But also, I think we have to clarify what the heck is a boring business? So go with wherever you want to go with that.
- [04:15]
A
Yeah, well, you know, I don't know if you ever had a job like this, but I had many, many miserable jobs.
- [04:21]
B
Hey, man. Sister.
- [04:22]
A
Yes, Right. Like, I had the types of jobs where you worked 60 hours a week. You know, now my husband says I look younger today than I did back then because I would have these big bags under my eyes. I was trying really hard. I was making good money at some points, but I was really miserable. Like, drinking too many glasses of wine at night, consistently in a not cute mom sort of way, miserable. And at some point, I, like, couldn't see a way out. You know, I was like, there's nowhere to go. This is my skill set. I had been at, you know, four different companies. I really could only stay at companies for two years until my last one, where I became a partner, because I. I thought, well, maybe if I jump to a different company, it'll be different. Maybe if I try this other thing, it'll be different. It was never different. And so I felt trapped. But I was making money, and I needed that to live. And I didn't have a crazy startup idea. Like, I had nothing. And so I was like, how could I decrease my risk in making money, keep my job, and potentially have, like, a golden parachute, something to exit with. And so the idea came to me because I was in finance for a long time, and I was watching these guys make all this money in finance, and they were buying businesses, like all types of businesses, doing a little financial changes to them, you know, maybe changing the model slightly. And then they were selling them for these huge profits or they were cash flying off them forever. And I finally, like, one day clicked. I'm a slow learner. It took me a long time. It was like 10, 12 years in, maybe 10 years in, I watched a couple deals go through at one of my firms, and I was like, wait a second, why couldn't I do this same thing at a much smaller amount? And so I had done three kind of failed ish startups beforehand on the side to try to make more money. Then I bought a consulting company, like a very small international relations consulting company, because that's what I was doing at the time. That kind of worked. And I made some money on the side, and I was like, whoa, whatever. It was 20,000, $50,000. I was like, this is real money. And I bought this thing and it didn't really cost me anything. That's interesting. And then I did it again with the Fashion Marketplace, where I actually did a little startup and then I sold it. And I was like, I made a little tiny bit of money on this too. And I was like, well, what else could I do this with? And that's when I came across my first Laundromat. And I had a guy who had owned Laundromats before and was in real estate, and so he knew how to manage them, how to run them, but I had a little spare cash on the side, and I knew how to do a deal. So I was like, let's buy this bad boy and why don't you run it? And let's see how we do. And it's not so big that it could bankrupt me. And nobody has to know. Like, we'll just keep it super quiet like that. Don't tell my boss. And so I didn't. And then that Laundromat turned into a series of Laundromats. And then eventually, between Laundromats and a bunch of these other companies, it sort of happened quietly on the side, where I started making more in these side businesses than in my main enterprise, which at the time was working at a private equity fund in the early stage cannabis space. And so I remember when I got into my little kerfuffle with that company, because they wanted to run it this way, and I wanted to Run it that way. I let it slip out somehow. I was like, you guys, I don't. I make so much more money in my other businesses than this. I'm doing it because I see this big vision, but it's not because you guys pay me this. And they were like, what do you mean? And so that's how quiet I kept it for so long because I was scared of quote, unquote, getting fired.
- [07:40]
B
Wow. Okay. So that's like the dream when you start making more money with the side hustle than you do your 9 to 5 job. And you could just go full width of side hustle if you want. So I'm curious, at that point, did you decide, I'm going all in? Was that your last job where you worked? You know, I. Were you working for them?
- [08:02]
A
Well, I was a partner at that time. So I had two jobs before I left where, you know, my. My job before that was, you know, it was a seven figure a year job. I was making a lot of money working at a company in finance, running a business in Latin America. And that business, I realized I was rather unemployable, you know, I don't know. I bet a lot of your people are unemployable too. Like, I think the best entrepreneurs are entrepreneurs because they were unemployable or they had an awful boss. And so in this instance, I didn't have an awful boss. I respected my CEO a lot, but I realized I was like, I think we should do finance and investing online. I think that we should actually go direct to consumers. I don't think we should go through these big institutions anymore. And my CEO was like, no. And so we were fighting about that. And so he basically at one point said, hey, with all due respect, I'm going left. You want to go right? It's my boat. If you want to go the other direction, you got to get your own boat. And I was like, well, that's kind of fair also. Fuck you, but kind of fair. And so. So anyway, so I left that business. At which point I was probably making pretty close to the same in my online businesses. But I was so institutionalized to thinking that I needed a job. Like, I needed the title, I needed the prestige. You know, I didn't think about myself as even running businesses. I was like, I own these things on the side. Sort of like one would own multifamily, right? And so I went and I got, quote, unquote, another job where I was a partner at the firm as well and invested in the asset management company. And in that same one, they wanted to go left, I wanted to go right. And only because they gave me an ultimatum did I finally go completely on my own. I actually rather liked having jobs. I just didn't like the way that my partners wanted to run them.
- [09:48]
B
Interesting. I love that you said you actually liked having jobs. I think some people listening now can relate to that. But I love that the universe was like, we've got bigger plans for you. We're pushing you out of here. We're just going to make this work in another way. So I love how that kind of all came together. So I'm curious two questions around this. Tell everyone what a boring business is because you are known for teaching people how to buy boring businesses. What does that mean?
- [10:14]
A
Yeah, a boring business is the company that's located in your small community or your town that you pay every single month, but you probably don't even think of as a business. These are landscaping companies, roofing companies, H VAC and plumbing companies. They're the cornerstone of America that actually employs somewhere around 47% of all employees in the US are employed in these small businesses that are sort of invisible. They're the opposite of Silicon Valley, which is where we say, well, you know, this business doesn't have a moat about it. This business doesn't have a crazy innovative idea. Your handyman is not an innovative business. And yet they might make millions of dollars a year. And so I kind of think of them, tongue in cheek as boring. Because if you went home and you told your mom after going to a four year degree and you know coming back that you going to be a handyman, she might go, wait a second, why did we go to college? Why did we do that? And so, but in fact, a lot of these people in the trades, which is they're also called, they have a higher rate of happiness. They make more money than the average college grad in the first three years of them graduating. And these small boring businesses are kind of all around us and looking for the next generation to take over. But you know, these days I also call them Main street businesses because I think it's easy for you to think about, can you go out and touch this business? And if so, then it might be a Main street or a boring business.
- [11:40]
B
Okay, all right, Main street businesses. That's how I want to look at them for sure. So a lot of people that are listening, Cody, right now, I teach people how to build businesses online. And we're going to talk in a moment about buying an online Business. But before we get there, I want to stay with these Main street businesses that you have been teaching about. I'm curious if someone's listening right now. Let's say they're in a 9 to 5 job. They want to eventually, you know, build up their online business, but they're very curious about possibly buying a Main street business. What mindset shift do you think people need to really embrace to see the value in these types of businesses? Where's. What does that mindset shift look like?
- [12:21]
A
Yeah, well, we teach 10 steps to business buying, and the first two steps are some of the most important. The first step I call the foundation, which is it activates something called your reticular activating system, which is basically, you know, how you go and you buy a new car and let's say you buy a Porsche, and before you bought the Porsche, you kind of don't see Porsches around. You're like, you don't really think about them. You buy the Porsche, all of a sudden, town's flooded with Porsches.
- [12:46]
B
Everyone has a Porsche, everybody's got a Porsche.
- [12:49]
A
And it's very similar with buying businesses. First, we have to activate the part of your, your, your brain that we call an owner's mindset. And so the owner's mindset starts to, 1 see deals all around them. It's like they see the matrix because they've learned that what ownership looks like is not what we were taught. And so we want to turn on that portion of your brain. The second thing that we want to do is we want to have the idea that ownership actually leads to freedom. And these days, the prior generation was kind of told, hey, four hour work week, quiet, quit, go and live your life. Do as little as possible. Mailbox money. We've heard all these terms, right? And we've kind of probably realized by and large, these terms are fake. You know, passive income. I'd love some. You know, I make a lot of money and I don't think it is passive. You know, you make passive income after years of active work. But I think these days, what people don't realize is this owner's mindset of having, hey, if I own my small business, if I own a portion of equity in my company, if I'm so valuable to my company that I currently like being an employee at, I can actually become a small piece of the ownership structure. And if I am that, then you can never take it away from me. Unlike a job, unlike a salary, if you have a contract written that says that you own a portion of the company, ideally with distributions, you can carry that through time. You can pass that down. And so we want to flip the switch. One, we want you to be able to see the matrix all around you. Then two, we want to be able to teach you how to become so valuable that you can either buy somebody else's business or get a part of somebody else's business for your talents.
- [14:36]
B
Okay, so I want to talk about how do you get started with this? But before I do, I know. I know exactly what my audience is thinking right now. Many of them are saying, what kind of money are we talking? Like, how much money do I have to have to get a piece of someone's business or buy a business? Because I think some people are taking themselves out of this scenario already. Can you talk about that?
- [14:59]
A
Yes. It's so smart. So in the book Main Street Millionaire, we talk about the three reasons why people never buy a business. One is what we talked about. And we got to dig in a little deeper in the book. But the first one is owner's mindset. So how can you realize what's happening around you? And then how can we train you to become a deal maker, to see deals all around and then to take action on them? And the second reason that people don't buy businesses is they say, I don't have any money or I don't have enough money. Which was what I thought. That's what took me 10 years to get over is like. I was like, I think people buy businesses when they're super millionaires.
- [15:35]
B
That's what I would have thought, right?
- [15:37]
A
And I'm not a super millionaire. Ipso facto, I will never buy a small business. And the truth of the matter is, is that you are never short of money. You are short of knowledge. And this, like, flipped my brain when I finally understood it, that if you go to. For instance, one of my good friends was a partner at one of the largest venture capital companies in the world. And I remember reaching out to him. I was buying part of a tech company. He was helping me think about the deal. And I was like asking him, like, what's the hardest part? Is it, you know, getting the money for these? Is it getting the deals? And he was like, pause. He's like, is never about the money. I'm like, never. Because this is, like, about the money for me. He's like, it's never about the money. Money is a commodity. So much so that this particular venture fund, one of the largest in the world, doesn't take investors unless they are non profits. Think about that for a second. They literally will not take anybody's money that's not a non profit. And so I remember when he unlocked that for me, I thought, well, that's interesting. And I said, now why is that? Why is money never the issue? And he said, because money is always chasing a good deal. If you have a good deal, you will have money to follow. The problem is that most people don't know how to find a good deal and they don't know how to get it in front of the money. And so a lot of what we teach is this idea of the 21 ways for you to get access to buying businesses and get access to capital without using your own. And you know, we go through all of them in the book. But you know, the three that I would obsess on. First is seller financing. Getting the seller of a business to finance the purchase of the business for you through future profits. 60% of all businesses are bought some portion of seller financing.
- [17:17]
B
I had no idea. Okay.
- [17:18]
A
Wild 2 is expertise to equity. This is unique to us. I think we're the only people that teach this, which is how can I get a part of a business just for the knowledge in my head and my experience in my past. And you would be surprised how often mask works, whether it's part of a deal upfront or an ongoing consulting fee. And then the third way that we teach is SBA loans. And there's all these different types of SBA loans. There's sba, there's sbl. You can now have an SBA loan that you bring investors into, not just yourself. So you can have multiple owners, diversify the risk. But it is basically the government saying, we want small businesses to exist and because of that, we will give you money to buy one. And so we talk about smart ways to do that. So those are three ways to buy a business without using any of your own money.
- [18:07]
B
Okay, so we took it right off the table. Anyone listening right now that they're like, this will never work for me. I don't have a bunch of cash in my bank account right now. You do not need it. And so I know you get into much more detail in your book and we're going to talk about that, but I love that we just kind of took it off the table. So now those of you listening, you can have an open mind, like, wait, maybe this is something that I want to look into. Maybe there's something here. So with this, I've got a bunch of people listening. They've never done this Before. And I think another question that could come up is like, okay, so I know you take us through the steps in the book, but what are some things I really need to consider as a first time buyer? And how do I even know what type of business would be right for me? These are some of the questions that I know my listeners are going to have.
- [18:52]
A
Yeah, it's a great question. Well, let's debunk one other thing too. When I first thought about buying a business, I thought they had to be millions of dollars. We bought one newsletter business for 8K. Yeah, $8,000. Somebody didn't want to own the business anymore. You can go to deuce.com d u c e. It's where you buy and sell newsletters. We have a list of like 115 of these different weird niche sites where you can find very specific businesses. And because they're really specific, there's not that many buyers. And so that 8K business that I bought, you know, I ended up making, you know, good six figures off of that bad boy. Then we turned around and did something else, which is, you know, for people listening, especially people who own online businesses or are thinking about it, every business has some value. Please, please, please. Never just shut down your business. Never shut down a business line. Sell it. Sell some portion of it. You know, I was with Michael Hyatt, who's a friend of yours too, at somebody's event and I was telling Michael he was going to shut down this product line. I'm like, absolutely not. Sell it. There is assets in your business. And so.
- [19:58]
B
So is that his membership?
- [20:01]
A
Maybe it was his membership.
- [20:03]
B
That's impressive, Cody. Yeah. Because I think you did really well with that. That's so cool.
- [20:06]
A
Yeah, well, I think we don't think about, you know, we. If you own a business right now, you get this. If you don't, you don't get it yet. But if you are able to get it, you will make more money than you can ever imagine, which is this. Every single business owner at some point in their lives hates the business that they've built. At some point they're like, get me out of this thing. I am miserable. Dear God above. And more often than not, if you can find a business owner at that moment, you can creatively structure a deal that is a win win for both of you, but is so unfair to you seemingly that you won't believe that you were able to get this deal. This is what private equity does every single day to small business owners. And if instead we can do this and come in as a solution to a business owner's pain. We can make really, really creative deals happen for very little capital. And so I wanted to prove that you could also sell a business. So I grew a newsletter list to 3. So I bought a business for 8K. And I said, I wonder if we could sell another business for 8K. We're going to do it for 60 days. I'm going to grow a newsletter email list. We're going to grow it up to, I can't remember how many subs, three or five thousand subs maybe. And at the end of it, I'm going to sell it to somebody just to show you that you can sell your assets. And what do we do? We sold the email list for 8k. So I was like, listen, you can buy one for 8k, you can sell one for 8k.
- [21:25]
B
Wow.
- [21:25]
A
Anytime you have an asset, make sure that you. That you do something like this with. And then. So the only other thing. Wait, the question that you asked me was what exactly?
- [21:34]
B
So what should people consider when they're first thinking about buying a business? And how do they even figure out what type of business is right for them?
- [21:42]
A
Yeah. So we have something called the deal clarity box, which is really important. So when you're thinking about buying a business, you asked the exact right question, Amy, which is everybody always says, what type of business should I buy? Wrong question. It's how do I find the right business for me? Because everybody's different. And there's really no bad or good businesses. It's just bad or good business relationships or partnerships. And so we have something called the deal clarity worksheet, where you basically go through 12 questions and in it you're trying to figure out, like Goldilocks with the soup, too cold, too hot, just right, right. And in this instance, some of the most important components come down to one thing, which in finance is called your deal box. And your deal box is sort of like when you. Back in the day, I don't know how the kids do it now because I've been married for a while. But like, remember when you used to, like, outline, like, here's the man I want in my life, Right? Like, here's all the things, you know, what is it? 6, 5, blue eyes, finance, whatever they're saying. So you're going to do the same thing with your deal box. You're going to figure out how to swipe right or swipe left on deals easily by knowing what you want in front of you. This is the most important part that most People miss for their first business acquisition, they go, Cody talks about a laundromat, I'm going to buy a laundromat, right? No, no, no, we got to narrow it down for you. And so in the deal box are things like how much money do you want to make? How much money do you want to put down? Where is it located? Are you going to run the business or do you want somebody else to run the business? How much time do you want the business to have existed for to make sure that you have decreased risk? What type of business? So what sector? Maybe it is an online business as opposed to an in person business. So we go through sort of like 13 or 14 of these questions for you to figure out exactly what a right sized business looks for you. And, and I think it's important that people spend the most time humanly possible thinking about what is the perfect deal for them and then thinking about how do I become the best deal maker I humanly can. Because if you do well on your first deal, a world opens up of opportunity. If you do badly on your first deal, you're going to think deals are bad. Not man, I just wasn't a good enough deal maker yet. So I kind of obsess on the education part.
- [23:58]
B
That's so, so true. And you said something that I wanted to drill down on a little bit. I have a family member who bought to cleaners, so not a laundromat, but cleaners. And she's miserable. She's like super miserable. But one thing she didn't do, I don't know all the particulars but I know she didn't have someone else run it. She's running it and now her life as she knew it is miserable. And so tell me, I didn't even think about the fact that you could buy, let's say a cleaners and have someone else run it. Is it someone else that's already in the business? Are you hiring somebody to run it? How does that even look?
- [24:32]
A
Oh, such a good question. It's really important that you understand up front. Are you an owner operator, AKA your friend? Are you an owner investor, AKA you invested the money, you found the deal and somebody else is going to run the business?
- [24:46]
B
I think she would have wished that part. Yes.
- [24:48]
A
Well, the good news is that you can, you can reverse engineer that. And so her entire path should be working towards what we call the nine steps to nine figures in our scaling system, which is how do you scale up and out of the manager role? Because that's how it usually Goes in running a business is that you start off as like founder or really flounder, right? Then you go to like manager of the business. You're like just kind of managing it, getting it together. Then you might go to CEO of the business. So, okay, I actually have a team. I got, you know, systems in place, people are working overall. Then I go to chairman, which is like I'm actually watching other people run my business overall. And then you go to investor level and an investor level. You're watching other people watch people running your business. And so levels to the game. I think in one particular instance like this, you've got to make sure if you're going to be an owner operator of the business, you want to run that particular business and that you like the game that you are choosing to play. I think about it very much like I hate soccer. Like if I had to go play soccer, I find it very hard. I can never do it right. I would be miserable playing that game. But if you gave me the game of volleyball, I'd be really happy doing it. So that's why we got to obsess on the upfront. Now the owner operator model I think is a good one for first time business owners to do because you haven't actually run a business before. So like you getting in there with somebody else. I still always believe in a number two, a really strong number two that you are training for you to get up and out of the business. The other cool part about being an owner operator in a business is these businesses are sellable. So just because you bought it doesn't mean you got to keep it. So instead she might be thinking, all right, I bought my first business and just like my first job, I don't want to stay at it forever. Of course you don't. That would be crazy if you did. So what do we need to do? Okay, over the next six or 12 months, I need to figure out a plan in order to stabilize the business. We call this the first 365. And for that first 365, I'm going to make the business slightly more profitable. I'm going to add in processes and systems to it. I'm going to backfill some employees in it, so I'm not doing all the work. And then I'm going to list the business for sale. And once I list it with a business broker, I'm going to sell the business. Because I don't think the first business you buy should ever be the last business you buy. Just like the first home you moved into is probably not going to be your forever home.
- [27:11]
B
That's a great way to look at it so that people don't feel so stuck. Like I'm stuck with this the rest of my life. I better make it work. And I've got to work in it. There's so many opportunities with this. Hey there. A quick word from our sponsor, Shopify. If you sell digital products in your business, such as templates, planners, checklists, guides, any kind of printables, you should definitely check out Shopify. In fact, I just did a whole podcast about how selling digital products like printables is a great way to get equipped quick cash injection. So I want you to upgrade your business and get a high converting checkout when you use Shopify. Sign up for your $1 per month trial period at shopify.com made easy all lowercase. So go to shopify.com made easy to upgrade your selling today shopify.com made easy. And you know my next question was going to be, and I think you kind of touched on it was this, this fear of risk and how do you manage the risk? Do you feel, I'm guessing you don't feel like these ventures are risky, but some people might be listening, like that's too much risk for me. So like how do you evaluate the risk reward kind of balance when you're considering doing this?
- [28:33]
A
Yeah. Well, first of all, your bank account is a direct correlation to the size of the problems that you're solving and the amount. I love.
- [28:41]
B
Say it one more time.
- [28:42]
A
Yeah. Your bank account is a direct correlation to the size of the problems you're solving and the amount of risk you're taking.
- [28:48]
B
Amen.
- [28:48]
A
You don't have as much money as you want, you aren't taking enough risk and you aren't solving big enough problems.
- [28:53]
B
I fully agree. I'm so glad you said so.
- [28:56]
A
Yes. It's hard truth that I had to hear too. Like somebody had to say that to me and thank God they did because the people who actually care about you, I think are the ones who will tell you the things you don't want to hear. It's really easy to be Susie Sunshine to everybody. It's not so hard to say, hey, this thing that you're doing right now is not serving you. And so, so one, I think people need to get used to the There is actually a formula to making money and the formula goes like this. First, you have skills that are highly valued. Second, you have risk that you are willing to take. Three, you have problems that people are willing to pay for. And four, you have a mechanism to collect cash. If you have those four things, then you can become very, very wealthy. And that is how money is made. A lot of people don't realize that if they never take risk, they will never actually be very wealthy. That is just the truth. It is the key to wealth. That's why if in finance, they call things like a risk trade, or they say, what is your. In finance, we also say something like, what is your risk allotment? So how much risk are we willing to take in this portfolio? Finance literally uses the word risk to describe making money, which should tell us something. And if that is true, then what we need to know is at any given moment, how am I defining risk and how much of it am I willing to take? And so if I was somebody listening to this, I might say, okay, I have $25,000 and I have, I don't know, 20 hours a week that I am willing to, quote, unquote, put on a risk trade. And with that $25,000 and 20 hours a week, I want to, for six months, determine if I am able to get a deal that makes me at least X amount of money. And in finance, I think we teach people to be scared of spreadsheets. Like, I got scared. I was really scared of spreadsheets. I don't like math. Same. I make my husband tabulate the check at the diner. Like, I hate it. I'm always stressed I'm going to get something wrong. But I think tools limit mistakes. So we use a lot of spreadsheets that other people have created so that you can calculate the risk in a deal. And it might sound a little scary, but fuck, it'll free the hell out of you because you'll never have an undefined level of risk again. You will put, just like when you go to buy a house, you go, okay, mortgage is this. Interest rate, is this. Insurance is this. Monthly upkeep is that. And then you go, I think I could afford this house. And you can feel like more comfortable with that. We can do the same exact thing with the business. And so it's just not normalized to talk about it yet, but we're trying to fix that.
- [31:36]
B
Yeah, I love this, though. And I love that you kind of said, like, listen, you're going to have to take some risk. And there's also resources that will give you the knowledge and the understanding of what kind of risk you're taking and what this is going to look like. So I love that you didn't Just say, oh, there's no risk with something like this, which we all know there's risk with everything we do in business. Okay, I want to ask about one of your most successful acquisitions, because I know you offer your students a roadmap to acquiring businesses. This is one thing that I love about you. The way you teach is very systematic. Step by step, we're going through a process, the roadmap. So could you talk about one of your most successful acquisitions and why do you think it was successful? Like what, what is your definition of success?
- [32:19]
A
Yeah, it's a really good question. Well, one, it changes. So when you start doing deals, your level of success will be probably determined by how much money you make per year in the deal. So in the beginning I was like, if I could make $100,000 a year in this deal, that will be a win for me. That is that because I only need so many of those in order to replace my salary. So, okay, $100,000 a year feels meaningful. And that feels like I will feel like I am successful if I have gotten out of a deal. Okay, great. And so some of my early first deals, like that first Laundromat, you know, that Laundromat was at first making something like $67,000 a year. And then we scaled it up to, you know, almost 200,000 plus. And that laundromat, then this is like a little mathy. But here's a cool way to think about it. So we buy a laundromat for $67,000. We are buying a shitty job, right? That's not a sexy deal. That's a shitty job. You run a Laundromat. But I have a guy who's going to run it because I've sold him a vision of multiple laundromats. Okay, so we've got 67,000. I pay 100,000 for that business. But here's the key. I know that there is a path because of some of the stuff done in the Laundromat for us to scale it up to. I thought we could get it to 300k. I think we got it slightly less than that. So I buy it for 100k. I scale it up to 200k. Once I scale it up to 200k, the average small business trades or sells for anywhere from three to five exits profits. So that laundromat, when we were making $200,000 a year, was probably netting me like, I don't know, let's call it $100,000 just to be even. So at $100,000 for that laundromat, and that is taking out my operator salary. So the salary gets added back into the business. That means I can sell that laundromat for 2 to 3 to 4 to $500,000. So for $100,000 investment, I am able to potentially see a path to 400 to $500,000. Now, is that going to work every time? Is there no risk risk to it? Is 50% margin unreasonable if you don't have a great operator? Yes. The average margin on a laundromat is somewhere between 15 to 30%. But what's interesting about is you can kind of see the path. And so in the beginning, that was a great deal for me because that first laundromat, we scaled it up to 200k, and then we added a couple other laundromats. So now we're talking about a $900,000 a year business that we can sell for 3 to 5x the profits of that business. So 300,000 times 3 to 5x, and that's really interesting. And we get to steal somebody's 20 years that they had built that laundromat before. So by taking this little amount of risk, we were able to steal somebody's 20 years, which seemed like a good trade to me. And then, you know, the fun game is as you get bigger, the deals get bigger. So, like one of the biggest deals we ever did was a company called Acreage. We bought a large portion of a company called Acreage and that company ended up getting sold to Canopy Growth for three and a half billion dollars. Yeah. Wow. And that's, that's what's called a partial acquisition. So we just owned part of that business. You know, we bought another business called Sublime. And that business was a lot of work. We had to turn it around. It was hairy. There was stuff in it we didn't think that there was going to be. But then we ended up selling that business for high eight figures to another company, a conglomerate of companies called Urban Leaf and Harborside. And so those are some of the bigger deals we did. And you probably won't start anywhere near that, but you find your drill box.
- [35:47]
B
It's exciting to see, like, what's possible. I love hearing where you started and then some of these billion dollar deals. It's really exciting to see, like, what's possible. And you know, I alluded to this in the beginning. You teach people how to buy these Main street businesses, but I know you have experience also buying online businesses like the newsletter. So can you Talk to my listeners a little bit about what if they did want to buy an online business? What are they looking for? What's possible? Do some of these things that you talk about in the book, can they still apply?
- [36:18]
A
Yes, absolutely. You know, the most interesting part about owning an online business is you can live anywhere, right as you run it. They're often very low overhead businesses. They don't have a lot of what's called Capex or opex, which are like operating costs or capital expenditures, which basically mean when you buy a Laundromat, you might be buying, I don't know, $200,000 in machines. That's a lot of machines. You know, for an online business, you don't really have any of that. There's no overhead on top of you. And so for an online business, for that reason, sometimes they're more expensive, but sometimes they're less risky. And so I think this industry is really interesting when we buy online businesses. I do this all day in my main company, which is called Contrarian Thinking. So I'll teach through examples. So we bought one newsletter company I told you about for about $8,000, integrated it into my business, and that was more of a test to see if we could do it. And so the idea is basically this. If you already run a business, in my opinion, there is no faster way to grow than through acquisitions. It's instead of growing one client at a time, you're growing a hundred clients at a time. The biggest companies in the world all grow through acquisitions. That is why Amazon, that is why Facebook, if you look, if you googled right now, number of acquisitions done by Amazon, it's like 200 plus.
- [37:38]
B
Really?
- [37:38]
A
Yes. I mean, the biggest driver of growth for Facebook are some of its acquisitions like WhatsApp and Instagram.
- [37:46]
B
Yeah, so true. Okay.
- [37:48]
A
They're not organic growth. And this is a big misconception, I think, for all of us out here fucking eeking it out, you know, like just trying to survive in small business land. The big boys, they think different than us. The really, really rich, the reason they're so rich is when they have a problem, they think by instead of how poor people, when they have a problem, they think, how do I fix this problem? How do I fix this right here? Limited resources. How, how, how sort of rich people think, who could help me solve this problem? Who is my how? And the really, really wealthy think, how can I buy my way out of this problem? Let me give you an example. I have a video team here where we're sitting in my studio My video team before wasn't doing so well and I was like, God, I need to hire this whole team. How do I fix it? I was getting in my poor person mentality. And then I was like, wait a second, I'm going to try three vendors. I'm going to pay them some small amount of money and whoever is the best vendor, I'm going to see if I can acquire hire that company. And so what that means is that all I'm buying is the salaries of those people and selling them on that my dream is bigger than their dream, that their ability to earn will be bigger with me than by themselves. So that's what I did. I ended up acqui hiring three people from a company called Rare Air Media. That company doesn't exist anymore because I bought it, but I bought it for $0 down. And their salary over the course of the year, I just increased their salary. And then I expand and expanded what the purchase price would be to 12 months instead of upfront. So when you have an online business and you start to think this way, you will never run business the same and you will be very hard to catch. Lots of people these days obsess on like, what's my offer? You know, how do I get leads, how do I close more? I actually don't have to be that good at any of that. Why? Because I'm leapfrogging. I'm just buying bigger and bigger stacks and letting the people inside of those businesses solve those issues for me. So that's how you can buy online businesses.
- [39:52]
B
Whoa, that, that's powerful. I'm going to go back to that whole segment and have to re listen again because that you need to do.
- [39:57]
A
This in your business.
- [39:58]
B
Oh my gosh. There's so much opportunity and it's kind of exciting to look at it that way. You know, I'm going to take a quick little detour. It relates to what we're talking about, but you're just really good in this area. I watch all your social media and by the way, I will link to Instagram and TikTok because Cody is so good, so good at just like inspiring and educating through social media in a way that is captivating. So I just got to give you all the credit there. You're killing it. And one thing I've heard you talk about a lot is hiring. And you've got a lot of great insight in around do's and don'ts of hiring. And people that buy in these businesses, they're likely going to hire some people and A lot of my listeners are hiring for their online businesses. So I guess I just wanted to kind of like get into that amazing brain of yours. What are some of the biggest mistakes you see when people are hiring or even firing? Like, what are you seeing that just drives you nuts? Because I know you have a lot of opinion in this area.
- [41:02]
A
Yeah, the biggest mistake you can make when you are hiring up front is hiring somebody just like you. What you actually want to do instead is you want to offset your weaknesses or somebody else's strengths. Now, the problem is that what do we do when we hire? We always hire people like us. That's why more men work for men. That's why more women work for women. Because we hire people based on whether we like them or not, and we like people whether they're like us or not.
- [41:29]
B
So true. So true.
- [41:30]
A
And so the number one thing you need to do is you need to actually look at your skills gap. And so the way that we do this at our company is basically we look at two different types of humans. By and large, you have the person who sets the tone and the vision and is more of an idea person. And then you have somebody who likes to implement and execute. Now, there are lots of variations on this, but I am a high start, low implement. My number two at the company is a low start, high implement. So especially for small businesses, you do not want somebody like you. And there's lots of ways to test this. One of my favorite ways that's a little hacky is when you're on the line with somebody, if you own the business, you're probably more high start than implement. Just by and large, it tends to be that way. Do this in your next interview as you're talking to somebody that you want to have high implementation, which typically means high detail orientation, systemization and project management. When you're on with them on zoom, just say, hey, I'd love to see how you organize your calendar. Can you pull that out for me? And then watch what happens. What you're going to see is that somebody who is like me is going to have calendar conflicts. Like, why do I have three minutes right now? This is crazy. I should never have three minutes. Somebody like me, who is high start and not as much implement probably doesn't have a lot of notes and briefs and details on the medians. They also probably don't use time blocking. Well, where they have, like, during this time, I will do X. During this time I will do X. A good implementation person, which would be like Lindsay, who works at my company, her calendar is meticulous. She lives by the calendar. Her time is blocked by the calendar. There's no conflicting times on top of it. She's high implementation, high detail orientation. So that's just like a little fun one for you to try.
- [43:19]
B
Yes. I love that. And I love this idea of looking for someone that's not just like you. I've absolutely been guilty of that. So I want to kind of pay attention there as well. Okay. So I was so curious about some of your thoughts with hiring, but I want to talk about this book. So tell everyone the name of the book and the subtitle. Let's just get it really clear.
- [43:37]
A
Yeah, I think I have it up here, so. Oh, gosh. Isn't this what you're supposed to do when you call on.
- [43:41]
B
Yes, you are. You got to show it.
- [43:43]
A
Okay, well. Main Street Millionaire. How to Make Extraordinary wealth by Buying Ordinary Businesses. I was actually kind of proud of the COVID When you first did a book where you. I still can't believe I'm an author. It's still weird. Isn't it wild?
- [43:55]
B
Isn't it wild? And I noticed that you didn't put. I didn't either. Put your face on the COVID You don't even have your face on the back of the book. I just noticed.
- [44:03]
A
No, if y'all can't see her right.
- [44:06]
B
Now, she looks like. No, I'm not doing that. But is it in the COVID Like, if I open it up, am I going to see you?
- [44:14]
A
Yeah, you'll see me on the intro or the inside of it.
- [44:17]
B
Yes.
- [44:18]
A
For me, this is not a book as a business card. This is a book that is about a process to take back our communities and our small businesses, I don't. I mean, despite the fact that I'm all over the Internet, yelling all the time and my face is everywhere, I actually don't really like that. I really am quite happy behind the scenes. Building companies, spreadsheeting away. I just found that the best way to create a movement of people changing what I think changes the world but starts in your community is speaking to people via video. That's just how we learn these days. So I'm willing to do it, but it's not like I don't love it, but. But my point is, with this book, it's like, I wish somebody had told me when I was in my 20s and even when I was in my early 30s, that there was a way for me to become, like, the richest people in the world. And that the way that I Did that could be by jumping on really three things, which is one, a generation of baby boomers retiring at a level we've never seen. I mean, you can Google. I started talking about this two years ago. Now it's become mainstream. But you can Google what's happening in Japan and why are people giving away businesses for free in Japan. And it is happening right now in America, too. And the problem is, if we do not take over these small businesses from baby boomers, guess who will? Private equity. And then every street we live on will have neon signs and our. And Walmart will be our only option. And while I love Walmart, actually, and Sam Walton and what he built, I think communities are better when you guys own them as opposed to everybody else. So the point about this book is that it's not about me. It is about everybody else out there who should be owning a part of this country and a part of their jobs. And so for that reason, I didn't want my face all over it, because I don't even care if my name's on it. If people go out and actually buy these businesses and take back a little bit of becoming the architect of their own lives.
- [46:15]
B
And tell me you. You've alluded to it a little bit. But, Cody, why are you so passionate about this? Like, you will shout it from the rooftops. And you have a unique perspective. Like, most of us are teaching online marketing and how to build businesses online and your own business from scratch with personal brand and influencers. And it's just a different world. You have a different take. Why is it so important for you to get this message out there?
- [46:39]
A
Yeah, well, one, I do think money is freedom and ownership is the surest path to money.
- [46:45]
B
Yes.
- [46:45]
A
I am a big believer that more humans should believe in themselves, be sovereign, and be free. And I do not think that we need permission from other people. I think we were sold a lie on that. And so it is part like, I still get the chills talking about it. I think a nation of owners is really hard to control. And so I believe in your, whoever's listening, individual sovereignty and that you are more capable than you think you are. I truly believe that and that it does suck. And it is a lot of work in a lot of ways, but it is worth it. It is the only type of work that is truly worth it. And then the reason that I'm really. There's two reasons I'm passionate. One is personal, like it always is, which is I watched one of my family members, Uncle EB have to he got sick with cancer. He ran a business for decades. He was his. He was a sharecropper before that. He's older, past now, and came from nothing. Built a plumbing company, Ebb Holmes Plumbing. Up to millions of dollars a year in revenue. And when he got cancer, he didn't know any different. And so instead of selling his business, he shut it down. And, you know, his wife survives him. She's probably the aunt that I'm closest with in the world, and she's fine, but that business could have been 2 to 3 million dollars. And honestly, sometimes I struggle even talking about that because that's probably hard for her to hear too, you know, and it makes him sound like he wasn't an incredibly smart, sophisticated businessman. And he was just. Nobody told him that he could sell this business this way, and nobody told me that. And I didn't know it back then. Like, if. If it was me today, never would have let that happen to him. Right. I'm pissed about that. And then number two is we see it. I mean, we feel divided as a country now. You know, there's. Man, there's so much going on around us. And, you know, I was in Latin America, and I've seen what has happened when things get nationalized, when the government takes over for the individual, and it's really, really bad. I saw it happen in Argentina. I saw it happen in Venezuela. And I believe that the best way for us to push forward as free citizens is for us to be hard to control. And you are much harder to control if you have money and if you have ownership, if you just have money, but you're an employee, you can get fired. You can get mandated to do xyz, you can get pushed out. If they don't agree with you, then you have really no lifeline. If you own part of the business, you're a lot harder to get rid of. And I watched so many of my friends over the last couple of years have differences of opinions, have different thoughts about, you know, Covid and whatever happened. And, man, and I watched them have to compromise their values for the bread on their table, which, of course, they needed to. They needed to provide for their family. And I never want that to happen again. And so I think the way we push back on the big guys telling us what to do, irregardless of party. I'm not even talking about political nonsense. I'm talking about the 0.001% that wants to own everything and is slowly doing it. And this is how we push back. We own Our own small businesses. And that works in a way that buying local never will.
- [50:06]
B
I love hard to control. Become hard to control. That is powerful, Cody, and that makes perfect sense. And you're speaking to the right people right now because they definitely want ownership in many different ways. And I think you just opened a lot of minds to wait. There might be a different way. And I'm curious. So at the time of this airing, your book will be out and I'm assuming people can buy it everywhere, but I'm guessing you might have some special bonuses. So where should people go to grab your book and get your bonuses?
- [50:38]
A
Well, I'm going to actually do something kind of cool just for you guys because Amy is a friend of mine, like a real life friend. So if you go to codiesbook.com there is going to be a slew of special giveaways, resources and tools just for my close friends and fam. And the idea is basically, we want to make it so that every single person who buys a book gets so much value that they want to buy a few and share it with friends. And then you get a little community of you guys all buying small businesses. There will be things on there, like deal calculators that I talked about today. There will be the deal clarity workshop that I talked about. There'll be a workbook that goes along with every single thing that we talked about in the book. And so for all of you guys, because I know if you follow Amy, then you're a doer, I'm going to make sure you guys get hooked up@codiesbook.com.
- [51:26]
B
Perfect. And Cody spells her name C O D I E book dot com. Just want everyone to hear that. I'll put it in the show notes, of course, as well. I just have this vision. Imagine someone gets the book and then they get it for like three of their friends. And now they're all like in a book club keeping each other accountable, saying, okay, within six months, we're buying something. Like, we're gonna figure this out. Let's keep each other accountable. That's pretty cool. I could see this book being spread amongst friends very easily.
- [51:52]
A
I love that. Yeah. You know, I always get mad when there's so many celebrities out there that like, don't help people make money and change their life. They just help entertain people. Right. And yet you think that's somehow better than changing people's lives with education? I mean, I think it's the wildest thing. And so I should. I want to go head to head, actually, with the Many book clubs out there that want to take, I don't know, 20 hours of our life every single month and have us read some books that like, hey, by the way, I read many of them. But, you know, is about some love session on the beach instead of doing one thing that could change everything for us. I agree.
- [52:30]
B
This needs to rival the romance novels for sure, so I'm all for it. Cody, thank you so very much. Congratulations on your incredible book and your incredible success. I feel like you just opened so many minds with this episode. I can't wait till my audience grabs the book. And thanks again for being here.
- [52:48]
A
You're the best. Thank you, guys.
- [52:50]
B
So there you have it. I hope you're walking away from this conversation feeling inspired, a little bit more educated than you were when you first jumped on. And also, as I mentioned a few times through this episode, I hope you feel more open minded to this idea of potentially one day, maybe not tomorrow, but hopefully in the near future, exploring what it would look like to buy a Main street business. I just feel that she opened up so much opportunity with just this short conversation. Imagine if you got her book. Imagine if you were to dive in to see what's possible. And I'm intrigued about buying online businesses such as newsletters. You can bet I'll be looking into that as well. So I love everything about Cody. I want you to go grab her book. But also if you have a takeaway, if you're like, oh, my gosh, I loved when she said this, or I love this part of the conversation. You know, I love to hear all of that.
- [53:48]
A
Right?
- [53:48]
B
So just DM me on Instagram. I'm just at Amy Porterfield on Instagram. Tell me your biggest takeaways. Tell me what you got from this episode. All right, my friends, thanks for tuning in and I will see you next week, same time, same place. Bye for now.