Young and Profiting (YAP) with Hala Taha – Episode Summary: "YAPClassic: Codie Sanchez, 7 Boring Businesses to Replace Your Income"
Release Date: December 6, 2024
Host: Hala Taha, YAP Media Network
Guest: Cody Sanchez, Investor, Entrepreneur, and Influencer
Podcast Description: "Young and Profiting with Hala Taha" is the quintessential podcast for hardcore entrepreneurs. Hosted by self-made entrepreneur and marketing expert Hala Taha, the show features mini-masterclasses with business icons and delivers actionable advice to help listeners profit in all aspects of life.
1. Introduction to the Episode
Hala Taha kicks off the episode by reintroducing Cody Sanchez, highlighting her significant contributions to entrepreneurship and investing through her focus on "boring businesses." Hala references their previous conversations, emphasizing Cody’s transition from journalism and finance to owning and investing in mundane yet profitable enterprises.
Notable Quote:
Hala Taha [01:22]: "If you want the motivation to level up your entrepreneurship game and work hard - while still prioritizing your mental and physical health - then Listen, Learn and Profit with Young and Profiting Podcast!"
2. Cody Sanchez’s Journey: From Journalism to Finance to Entrepreneurship
Cody Sanchez shares her unconventional path, starting as an idealistic journalist covering critical issues like human trafficking and drug smuggling along the US-Mexico border. Her yearning to make a tangible impact led her to finance, where she spent 12 years in corporate roles at prestigious firms such as Vanguard and Goldman Sachs. However, she eventually broke free from the "golden handcuffs" of corporate America to pursue entrepreneurship and investing.
Notable Quote:
Cody Sanchez [05:08]: "Big corporations usually invest a lot in their employees because they understand the numbers. I benefited from that."
3. The Concept of Contrarian Investing and Owning Boring Businesses
The core of the discussion revolves around Cody's philosophy of contrarian investing—opting for seemingly mundane businesses that offer steady, reliable profits rather than high-risk, high-reward startups. She emphasizes the importance of identifying businesses with consistent revenue streams and low volatility, such as laundromats, car washes, and vending machines.
Notable Quote:
Cody Sanchez [14:00]: "I think you don't have to be the most intelligent person out there if you can find where the narrative is different from the numbers."
4. Passive vs. Horizontal Income: Redefining Income Streams
Cody differentiates between traditional passive income and what she terms "horizontal income." While passive income often implies minimal ongoing effort, Cody stresses that true financial freedom comes from diversified income streams that require strategic management but offer greater stability and scalability.
Notable Quote:
Cody Sanchez [16:58]: "I like to use the word horizontal income because passive income has become used by a bunch of 20-year-olds on the Internet telling you you can get rich in 30, 60 or 90 days if you follow my foolproof plan."
5. Strategies for Acquiring Boring Businesses
Cody outlines various methods for acquiring businesses with minimal upfront investment:
- Seller Financing: Negotiating terms where the seller finances the purchase, allowing the buyer to pay over time.
- Revenue Share: Agreeing to share future profits without an initial monetary investment.
- Profit Share: Similar to revenue share but focuses on net profits.
- Asset Sale: Purchasing specific assets of a business rather than the entire entity.
Notable Quote:
Cody Sanchez [32:03]: "There are six paths to buy a business with $0, including seller financing, revenue share, and profit share."
6. Selecting the Right Business: Criteria and Considerations
Cody advises focusing on businesses that are easy to understand and manage, avoiding industries that are overly complex or require specialized knowledge. She advocates for simplicity to mitigate risks and ensure sustainable profitability.
Notable Quote:
Cody Sanchez [43:30]: "I like really simple businesses because then it's easy for me to understand. Most deals go wrong because if the deal doesn't make sense on the back of a piece of paper or on a napkin, then the deal probably doesn't make sense in general."
7. Managing Multiple Income Streams: Balancing Focus and Diversification
Cody discusses the importance of balancing focus with diversification. While she owns 26 businesses, she allocates 80% of her time to one primary enterprise, allowing independent operators to manage the rest. This approach ensures effective management without spreading herself too thin.
Notable Quote:
Cody Sanchez [25:38]: "I own 26 businesses, but 80% of my time goes to one business. The rest are operated independently, like a private equity model."
8. Gender Dynamics and Navigating Corporate Finance
Cody reflects on her experiences in the male-dominated finance sector, addressing challenges such as sexism and the unspoken "one woman at a time" rule. She emphasizes the importance of choosing reality over stereotypes and leveraging her unique perspective as a Latina woman in finance.
Notable Quote:
Cody Sanchez [09:01]: "There was kind of an allowed to be one. It wasn't a real rule, but it was kind of there."
9. Entrepreneurial Habits: Accountability and Continuous Improvement
Cody shares her personal practices for maintaining accountability and continuous growth:
- Mirror Selfies with To-Dos: Taking daily selfies while outlining daily tasks to stay accountable.
- 1 in 60 Rule: Ensuring that small daily deviations don't lead to significant long-term divergences from her goals.
Notable Quotes:
Cody Sanchez [58:43]: "The most critical person to you will be that person you see in the mirror every day."
Cody Sanchez [59:48]: "For every degree that you get off course, you end up tens or hundreds of miles away from where you wanted to be."
10. Practical Insights: Pros and Cons of Specific Boring Businesses
In a quick-fire segment, Cody delves into the specifics of three popular boring businesses:
a. Laundromats
- Pros: Steady cash flow, relatively low management, scalable through multiple locations.
- Cons: Limited profit ceiling, potential for vandalism, significant investment in equipment.
Notable Quote:
Cody Sanchez [53:15]: "The biggest con is that you can't typically make like tens of millions of dollars with a laundromat."
b. Vending Machines
- Pros: Low startup cost, easy to operate, potential for passive income with technology integration.
- Cons: Low efficiency per location, logistical challenges in restocking and maintenance, difficulty in scaling.
Notable Quote:
Cody Sanchez [54:12]: "Vending machines are great because they're a very cheap business to start or buy."
c. Car Washes
- Pros: High revenue potential, scalable through additional bays, relatively automated operations.
- Cons: High initial investment in equipment, significant utility costs, dependence on prime location.
Notable Quote:
Cody Sanchez [55:43]: "Car washes have the highest revenue potential but require the most expensive equipment."
11. Choosing the Right Partners
Cody underscores the importance of selecting trustworthy and compatible partners, whether in personal relationships or business ventures. She shares personal anecdotes highlighting how pivotal partners can be to one's success and well-being.
Notable Quote:
Cody Sanchez [61:53]: "Choose your partners carefully. They will be the single largest impact on the human that you become."
12. Actionable Advice and Closing Thoughts
As the episode concludes, Cody offers practical advice for listeners aiming to enhance their profitability:
- Focus on Your To-Do List: Prioritize actionable tasks over seeking external advice.
Notable Quote:
Cody Sanchez [61:22]: "You don't actually need advice. You need to figure out your to-do list."
- Invest in Relationships: Select partners who align with your values and long-term goals.
Notable Quote:
Cody Sanchez [61:53]: "The best deal I ever did was my partner. Choose your partners carefully."
She directs listeners to her resources for further learning, including her website unconventionalacquisition.com and newsletter for insights into contrarian investing and acquiring boring businesses.
Conclusion
This episode of "Young and Profiting with Hala Taha" offers a deep dive into contrarian investing through the lens of Cody Sanchez’s expertise. Listeners gain valuable insights into acquiring and managing mundane yet profitable businesses, the importance of diversified income streams, and the significance of strategic partnerships. Cody’s pragmatic approach demystifies the process of buying "boring businesses," making it accessible for aspiring entrepreneurs seeking financial independence and sustainable growth.
For more detailed strategies and resources mentioned in the episode, visit unconventionalacquisitions.com and subscribe to Cody Sanchez’s newsletter at contrarianthinking.co.