🎙️PODCAST REVIEW: The Ultimate Guide to Buying and Running Boring Businesses with Codie Sanchez — James Altucher
Featured this week 11–28- 23 in TheHub Mainstreet M&A news and events:
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The Hub Short Take:
Codie Sanchez shares her experience and insights into buying healthy and boring businesses as a path to wealth. She discusses the high failure rate of businesses and the missed opportunity for owners to sell their businesses instead of shutting them down. Codie emphasizes the importance of buying businesses that are already profitable and highlights the potential for multiple expansion and profit growth. She shares her own journey of buying and selling businesses, including laundromats and car washes. Codie also discusses the risks and challenges of business partnerships and the importance of due diligence in acquiring businesses.
Key Takeaways:
- Buying healthy and boring businesses is a path to wealth.
- Most businesses don’t sell when the owners are done, resulting in missed opportunities for profit.
- Buying existing profitable businesses allows for multiple expansion and profit growth.
- Due diligence is crucial in assessing the financials and potential risks of a business.
- Business partnerships can be challenging and may lead to personal and professional conflicts.
Quotes:
- “Healthy and boring equals wealth.”
- “Buying a profitable business already de-risks the investment by 40–50%.”
- “The biggest reason why startups fail is they never hit product-market fit.”
- “Turnarounds take a lot of work.”
- “You make your money on the deal when buying a business.”
- “Debt is really risky.”
- “Time is a risk in business.”
The Guest:
Codie Sanchez is a businesswoman, investor, and entrepreneur. She has a background in journalism and has worked in various industries, including finance and Latin American investment. Codie is the founder of Main Street Holdings Company, which focuses on acquiring and growing healthy and boring businesses.
The Host:
James Altucher is an entrepreneur and angel investor. I’ve achieved the rank of chess master. And I’m the author of the Wall Street Journal bestselling book “Choose Yourself.”
The Power of Buying Healthy and Boring Businesses
Introduction
Business ownership can be a challenging and risky endeavor, but there is a path to wealth that is often overlooked: buying healthy and boring businesses. These businesses may not be flashy or exciting, but they offer stability, consistent cash flow, and the potential for long-term wealth accumulation. In this article, This podcast review will explore the concept of buying healthy and boring businesses and the strategies that can lead to financial success. We will draw insights from a conversation between James Altucher and Codie Sanchez, a business owner and investor who has built a portfolio of profitable businesses. Through their discussion, we will delve into the world of buying existing businesses, the risks and rewards involved, and the potential for growth and expansion.
The Appeal of Healthy and Boring Businesses
According to Codie Sanchez, many business owners are ready to sell after years of running their businesses. This presents an opportunity for savvy investors to acquire profitable businesses that are already established and generating cash flow. However, it is important to note that not all businesses are created equal. Sanchez emphasizes the importance of buying healthy and boring businesses, which are characterized by stability, consistent cash flow, and the potential for long-term wealth accumulation.
Sanchez highlights two keywords that aspiring business owners should keep in mind: healthy and boring. Healthy businesses are those that are profitable and well-managed, with a track record of success. Boring businesses, on the other hand, may not be glamorous or exciting, but they offer stability and a steady income stream. By focusing on these types of businesses, investors can mitigate risk and increase their chances of financial success.
The Risks and Rewards of Buying Existing Businesses
Sanchez points out that many people are unaware of the statistic that approximately 70% of businesses do not sell when the owners are ready to move on. Instead, these businesses are shut down, resulting in lost opportunities for both the owners and potential buyers. Sanchez shares a personal story about her uncle, who had a successful plumbing business but was unaware of its sellable value. When he decided to shut down the business due to health issues, he missed out on the opportunity to sell it for millions of dollars, which could have provided financial security for his family.
This story highlights the importance of recognizing the value of existing businesses and the potential for wealth creation through acquisition. By buying healthy and boring businesses, investors can capitalize on the hard work and success of previous owners, avoiding the risks and challenges associated with starting a business from scratch. Sanchez emphasizes that buying existing businesses is not a passive income strategy, but rather an opportunity to leverage the expertise and resources of others to generate wealth.
The Art of Buying a Business
Sanchez shares her experience of buying her first businesses, which were marketplaces and consulting agencies. She explains that she was drawn to these businesses because they aligned with her expertise and allowed her to leverage her skills and connections. The process of buying a business involves several key steps, including due diligence, financial analysis, negotiation, and the identification of value-add opportunities. Sanchez emphasizes the importance of thoroughly analyzing the financials of a business, including tax returns and profit and loss statements, to ensure that the purchase price is fair and reasonable.
Sanchez also highlights the importance of having an operator or manager in place to run the day-to-day operations of the business. This allows the investor to focus on strategic decisions and growth opportunities rather than getting bogged down in the day-to-day tasks. She notes that it is crucial to ensure that the business has enough cash flow to support an operator or manager and that the investor can supervise and oversee their work effectively.
The Downside of Big Cities
Altucher and Sanchez discuss the challenges and risks associated with doing business in big cities like New York City and San Francisco. They highlight the high taxes, increasing regulations, and other factors that are driving businesses out of these cities. Sanchez shares her own experience of leaving New York City and relocating to Austin, Texas, which she describes as a new mecca for business and media. She explains that many business owners are seeking to sell their businesses after years of dealing with the pain and challenges of operating in big cities.
The Importance of Buying Healthy and Boring Businesses
Sanchez and Altucher discuss the concept of buying healthy and boring businesses as a path to wealth accumulation. Sanchez explains that healthy businesses are those that are profitable and well-managed, with a track record of success. Boring businesses, on the other hand, may not be glamorous or exciting, but they offer stability, consistent cash flow, and the potential for long-term wealth accumulation. By focusing on these types of businesses, investors can mitigate risk and increase their chances of financial success.
Sanchez emphasizes that buying a healthy and boring business is not a passive income strategy, but rather an opportunity to leverage the expertise and resources of others to generate wealth. She shares her own experience of buying laundromats and car washes, which are examples of healthy and boring businesses. These businesses offer stable cash flow and the potential for growth and expansion. Sanchez explains that the key to success in buying these businesses is to conduct thorough due diligence, analyze the financials, and identify value-add opportunities.
The Potential of Car Wash Businesses
Altucher and Sanchez discuss the potential of car wash businesses as a profitable investment opportunity. They highlight the fact that car washes are essential services and have the potential for consistent cash flow. Sanchez explains that car wash businesses can be enhanced by offering additional services such as subscriptions and higher-level services. She also emphasizes the importance of reviews and customer satisfaction in attracting and retaining customers.
Sanchez shares her own experience of buying car wash businesses and the strategies she implemented to improve their profitability. She explains that by focusing on customer service, branding, and marketing, she was able to increase revenues and create a positive customer experience. Sanchez also highlights the potential for multiple expansion in the car wash industry, as the value of a business can increase significantly with growth and expansion.
The Risks and Rewards of Buying Existing Businesses
Sanchez acknowledges that buying existing businesses is not without its risks. She emphasizes the importance of conducting thorough due diligence and financial analysis to ensure that the purchase price is fair and reasonable. Sanchez also highlights the risks associated with partnerships and the potential for conflicts and disagreements. She shares her own experiences of working with family members and friends in business and the challenges that can arise from these relationships.
Despite the risks, Sanchez believes that buying healthy and boring businesses can be a path to financial success. She encourages aspiring business owners to consider this strategy and to focus on businesses that offer stability, consistent cash flow, and the potential for long-term wealth accumulation. By leveraging the expertise and resources of others, investors can increase their chances of success and build a portfolio of profitable businesses.
Conclusion and Future Outlook
In conclusion, buying healthy and boring businesses can be a lucrative and rewarding investment strategy. By focusing on businesses that offer stability, consistent cash flow, and the potential for long-term growth, investors can mitigate risk and increase their chances of financial success. The insights shared by Codie Sanchez and James Altucher provide valuable guidance for aspiring business owners and investors.
Looking ahead, the future of buying healthy and boring businesses looks promising. As more business owners seek to sell their businesses, there will be ample opportunities for savvy investors to acquire profitable businesses. Additionally, the rise of remote work and the decentralization of business operations may create new possibilities for buying businesses outside of traditional big cities.
In conclusion, buying healthy and boring businesses offers a path to financial success and wealth accumulation. By leveraging the expertise and resources of others, investors can mitigate risk and increase their chances of success. The potential for growth and expansion in these businesses is significant, and the rewards can be substantial. Aspiring business owners and investors should consider the strategies and insights shared by Codie Sanchez and James Altucher as they navigate the world of buying existing businesses.
Disclaimer: The thoughts and opinions expressed in this article are our interpretation of those of the speaker and his guest and do not necessarily reflect the views of any one party.
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Written by the team at How2Exit.com
