Codie Sanchez: How to Get Rich Buying a Business No One Wants | Entrepreneurship | YAPClassic
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Podcast Summary
This episode features Codie Sanchez, a former finance executive turned contrarian investor who left Goldman Sachs and a twelve-year corporate career to build a multimillion-dollar empire through acquiring "boring businesses." The conversation explores how to achieve financial freedom by buying profitable small businesses like laundromats, car washes, and vending routes using creative financing strategies that require little to no upfront capital. (10:23)
- Main Theme: Contrarian investing approach focusing on acquiring overlooked, profitable small businesses rather than chasing high-risk startups with 80% failure rates.
Speakers
Codie Sanchez
Codie is a former journalist turned investor and entrepreneur who spent over a decade climbing the ranks at major financial firms including Goldman Sachs, State Street, and First Trust, where she served as head of Latin American Investments. She's the founder of Contrarian Thinking, a top business and investing newsletter, and co-founder of Unconventional Acquisitions, where she teaches entrepreneurs how to buy "boring" businesses and achieve financial freedom.
Hala Taha
Hala is the host of Young and Profiting Podcast and CEO of YAP Media, a podcast network and social media marketing agency. She previously held leadership roles at corporate giants like Hewlett Packard and Disney before launching her entrepreneurial journey.
Key Takeaways
Learn Corporate Skills Before Going Solo
Rather than rushing into entrepreneurship, Codie advocates for gaining experience in corporate environments first. (05:32) She spent twelve years in finance learning on someone else's dime, which provided her with deal-making skills, financial analysis capabilities, and business fundamentals that proved invaluable. Many new entrepreneurs lack basic business knowledge like understanding P&Ls or managing employees because they never worked for established companies. This foundation allows you to "fail often without the ability to bankrupt yourself" while building expertise.
Focus on Profitable Businesses, Not Growth Potential
The key principle is buying businesses based on current realities rather than future projections. (48:18) Codie explains the fundamental difference between private equity (buying based on current profits) and venture capital (investing based on hoped-for future growth). When evaluating a boring business, you need three key documents: profit & loss statements, tax returns, and understanding the 20% of factors that drive 80% of success in that specific industry. This approach provides an 80% win rate compared to the 80% failure rate of startups.
Six Ways to Buy a Business with Zero Down
Creative financing eliminates the barrier of needing significant upfront capital. (30:44) The six methods include: seller financing (paying over time from business profits), revenue share (taking percentage of growth you create), profit share (percentage of increased profits), asset-backed loans, raising investor capital, and asset purchases from distressed businesses. These strategies allow you to acquire profitable businesses even without substantial savings, reducing financial risk while building wealth.
Target Motivated Sellers Over 50
The ideal seller profile dramatically increases deal success rates. (38:59) Look for business owners over 50 who have run their business for 5+ years, show minimal growth (3-5% annually), operate in commoditized industries like roofing or landscaping, and are experiencing one of the "five D's": death, divorce, disease, disaster, or unhappiness. These sellers are naturally motivated to exit, making negotiations smoother and deals more likely to close successfully.
Apply the Three M's Strategy for Growth
Once you acquire a business, systematic improvement comes through Markets, Marketing, and Measurements. (50:24) Markets means identifying new customer segments or geographic expansion opportunities. Marketing involves implementing basic digital strategies these traditional businesses often lack, like Google reviews, social media, or online advertising. Measurements means tracking key performance indicators that weren't previously monitored, as "you typically outperform what you measure."
Statistics & Facts
- Codie owns more than 26 businesses but dedicates 80% of her time to just one business, following the Pareto principle where 80% of outcomes come from 20% of activities. (25:50)
- The average person who completes Codie's Unconventional Acquisitions program buys a business within eleven months, with business revenues typically ranging from $100,000 to $10 million. (28:17)
- Venture capital has an 80% failure rate for startups, while buying existing profitable businesses that have operated for 3+ years provides approximately an 80% success rate. (15:25)
