Intro
In this episode of “The Diary Of A CEO with Steven Bartlett,” Steven Bartlett interviews Codie Sanchez to discuss the simplicity of finance and the skills billionaires use every day. They share insights on buying and selling small businesses, the importance of understanding the deal-making process, and how to leverage relationships to create profitable opportunities.
Main Takeaways
Importance of Taking the First Step
- Steven Bartlett emphasizes the significance of taking the first step, particularly in buying the first business, as it involves uncertainty and the unknown. (00:00:00)
- He infiltrated finance as a journalist, which allowed him to ask questions and connect with the right people for answers. (00:01:33)
Buying and Selling Small Businesses
- Bartlett realized that there’s no material difference between billion-dollar and million-dollar deals, leading him to understand that he could do smaller deals with a smaller amount of money. (00:02:34)
- He saw buying businesses as stair-stepping real estate, making smaller deals possible, and decided to buy a laundromat as his first deal due to time constraints. (00:03:30)
- Small business owners often reach a point where they want to sell their businesses after years of running them, even if they are profitable. (00:00:00 – 00:04:01)
- Many small businesses are for sale but will never sell because the owners don’t realize their businesses are sellable. (00:04:02 – 00:07:11)
- Small businesses can be seen as “gateway drug businesses” that can change one’s perspective on business and lead to opportunities for buying and selling. (00:07:12 – 00:10:38)
- Buying small businesses and putting in an operator can be a pathway to success similar to big companies like Warren Buffett’s or Blackstone. (00:10:39 – 00:14:29)
- Competence in the industry is not essential for buying small businesses, but it can be helpful. (00:14:30 – 00:15:33)
The Deal-Making Process
- Understanding the deal-making process is crucial in acquiring businesses.
- It’s important to be able to read a balance sheet and understand profit and loss.
- Networking and seeking advice from industry experts is valuable in making informed decisions.
- Access to information is easier than ever, through platforms like Reddit and other online communities.
- Fear of the unknown can be irrational, as information is readily available.
- Buying a business with limited funds is possible, even for $0.00, with the right structuring of the deal.
- Seller financing is a common practice in small business acquisitions.
- Constructing a deal that benefits both parties is key in successful deal-making.
- Deal-making is not a zero-sum game, and it’s possible for both parties to win.
- Negotiating deals can be a win-win situation by tying payments to business performance.
- Lack of education on deal-making contributes to financial struggles for many.
- The key to successful sales is understanding the other person’s motivations and needs.
- A motivated seller is someone ready for their next adventure, and a good salesperson is a good shepherd for the business.
- Curiosity and understanding are crucial in convincing someone to sell their business to you.
Opportunities and Growth
- Cody advises using one’s unfair advantage to get out of a job and into entrepreneurship. (00:00:00)
- He suggests looking at what one already spends money on and turning it into an asset. (00:00:00)
- Cody shares his experience of buying a podcast and video production company for a low cost and making it profitable through connections and revenue sharing. (00:00:00)
- He recommends approaching a studio space and understanding their business to gauge if the partnership would be material to them. (00:00:00)
- Building a relationship with the owner can also be beneficial in such deals. (00:00:00)
- Building a connection with the owner can help you get the deal done. (00:00:00)
- Consider becoming an apprentice and buying the business using future profits.
- Understand the owner’s needs and become the solution.
- Think about how you can become the son to the father or the buyer to an anxious seller.
Summary
Buying and Selling Small Businesses: A Pathway to Success
Steven Bartlett shares his journey of buying businesses, starting with a laundromat deal in California. He emphasizes that learning how to do deals and running a business are not as complex as they seem, and financial lingo is often used to charge more. Small businesses can be valuable assets that are often overlooked by their owners, presenting opportunities for aspiring entrepreneurs. Bartlett highlights the importance of finding the right people to manage the businesses and the potential for stair-stepping real estate through smaller deals. He also discusses the similarities between buying small businesses and the strategies employed by renowned investors like Warren Buffett and Blackstone.
The Deal-Making Process: Skills for Success
Understanding the deal-making process is crucial for acquiring businesses. Bartlett emphasizes the importance of being able to read a balance sheet and understand profit and loss. Networking and seeking advice from industry experts can provide valuable insights and help in making informed decisions. Access to information is now easier than ever, with online platforms like Reddit and other communities. Bartlett dispels the fear of the unknown, highlighting that information is readily available. He also shares strategies for structuring deals with limited funds, including seller financing and creating win-win situations. Lack of education on deal-making often contributes to financial struggles, but with the right skills and mindset, success is attainable.
Opportunities and Growth: Leveraging Relationships
Codie Sanchez shares his insights on leveraging relationships and identifying opportunities for growth. He advises using one’s unfair advantage to transition from a job to entrepreneurship. By looking at what one already spends money on, it’s possible to turn expenses into assets. Sanchez shares his experience of buying a podcast and video production company at a low cost and making it profitable through connections and revenue sharing. Building relationships with business owners can lead to valuable opportunities, and understanding their needs can help position oneself as the solution. Sanchez encourages aspiring entrepreneurs to approach potential partners or owners with curiosity and understanding, fostering connections that can lead to successful deals.
Conclusion
Finance and deal-making may seem complex, but Steven Bartlett and Codie Sanchez emphasize that it’s not rocket science. Taking the first step, buying and selling small businesses, understanding the deal-making process, and leveraging relationships are key skills that can lead to success. By dispelling fears, seeking knowledge, and building connections, aspiring entrepreneurs can unlock opportunities and create profitable ventures.
