Transcript for:
Business Acquisition Strategies

You're told that the best way to get rich is to start a business. Then why is it that there's not a single billionaire that exists that hasn't done this other thing? The best way to actually get rich with the highest degree of certainty of continuing to get rich is through acquisitions. How do I know? Because the richest people in the world have all done it. Amazon that's done 110 acquisitions. Google that's done 200 acquisitions. In fact, if you go to the richest people in the world and look at the Forbes 100 list, not a single person on there hasn't done an acquisition. But here's the problem. you don't have any money to go out and buy businesses. And two, where do you find businesses that you could buy if you don't have tons of money? So, for the first time ever, I'm going to do a master class for you guys so that you can do what the richest people do in order to make massive wealth. And that's find businesses where they want to sell to you and they want to use the profits of the business to do it. By the way, this is going to be a long video. If you don't have the attention span, do you really think you have what it takes to get rich? So let's talk about first why is it that acquisitions make sense. This is going to be very short because today the biggest thing I want to focus on is the thing that nobody actually tells you which is that all around you are a series of diamonds in the rough. They just look like rocks to you and we've got to go find them. Let's talk about why acquisitions work so well. While 70% of millionaires in the US they own a business. 88% of people worth $30 million or more did an acquisition and own a business. In fact, what's fascinating about acquisitions is while 90% of startups fail, 80% of acquisitions survive the first year. And in fact, acquisitions done with either seller financing or loans have one of the lowest failure rates of all businesses, about 13% from the SBA. But I think more than any of that, whether I convince you or not to buy a business is totally up to you. But the part that's interesting is what if you just started seeing them all around and then you could figure out if you want to do them or not. If you want to buy a business in 2025, this will be the most comprehensive guide to finding businesses that exists on the internet. And how do I know any of this? Well, we've taught thousands of people exactly how to buy and find businesses. And if we've never met before, hi, I'm Cody and I own a portfolio of small businesses that look like this. Some of these businesses were small when they started, a couple hundred thousand dollars, and some of these businesses now are worth lots and lots and lots of zeros. So, I'm going to let you steal my homework today because I remember the beginning for me. I remember before I had Resi Brands, one of the largest trade franchise companies. I had fail fail fail and startup land before I realized that I just wasn't using the right skill set. You see, I've been in finance for a really long time, and I had learned acquisitions. I had never really learned how to go from zero to $1 million in revenue. That part, I think, is very hard. It's called the chasm. So, after this video, you're going to steal my 15 years of finance homework. You're going to learn some of the best places to search for deals. You're going to learn exactly how to keep track of the deals you're tracking. And you're going to be ready by the end of this to start reaching out to businesses and know where exactly to go to to find them. as simple as if you were looking for a home or an apartment and you went to Zillow and you narrowed your search criteria and you tapped on them and you knew exactly what they were worth and there were market comps. It will be just as straightforward for you as it is if you were going to do a real estate deal. Now, there's four quadrants today that we're going to break down. And I was taught these when I worked at Goldman Sachs. When I worked at Goldman and we wanted to do an acquisition, there were four things we need to do. First, we'd have to define our acquisition target. That is typically called your deal box. Then we have to talk about are we going to go on market aka to the Zillow of business buying and find the deals that are already listed. They got the sign out front theoretically and they're ready to go or are we going to go off market which is to go search door knock the proverbial businesses that are for sale and then how do we target them? So once we know where the businesses lie, how do we make sure that they're the right businesses for us? And how do we narrow down what the right business is? But the first question that people ask when we get to define is typically why would a seller agree to sell their business in the first place? This is called the seven Ds. So sellers on average, do you guys know the age of the average small business owner in the US? It's 67 years old. If you've ever run a business for 5 minutes, you know that it can be hard. So imagine most of these business owners have had businesses for 10 years plus. They're old, so they're ready to leave from their business that's in New York and move to Florida. That's the first D called departure. Maybe have gone through a divorce or are going through a divorce and have to split up assets. They uh are getting older. So we've got disease happening. This happened to my uncle EB with cancer. He got cancer, wanted to spend more time with his family, couldn't sell the business fast enough, and so ended up shutting down a business that made millions of dollars a year in revenue and over seven figures in profit. The fourth D is disagreement. So, they're usually business partners in business deals. Maybe one of them doesn't get along with another. Then we've got distress. This is where a business is starting to go sideways and you can pick up businesses for pennies on the dollar. Then we've got death. We're talking about 67 on average, which means there's a lot older. But what happens when that business owner dies? they go to something called probate and those businesses just go away unless we buy them first. And then the final D is dullness. So at some point when you're running a business, you're ready for the next opportunity. One of the most recent businesses I'm going to show you today is exactly that. It is a business that does seven figures in revenue. And this business owner is just ready for the next thing. They think this business isn't going to be big enough for them. So they're willing to seller finance the deal. And I think one thing I want you to remember is one of my quotes from one of my favorite mentors in business. His name is Samz Zel, a billionaire investor. And I want you to realize if you watch this video, you will learn more about doing deals than you ever have before. You'll be one of the top 1%. But at some point, you're going to start realizing by the end of this, are we getting really unfair deals? Like, are these deals that Cody's helping me set up so unfair that like the business owner is getting taken advantage of? And what I want you to realize is that Sam has this line where he says, "Some see buying and creating value from others misfortunes as exploitation, but I see it as giving neglected or devalued assets in any industry a new life." Now, if we understand why a business owner in general might want to sell a business, how could you get a business owner to allow you to buy a business using their money? Why would a business owner pay for me to buy their business? Well, this is called seller financing. And one of the reasons why is because seller financing can also make the seller more money. So, you know, right now if you were to go buy something, you either need to have the cash in your hand, right? Or you might have a credit card or you might need to go get a loan from a bank. That's normal if you want to buy a house. You say, "Okay, I don't have a million dollars to buy a house, but I've got some money to put down and then I go to the bank and the bank supports the rest." Seller financing is just removing the bank. Doesn't mean that you have to have all the money. you can put some money down and then instead of the bank giving you money, the seller does. And the seller uses future profits of the business in order to pay you to take over their business and you give them money over time. Now, why would a seller do something like that? Why would they say, "Hey, no problem. I'll be the bank instead of the bank." Well, let me show you why. The first reason is more cash. So, in this real deal, the seller of a business wanted a million dollars for their business. The bank says, "It's not worth a million. is worth 750. So you have to actually get a loan from the bank at an 8% interest rate, which means that you have to pay $750,000 plus the 8%, so that's probably another $80,000 per year with costs, etc. on it to pay for this business acquisition. So you say, that's option one, Mr. Seller. But option two, what if I give you 1.15 million? You want a million. I'm going to give you a million plus $150,000. Now, why would I do that? because instead you're going to be the bank. I don't need to go through the entire banking process. I'm going to still give you a little bit of money down, but how about you give me that money at a much lower interest rate or maybe even a 0% interest rate. I give you more money, but instead of having to pay the bank the extra couple $100,000 over the course of this loan, I pay you. And instead of you getting $750,000, you get more like $1.46 $46 million, which is your additional purchase price plus an interest rate on the loan. Does that sound like that's interesting? Yeah. I'd rather have 750* 2 than 750. Okay, cool, Mr. Seller. Now, the second reason why somebody might do seller financing for you is because they could pay less to Uncle Sam. And I don't know very many people that want to pay more. So, in this instance, let me show you what that looks like. You could say, "Mr. Seller, if we go with the bank, that means you have to do what's called a lump sum payment. you're going to pay a big huge amount of money to Uncle Sam right now today to the government for getting this big purchase price. However, if you sell or finance me, we'll put that payment out over the course of 10 years. By that time, your tax bracket will have decreased because you won't be a business owner anymore, which means that you'll save potentially, depending on this the deal size, thousands to hundreds of thousands of dollars a year in taxes. So, would you like to pay less taxes and get more money for the transaction? Of course you would. Finally, there's a truth about doing deals, which is time kills all deals. The faster you move, the more money you make. And if you want to do deals and make money, you got to move fast. So you say, "Mr. Seller, do you think it'll probably be better or worse for you if we move faster? Do you think the deal's more likely to close if we move faster?" And the seller goes, "Yeah, totally." Okay. Well, look at the average loan time it takes to do an SBA loan, a standard loan from a bank, let's say, as opposed to if you seller finance me. If you seller finance me, well, we could close in a week, 2 weeks, 3 weeks. If we go with a bank, that's anywhere from 3 months to 6 months to 9 months. So, do you think that a deal could go sideways inside of 9 months pretty easily? Oh, yeah. You do? Okay, great. So, why don't we do seller financing? Because you can make more money, you can pay less taxes, and we can close a deal faster. Awesome. Now, if all of that is true and you sell the seller on it, the seller also wants a great and trusted buyer. How do you present yourself as that? Not just somebody who's saying, "Please give me your business for $0 down." What's fascinating about sellers is they're not always motivated by the purchase price. Meaning, if I say, "I'm going to sell you this iPhone." The thing that you're most interested in is certainly that I give you more money for this iPhone uh than the other guy. But what do you think's even more important than that? That I actually like give you any money. That the deal actually follows through. That you're trusted. If you guys have ever sold something on Facebook Marketplace, for instance, how often do you get a lot of people throwing big offers in and you go that this is a scam. This isn't going to fall through. It's the same with selling a business. So, most of these sellers, they're burned out, maybe they're sick, maybe they're going through divorce, they want to retire to Florida, they're moving. And so, these individuals, somewhere between 21% of them are motivated by burnout, 55% want to retire, 13% they have failing health. They need to sell this business. And so they want to make sure that you close. So sometimes they don't care about the purchase price. They're like, "Are you going to close the deal? Are you going to take care of my customers cuz I'm probably going to have to see them again. Are you going to take care of my employees? Will the business continue to exist? And are you going to continue my legacy?" And that is how you sneak in. Next question becomes when we start looking for deals, how do you find the right types of sellers who are going to help you buy a business without having tons of money? And this is what we call finding your seller financing avatar. There are two types of avatars for a seller. A good seller that you can find a business you want to buy without a ton of cash and a bad avatar. The good avatar, the seller wants to retire. They want more money than the bank will loan. They want an annuity or an income stream. It's a simple, boring business. They know you potentially. That's a great avatar. Let me tell you what a bad avatar is. They're young. They want to grow. They have a lot of offers on the business. They have a complex, sexy business. The business is growing like crazy fast. The business is young. It hasn't been around very long. The seller doesn't know you. Is a go-getter and aggressive and maybe they don't even like you. We're going to go with old, tired, slow growing businesses, not fast, young, hungry businesses. And we have an entire checklist at this. The higher the number of checks, the more likely the seller will sell to you. So, what I do is I take this checklist for me and all the members of my community. And every time we talk to a business, the checklist is in front of you and you're checking off if this is the right type of seller or avatar for you. Let's go through a couple of these right now. Duration. So the longer the business has been around, the better for you. Number two, is it sub less than a million dollars in profit? The bigger the business, the less likely for seller financing. Three, low competition. If there's not a lot of competition, seller financing is in in play. Four, brickandmortar. If it's online as a business, seller financing slightly less normal. If it's in person, more normal. The duration of the owner in charge. So, it's not just how long has the business been around, but how long has that owner been around? And then lack of successor. Do they have a junior, a kid, or whatever that wants to take over their business? If they don't, we're in play. Older the owner, the more likely they'll sell. The less financable the business is, which means that the bank won't give loans. Maybe they have beat up financials. Maybe they still have their, you know, tax returns and profits and loss statements in a box with a bunch of papers in it. That's a good avatar for seller financing. Nine, price too high for its balance sheet. The seller really wants to get a bigger dollar amount. 10, business without clean financials. So, let's say this business uh is really beat up. 11. No leadership team. 12. The business is kind of a mess. 13. We got something called an asset sale. So, this is where like the business is maybe not even profitable, but the assets of the business might be worth something. We're sitting in a place right now, as you can see with a bunch of furniture. You got cameras over here. Well, that means that there's something in here that's valuable, even if I don't make any money in this business. If you already have a relationship with the seller, the more they know you, the higher likelihood you'll get seller financing. And then, are they cool with having a big lump sum or do they like the idea of a smaller amount over time? And then has other sources of income outside of the business. So, let's say now that you've got the perfect seller financing avatar. What type of business are we looking for? This part will be quick before we get to how to find them. Ideally, we are looking for a business below $10 million in revenue and with profit to cover the costs for my income, the costs for an operator for the business, the cost for the business to grow. That's called working capital. And simultaneously, the cost of debt service. So, that's the price that I pay to buy the business. That's like how you get an interest rate on a loan. So, if they're below $10 million in revenue, there's less competition from private equity guys, and we're not ready to go head-to-head with those guys yet. So, we don't want that. We also want a certain type of business. So, bluecollar service-based businesses, I like these because there's a lot of them. Highly fragmented industry. I don't want to try to go buy an AI company right now. Too sexy, too expensive. I also want one that's cash flowing and profitable. If you believe anything in this video, it should be this. Please do not buy other people's hopes and dreams. We buy realities and profits. So if it is unprofitable, if it's not a strong business today, we don't want to hope that we could fix them. You're not going to fix the guy. He's probably going to stay exactly how he is. Ladies, you're also not going to fix the business, right? So the same idea. We don't want to buy the ugly house on a nice block and think that we can turn it around when we've never done construction before. We're not going to play that game. We also want to make sure the business has sufficient margin. That means if I pay a dollar to that business, if I give a dollar to the business, how much does the business keep from that dollar and then put in their pocket? I want to make sure it's at least 15 cents. So, we want about at least a 15% profit margin. Then, we want to have that seller financing avatar. We want that motivated seller. If it's proprietary, if it's patent pending, if it's in biotechnology, we're a pass because for this first deal, we're learning deal making. We don't also need to learn a complex business. If there's a broker in in the middle and you're not going to pay the broker's fee, that broker is going to get in your way. So, just think about it like a real estate agent. A real estate agent's got to show every offer to the person selling their house. But if somebody says, "I refuse to pay your real estate fees." I want to make sure that's not happening in this business. What's the real going to do? Not give you the deal. And so, it's the same with brokers. That's why I like you guys to say, "Don't worry, we'll handle the broker's fee. We'll get paid. We'll we'll get you paid even if we do seller financing." If the seller has a lot of competitive offers, it's not going to happen. And if you can't get the seller to trust you, it's not going to happen. More on that part later. It's super important. All right, I want you guys to meet my friend Josh. So Josh uh and I work together. Josh was an executive for many years. He's a super smart guy. He had been pretty successful. He had made a lot of money. But what was something that was interesting is I talked to him about, you know, 3 years ago about buying businesses. And he had never bought one before, even though he had been in a business for 11 years. And I said to him that, you know, why do you think that is, Josh? And he said, well, before I met you, Cody, I never even knew to look for businesses for sale. I had no idea that this was possible. About 6 months after learning this, he bought his first business and then his second, then his third. So now he's done three deals. What I asked him, I was like, Josh, do you think before you met me, no businesses were available to be bought anywhere? Do you think that somehow you got way richer, so you had more money to do a deal afterwards? and he was like no to both of those. So then what was the difference? Your amount of opportunity will always be limited by your ability to recognize it. Right now all around you are businesses that you could buy. You just don't know what you're looking for. So you think that they're just rocks, pebbles, totally worthless. And inside you don't actually realize that there is a diamond. I want you to think about a few ways you will never find a deal. You will never find a deal if you do not get specific about what you want. Uh in search we call this the spray and prey method which basically means when an investor has no real plan. They invest a small amount of money in a bunch of different things. They what kind of business are you trying to buy? Any business. Where is it located? Everywhere. How much money do you want to spend? Well, it totally depends. If you're not specific, then it turns out that it's really hard to buy a business. The next question becomes there are two paths to finding a business. The two paths are either onmarket deals or offmarket deals. Let's talk about what those are specifically before we get into them in depth. On market deals are businesses that are already for sale. The owner knows they want to sell. They're publicly listed across varying platforms. They've been prepared to sell. They probably have some version of financials. Um they expect you to reach out to them. Uh these are ready to go. It's really not that dissimilar from uh when you have a house listed on Zillow or Red Fin and it's been prepped, the owner's ready to go, they want to move on. This means that there's visibility into the business, there's transparency in what you're going to ask for. It's potentially a much faster process. Some of the cons to onmarket deals are because it's super ready. That means there's more competition, right? If you find a house that's not listed for sale yet, maybe you could get it for cheaper. Um, if it's listed, everybody can see it. It's also maybe more challenging to get creative deal structures like seller financing. Now, 60% of all businesses are sold with seller financing. So, I do think it is possible for just about any business to have some component of the seller giving you the money to buy the business. But certainly, if it's onmarket deals, it's just slightly less easy. The way that we search for these kind of deals, I'm going to show you. It's called Biscout, but think about it like you're going to go to Zillow, but make it SMB. And when you click on the listings, and we'll walk through this later in the video, you can see every single business. You can see a bunch of details about them, and you can reach out to the sellers. Now, the other way to find deals is called offmarket deals. Offmarket deals are businesses that are not actively advertised to the public. So these owners haven't listed their business for sale yet. They're not even sure that they want to sell yet. And these are where most deals are today. There's 11 million small businesses for sale right now in the US. And those are publicly listed deals. I think there's probably more like 20 to 30 to 40 million businesses for sale in the US that don't realize they're for sale. could be as small as jobs. These could be side hustles all the way up to really big companies that would be for sale at the right price or the right terms. How do I know this? Well, there's 56,000 listings for sale right now on Biscout. But what's fascinating is I travel around the world seeing hundreds of thousands of uh people a year. And every time I I'm in a room with owners, you want to know something fascinating? I say, "Hey, who in here owns a business?" Raise your hand. Now, keep your hand up. And I say, "Okay, who in here would sell your business at the right price and the right terms?" You want to know how many hands go down? Like 1%. Every single business owner at some point will take a deal. That means we have a huge untapped market of people who not only don't know that they want to sell their business, but also don't know that their business is sellable. A lot of people shut down businesses because they think they're jobs. We're so trained to think that a job can't be sold, right? that we don't realize that our business can be sold even though it feels like a job. Now, there's some cons to offmarket deals, though. They take longer. You have to educate the seller more. You've got to go find the deals. But this might mean that you get to pay less and you get to negotiate a lot better. So, I think about it, and we're going to teach you all the ways to do uh offmarket deal listing, but I think about it a little bit like door knockocking. You go to a neighborhood you like, you send a nice little letter. Hey, I want to buy a house in this neighborhood. I'm having a baby. I'm not a psychopath. would you want to sell to me? Right? That's off-market deals. Now, both can work. The difference between your two is onmarket deals take faster moves, potentially you pay a little bit more. Off-market deals a little bit slower, potentially you pay a little less. Let me show you how you can use our contrarian deal box in order to nail exactly the right type of business that you want. By the way, what's really cool is after you guys fill this out, we have one of the largest marketplaces of small businesses listed. And so you can actually use the deal box and it will custom send deals to you based on your parameters. Okay. Now this is called a deal box. What is a dealbox? This is where you figure out exactly the things that are important to you in buying a business. And we fill out every single segment of this so that when a good deal walks past you, you know, sometimes I think about this like Neo in the Matrix. Remember how he was walking along and all of a sudden the girl in the red dress walks by? He turns and looks. when he looks back, he's about to get shot. Right? In life, we get distracted by the girl in the red dress everywhere. And if we don't know exactly what we're looking for, we're going to get distracted again. This will narrow your focus. No girls in the red dress. All right. So, what are some of the requirements? First, I like to break down how much money do you want to spend? And then you say, "How much do I want to make in a year?" You're going to fill that out as well. You're also going to talk about how much do I want to finance? You're going to talk about where is the deal located. You're going to talk about what industry is it in? Do I want to be an owner investor, aka I just give the money, but I don't really run anything. Do I want to be an owner operator? All right. So, if you are in our community, which if you're serious about business buying is definitely worth checking out. We'll include a link below. This is only for people who are really serious about business buying and we handhold you through every step of the process and help you find deals and help you analyze those deals and hook you up with a one-on-one deal coach. If you're in our community, you get access to this deal navigator. We're going to start with a few questions that you have to ask yourself when you're looking for your deal. Here they all are so you can see them live. What's the minimum amount of cash your income you have to make going forward on this deal? How much do you want to pay an operator? How much financing do you think you're going to need? What's the estimated debt service cost? We'll also show you how to explicitly do that in the community. How much cash flow do you need in the business? What's the minimum purchase price then and maximum purchase price? And then we got something called musthaves, can'tthaves. These are things the business has to have. Like I want it by me or I want it remote or I want it to be less than a million dollars. Can't stands would be like I don't want to own a restaurant. That's too much work. I don't like dogs. I don't want to own a dog room in facility. And then I also want you to think about your sector, location, number of employees, and numbers of years in business. Then we're going to take all of that and put that in your custom deal box. Then every time you look at a deal, you will look at this and make sure that this deal is actually a good deal for you. Let's walk you through a real one lot live. So this is from somebody by the name of uh Heather and Chris. They bought a sign manufacturer business in California. They needed $120,000 a year in cash flow because she wanted to replace her income. She didn't need an operator salary because she was going to operate it uh herself. They didn't want to use a traditional loan. They wanted to use SBA. Uh they wanted to use seller financing. So, no no financing in this business. They wanted a recession resistant business and no license. They didn't want to have to get like a contractor's license. She wanted nothing to do with anything that had to do with cars, anything that had to do with e-commerce, anything that had to do with retail. And then it needed to be located in San Diego and they'd like a smaller team because she hasn't run that many teams before and wanted an operator who was willing to transition for at least a year. Cool. Now we know what she wants. So when she looked at the business, which is this sign manufacturing business that was doing $170,000 in SDE, which is a fancy way to say sellers discretionary earnings, aka the money that she makes herself in the business and puts in her profit, and $278,000 in revenue. So, she thought, "Okay, this is close. It's not my perfect 120K, but it's pretty dang close." She also liked that the business owner had a lot of work life balance, 40 hours a week. She liked the business had been around for 12 years. It was located in San Diego. There was no license that was needed for it, and they didn't really have a lot of keyman risk. She knew she could run this business, too, and the owner was willing to do a smooth transition. They were also being pretty reasonable on the asking price, 275K, and they would finance the deal for her. Plus, if the business didn't make what she thought it was going to make, they could pull the price of the business down. So, she was like, "Okay, this looks like a cool business." So, now it's hitting all parts of her deal box. She is off to the races. Now, we're going to go to searching for onmarket deals. What does this mean? These are businesses that are listed for sale publicly. Like we talked about, the sellers want you to find them. They're going to include really general criteria, not everything for the business because they often don't want their employees to know that they're selling the business. Typically, these businesses are broker represented. That means that they have a broker just like you might have a real estate agent. They have a selling their business agent or what's called an SMB broker. Now, there's a couple simple steps for onmarket outreach. The main steps are like deal clarity. So, you need to know your criteria. We went through your deal box. You're going to fill that out. You're going to search using target filters. I'll show you later in this how to set up one perfectly for you on Biscalow. That's how I search for businesses. You're also going to reach out to the listing brokers. You're going to get a vibe of what that feels like to talk to them. And then we're going to rock and roll. Now, one of the first things that happens once you start reaching out on site and saying like, "Double click. I want to buy that business." Do you know that the average listing gets over a hundred outreaches? So, every time somebody lists their business, they have a hundred people in their inbox. It's kind of like a hot chick on Tinder, right? So, the brokers have to screen through them and see who looks serious and who is actually going to close a deal. So, I'm going to give you some pointers to make sure that you don't have what happened to this guy happen, which is basically broker saying, "No thanks. I'm going to pass." Be good. Be brief. Be gone. So, here's what I mean by be good. I want you to be really professional. Hi, I buy businesses in the tax and accounting space. I'm looking for one located in the Southwest. I'm looking for businesses below $3 million in revenue. I see you have a listing that matches my criteria. If we're looking to move forward quickly on the deal, uh, typical process for me is going to be that I outreach, see a little information. I'm going to obviously sign your NDA. Then I'd want to go into like maybe a 2 to four week due diligence, and then we close. I'd be happy to chat further if you're open to it. Great. I also want you to demonstrate financial capability. I'll show you how to do that on Biz Scout. You're basically going to check a little something that shows that you're a player, even if you don't have your your the money to do it. I want you to indicate that you want to move quickly, like, "Hey, we're looking to move forward quickly. here's my typical turnaround time and not emotional. Also, it's really important like this first outreach is really like that first look. You only get one chance at this because you got to remember everybody who's responding to this is a broker for a business owner and they don't work for you. They work for the seller and they work for the deal. And so, how do you become a person that doesn't send, you know, dozens of messages and not get responses and have one that gets response? You've got to know that in this instance, it's all about reps. The first time you swing a golf club, it probably looks pretty ridiculous. The first time you swing a bat, the same thing. The first time you outreach, it's the same. We're going to give you some reps. Now, this is Biscout's listing list. Here, you're going to use these advanced filters to narrow down the options based on your dealbox. And once you fill these out, if you're in our community, we're going to send the deals custom to you. You're going to refine by all the things we had you go through earlier. Then, I want you to set up alerts. So, this is where you're going to receive notifications on every new deal because the person who sees the deal fastest, moves the quickest, is often the one that gets the deal closed. Time kills all deals. So, we're going to set them up. I like to see deals daily in the beginning. I just kind of want to get a vibe for what a good deal looks like. You need to see kind of a hund of them before you find the right one. I also want to make sure that once you're serious about buying a business and you have your deal box narrowed, we're going to reach out to them on a consistent basis every single day. Because I think what most people don't realize the difference between you being super rich and having bought a business, you being an acquirer or you potentially thinking about doing a startup for the rest of your life, there's really only one difference and that's do you move even though you're a little scared. Biscout is not the only place to buy businesses by the way. There's Bisby by Sell, Flippa, there's Loopnet. There's lots of locations. I just found most of them to be lacking, which is why we built our own. I wanted some place where all the deals were curated. There was no trash or slop on there. No fake listings, no outdated listings, and people actually got back to us. Now, what I'd like you to do in a perfect world, if you're reaching out to find a business to buy, cash rewards consistency. Consistency is then contagious. And once something is contagious, it spreads. So before you do anything, I like you to have an accountability buddy because I think if you want to go fast, you go alone. If you want to go far, you go together. I'm going to show you how a couple of people in the community have used an accountability buddy to execute faster. In case you think this is crazy, pretty much in every aspect of your life, if you just consistently tell another person and you put down the activity on your calendar, you have anywhere from a 60 to 90% higher likelihood of achieving XYZ goal. The American Society of Training and Development found that people are 65% more likely to hit their goal if they do it with somebody else, which is why I think community is so important. You're just more likely to win if you're around winners. So, quick caveat before we get into how to search for businesses directly. What does good accountability look like? I want you to identify an imperfect action plan for outreach. What I think that means is you fill out your dealbox on Biscout. You find your accountability partner, you join a community, then you have your dealbox set up automatic notifications or you work with our deal coaches and they push things to you directly and you say, "I'm going to buy a business inside of the next 6 or 12 months and I am going to spend at least 2 hours a week looking at it." That's your imperfect action plan. Then I want you to create an accountability statement. In the next year, I will buy a business that will replace my salary entirely. That could be a good accountability statement. Then I want you to have a challenge where you talk to your community uh buddy or your accountability buddy and you say, "Hey, once a week I want to check in 15 minutes and see, are we doing the things that we say we're going to do?" Then those check-ins will be your deadline. You're like, "Well, I know I got to check in with Tom on Tuesday, so I better have reached out to those businesses by Tuesday." Then I want you to celebrate the small wins. So what? You haven't bought a business yet. every single week you at least reach out to the number of people you say you're going to reach out to. Go buy yourself a little something, have a drink, go out to dinner. Because what's also fascinating, you are twothirds more likely to achieve your goal if you celebrate the small wins than if you only celebrate once you accomplish it. So think about that. We call it the partner, then plan, then propose, periodic updates to have a particular profit. That's your reward where you then party about it and then you pass it on. Now, let me show you how a live acquisition might happen. So, this is Lloyd. Uh before uh I taught Lloyd, Lloyd had bought zero businesses. Now, he was a smart, hardworking guy, but he had never bought a business before. He had had some startups to like varying degrees of success, but he had never actually bought something before. Second year, he now owns two businesses and he works with me. How did he do it? Well, step one, he's learning the things that you're learning today. He had a foundation. He joined the community. He set his deal box. He started moving forward. Step two, he handled his deal clarity perfectly. That deal box got locked and loaded. And he knew how much he could afford to pay for a business or not. And because he nailed his financing first, then he nailed his must-haves and his can'tthaves. His musthaves were it needed to be close to him. He didn't want to spend too much time on it, so he settled on a laundromat. Step three, origination. That's what we're learning today. This is how to find a business to buy. And so here you can see this is the inside of Contrarian's CRM. This is where all the deals get filtered if you're in our group and you can see how many deals you have to look at and how many fit your criteria. So he started looking. Once he had saved his deal box, he realized, wait a second, I have a bunch of stuff that's on market that interesting. Um, how many do I have to talk to before uh I can actually buy a business? And he started at 50 that he looked at high level. That's like you scroll through Zillow. You kind of put 50 in your saves. Then you go to 20 and you really analyze the numbers. Do these make sense? Do I like these? Maybe you do a driveby. Then he went to five where he was like, I'm actually going to put in a letter of intent. I'm going to I'm going to say that I'm really curious in these so I can get their financials. I can sign a non-disclosure agreement. I can go deeper. Then he went into advanced due diligence. Okay, I really like these three houses. I'm going to go out there. I'm going to meet with them. I'm going to put in a real offer. I'm going to talk to the real estate brokers. I'm going to comb through all their financials and then he finally bought one business. So 50 to1 ratio. And then he did what I started talking to you guys about with finding a business. When he found this business, it was an onmarket business and he did our outreach process where he made himself the trusted resource to both the seller and the broker. He used Biscout to dive into this business and started tracking every single one of his steps of where he was at in the business buying process. He realized that it would take him in this case about 3 months to close a deal. And so every single day he would update his status. You can see here he was at 14%. Because I think when you follow a proven process, you get to your goal faster. So steal my homework on this. Then he evaluated the business and said like, is this business worth too much? Do I like this business? I call evaluating a business the keep it stupid simple method which basically means most businesses sell for two to 3x revenue or two to 3x profit if they're smaller businesses what's often called seller discretionary earnings. So he knew that and he was like okay so this business that I like after I've screened it down I'm going to buy it for 2 to 3x. Then he gave an offer, put in his LOI, then put in his binding purchase agreement and closed on the deal. At which point he gets the NDA for the deal. He gets his accountability buddy locked in. He sources vendors to help him close the deal. He breaks down every single segment of the business just like you would a house. Hey, are the hardwoods good? Is the roof leaky? Are the lights where they're supposed to be? Wait a second. Are there any other leans on the house? All of that he did for the business. That took him about four weeks. Four weeks from beginning to end. And now he's moving from 14% completed to more like about 50% completed. Finally, he gets into financing. How's he going to buy this business? Well, he like many of you guys didn't have a lot of cash. You know, he was an employee for a long time. He had burned a bunch of money on his startup. So, he was like, I got I got like 30k to put down. I can put about 30k down on this business and the rest I'm going to finance with the SBA. And so he did just about that and that allowed him to buy a small business without having a ton of cash. Now he used just one of these 21 other ways to finance a business that we teach. But that step allowed him to get to closing at which point he finalizes the contracts. He puts in his offer and he rocks and he rolls. And this same process is the one that you're going to follow. It's the one that I followed to buy first a laundromat, then a second, third, fourth laundromat, then a wash and fold company. The fold. So, my first laundromat was $67,000 a year. The second company was a $3 million a year business. And the third company, which is a software company that I just own a small part of, that's a $60 million a year business. You can layer these acquisitions the same way. I think what most people don't realize in doing a deal is that when you go to eat an elephant, you do it one bite at a time. So, we do tiny little steps every day to outreach different buyers. So, we do tiny little steps every single day to outreach different sellers and that's how we get the outcome that we want. Before I get into Biscout and I want to break down for you how to use this tool live by the end of it, you can create your own dealbox. You can actually search for a business live and we can like find you your first business here. But before we do that, I want you to to think about something a lot of people talk about. A lot of people talk about, can I have a broker find me a business? You know, right now you go to buy a house, you're like, I don't need to know how to search on all this stuff. I just go I call this real estate broker up and they go find the houses for me and they they give them right to me. Why doesn't that exist in buying and selling small businesses? Because really good brokers, they do what's called they go up market. That means they don't want to work with little guys. So, they're either going to charge you five figures a month, like 10K a month to help you source a business because most people aren't serious business buyers, or they're going to charge you five figures a month plus a percentage of your closing costs, like somewhere between three and 7%. I don't like that. I think most business brokers are incredible at working with sellers and really bad at working with buyers. The industry is just not set up for it. And so if you're asking me, I would say do not use a broker for the buy side. I do not recommend them at all. I think it is way too expensive. And instead, this is what I would do. I'm going to show you how to walk through and find your own business so easily. You don't need a broker. You just need a computer. Okay. So now we're on biscout.com, which is where I go to buy and sell businesses. And I'm going to click in here, and I'm going to look at what businesses are for sale. So, I come right in to the marketplace. The first thing I'm going to look at in the marketplace is all the businesses for sale. You can see that right now there's 50,352. That's too many for Cody. So, in the beginning, I might just go in here and say, I want to find laundromats and I want to find them in Austin, Texas. Okay, ready? Go search. And it's going to pull up a bunch for me. But you guys are going to be pros, so we're not going to do it that way. We're going to go to a deal box. And when we click on our dealbox, we're going to go in here and we're going to say, "All right, I want to have, let's call this one Austin, Texas." And I'm going to say I'm in the state of Texas. That's where I want to find a business cuz I live here. I want to do it in Austin. I want a price range. So, you know, maybe I don't want a business below $10,000. I maximum want to pay $2 million for my business. Let's say one more zero there. Um gross revenue, you know, I don't want anything that makes less than $10,000. Maybe maximum revenue, I don't care as much as we want. Um I want something that's added in any time or day. Maybe I want it to be established after 2021. I want a business that has a little time on market. and I want for sale businesses and I don't care about real estate being included or not. Okay. So, I'm gonna save my little deal box here. And then I'm gonna go in and I'm going to have Biscout search for my dealbox. Now, look at this. Okay. It's like perfect. Look, I got a I have 45 businesses for sale, all located in Austin, all that fit my deal box. That's great. And if I wanted to add another one, I just add a different deal box. So, maybe my next deal box I'm like, let's be more specific. I actually want to buy a beauty and personal care business, a building construction, and a cleaning service business cuz those are all related. So, I'm going to call this Austin, Texas, too. And I want to see just all of those that are located here. So, let's see how many that pulls up for me. And see at the top, we've got Austin, Texas, too. Now, here I've got 13 businesses. So, wow, I got some kind of cool spas. If I want to buy this spa for 300k and make $76,000 a year, that's not bad. You know, maybe I want to buy this $4 million HVAC company that cash flows $1.3 million a year. That's kind of sexy. Let's look at it. All right, you can see we got $4 million. Not that many people looking at this business, by the way. And then let's look down below. What else do we see? We see the cash flow on this business, 1.28. Nice. This is a $10 million gross revenue business. So what does this mean? In these little purple boxes, you can see the sales multiple means the ratio of the business's act scheme price to its cash flow. So basically, they want $4 million for this. Well, the business is making 1.2. So 3.1 * 1.2 is about 4 mil. The profit margin on this business is 12%. How do we feel about that? We don't love businesses that fall between below 15%. Right? Then we look at the debt service. So, how much would this business cost me to finance for this business? We assume, well, let's say I only put 10% down. And uh and I can only get a loan for 10 years. Then what would be the debt service on this? And then we look at, wow, what's the cash on cash return here? It would be 174% if I did it on those loan terms for this business. And then you can dig down deeper. Look, this business has been around for 30 years. Awesome old business. We like that. And we can also see why the owner is selling. He wants to retire and he says he'll support us for 30 days. So I might go, okay, sounds good, but I don't love 12% margin. So what would that mean? That would mean either I want the sales price to come down or it might means I keep looking. So in here for instance, like look at this highly ranked handyman business with call center for sale Austin, Texas for 124K. Now, this business doesn't have any details on it. So, let me look in and why don't we reach out to the broker. So, here I would reach out to the broker. I'd put in my phone number. I'd put in my email. I would select a time frame. Uh, spoiler, I think you should say sooner rather than later. We're looking to do this in the next 0 to 3 months. This is where I would give your pro advice. You know, I use Whisper Flow, so I'm going to talk to it. Hi there. I am looking to buy handyman businesses in the Austin area that have been in existence for at least three years that are profitable. It looks like yours could hit my parameters. I would love to discuss further if you could please reach out to me at this number. I am happy to provide preapproval letters and also show you that I am a qualified buyer at this price. Now, I'm showing them that I'm serious and I'm going to send that. then Biscout will go to work for me. Now, let's say there we go. Message sent. We're on it. Now, let's say that um I want to see what's going on. I want to see the businesses that I have going on on Biscout. Well, now I go to my acquisition dashboard. And here you can see, all right, I want to see all the businesses that I've put in offers on outstanding and where we're at. You can see the status of all my businesses. Like, oh, look, this one I'm under initial inquiry. This one's I'm at due diligence. If I go into this handyman business, we'll see where I'm at today. Well, I'm at step one. I've got eight open tasks. They haven't followed up to me, and I can see the the time and place that they followed up or didn't. The other thing that I want you to pay attention to is your profile. So, couple different things you can do to really stand out. One, I want you to verify with your ID. So, you're going to scan. It's free. Your ID ID here, that means that you're not a bot, you're not a fake person, and you're going to increase your response rate by more than 50%. Then I want you to put in the amount of funds available you have, and I want you to get Google verified. Super, super easy. Above and beyond that, we're also going to tell them some stuff about you, make you look like a serious buyer. We're going to tell them what kind of acquisition target you're looking for, and we're probably going to we're going to even put in here, I actually like to put in my LinkedIn. So, I just want them to know, hey, I'm a player. I've been buying businesses and doing deals for 15 years. I was previously in finance. I own an asset management company. Please see my LinkedIn for further details. This way, if a seller checks, they're going to see all of this information about me. All right, that makes sure your Tinder profile starts looking nice. I also highly recommend that you use the platinum plan so that you can show them that you are serious as opposed to curious. Now you guys know how to do a biz scout walkthrough for onmarket deals and have people actually respond to you. That is all you need to know. We're about to go to offmarket deals, which is how you find businesses before anybody else knows they're on the market and thus you can do deals that nobody else gets to do. But before we get to that, if you guys are serious about buying a business, I want to invite you to talk to one of our consultants at our M&A advisory firm called Contrarian Community, where we teach people how to find, buy, vet, close, and finance businesses. If that's something that's interesting to you, you can click the link below and have a one-on-one phone call with one of my M&A consultants. You can also see firsthand how they'll push deals to you with the deal navigator. And so once you fill out your deal box and they help you craft it, we'll start pushing businesses to you and making sure that you have all the tools you need to close your own business. And now let's get into those offmarket deals. Offmarket deals. How do you find deals that nobody even knows exist? I think there's a real difference between players who do private equity because they go searching as opposed to those who think they're going to get fed. There's no baby birding in deal making. So, this is about how do you find companies before they even know they want to go on sale? And I think what happens here is the more you know about doing deals, the luckier you get. It's the weirdest thing. So, I remember when I was at Goldman, one of my best deal makers at the firm told me that there are only two things that matter to becoming a great dealmaker. And I thought it was that you were incredible at financial modeling. You were super intelligent when it came to analyzing spreadsheets. Um, you really knew how to negotiate and you knew all the terms of the deal. Those are important, but the most important is that you know how to get a ton of deals and you know how to create proprietary deal flow. Proprietary deal flow means you have your own pipeline that's not deal aggregating from a bunch of stuff that's in the market, but that is specific to you. And you can kind of think about this as a leader. Let's say that you know that uh a best you know what a great leader is. A great leader is not somebody who inspires other people. A great leader is somebody who people can follow. And what's funny about most leaders is they think, well, if I get the job and I have the title that I'm a great leader, it's like, no, no, no. Can you find people that are talented? Can you get them to believe in the mission enough to come over and do they want to stay and keep working for you and get better? If you can't do those three things, you're not really a leader. If you can't go and find proprietary deals, you can't go and get those deals to convert, you're not really a dealmaker. And so, how do we do this? How do we steal from Wall Street here? Well, we focus on off-market deals and we use the quiet seller methodology. So, I want you to steal my homework. It's called the quiet seller methodology and it's how we avoid super competitive deal processes. Instead of waiting for the deals to come, we do direct outreach. So, let's talk about how to do that. There's sort of five main ways to do it. The first way is strategic targeting. So that's where you have a specific type of business you want to buy and you go after it within a target area. I think about this as sniper rifle as opposed to shotgun. The next is direct outreach. This is where you are going in an area and you're actually initiating conversations. Typically you're doing it in like centers of influence areas like um a golf course uh like going to the local chamber of commerce. The next is that you are using third-party deal sourcers. Uh thirdparty deal sources are really big in private equity. That's how a lot of people get their deals done. And the last two ways that we're going to focus the most on is using 21st century technology to make it feel like you've got proprietary deal flow, but really it's doing massive aggregation and then you are doing curation. So let's break this down. All right. My favorite way to do this is Biscout, which we're going to get into a second with our proprietary deal sourcer. But I want you to remember this quote by Peter Lynch, which is the one who turns over the most rocks wins. Let's say right now you're watching and you're like, I got like 20 bucks, Cody. I'm like, I don't know how I'm going to be buying businesses. I don't have enough money to do this. Also, I'm not going to create a proprietary dealflow search engine. I want like one business cuz I need some income or I don't like what I'm doing. Then I would do the Venmo challenge. Here's how this works. It's you turning your costs into profits. So, what if you made money every time you spent? I want you to ask yourself the question, where are small businesses that you know and already spend on? And how would you figure that out? Well, let's look at your Venmo and your PayPal history. If you pull it up right here, like I have that, what will you see? You'll see that most of the people you're paying on Venmo and PayPal are either friends and buddies and family, or they're small businesses. It's like a farmers market, maybe it's a cleaning lady, maybe it's your landscaper. So, these are businesses that you have access to the seller or the owner of the business and they take cash. It's a great way to narrow them down quickly. I take my list of Venmo and PayPal. I download all the transactions and I put them in a spreadsheet like this. In that spreadsheet, I want to know who is the owner. Do you have ability to get to them? How much do you spend with them? How much revenue do they have? And do you think you could add value to the business? So, think about it like this. Um, my list here, you can see I've got Griselle. She's my cleaning lady. I spend $2,000 a month on her because I'm a dirty girl, but she has a lot of stuff for me. The total revenue that she has in the business when I ask her about it is $150,000 a year. When I talked to Grisilla about her her cleaning business, I'm like, you know, do you have a website? No. Do you have subscriptions? No. Do you have uh employees? No. Do you have you ever increased your prices? No. Do you offer upsells? Do you have additional services? No. I'm like, wait a second. I could probably add some value here. Then we've got Susanna. This is one of my property managers. I pay her about 6,500 bucks a month. Her business overall, when I ask her, is about $420,000 a year. Then I look at hers and I'm like, "Okay, she has a website. She has some employees." And then I ask her, "When was the last time you raised your prices?" She says she hasn't. She since she started the business 3 years ago. Then I ask her, "Hey, um, have you ever looked to add additional services on top of it? Like, do you take a cut uh if you're managing Airbnb of different vendors that you source to Airbnb attendees?" No. No. So, I'm like, "Okay, I think I could grow this business." And then the third one on there is Oscar. Oscar is my handyman. I got to spend like 500 bucks a month. I don't know, random stuff for him. Turns out his business is big, though. It's a million bucks a year. He has a lot of services that he offers and employees that work for him. But I realize that his website's kind of crappy. He really has no reviews on Google. All of his businesses through referrals and he has no tech incentive uh inserted into his business. So, I'm like, I could grow this bad boy. So, how this conversation happens is after I've pulled this list of people in order to figure out if they have a real business or not, you would be shocked what people will tell you. So, I just went to Griselle and I said, "Hey, you know, I'm investing in and looking to own part of small businesses kind of like yours. I don't know how much revenue you do in your business, but if it's a right fit for me and you, potentially I could invest and help you grow the business if that would be interesting to you. How much revenue do you do, Griselle?" And then she tells me, "You can steal my script on that." I even showed you a text message I sent to uh one of my owners to see if they would have this conversation with me. So, I sent that text. They said yes. Here's how the process goes for Venmo. You pull up your Venmo spend. You list all of the people like I just showed you. Then you go through that list and you go, "Nah, I don't want to own a handyman company. I don't want to own a cleaning company. Property management, that's cool. I could own part of that. I want to grow that." So, that's your must-have list. Then, you go and you have the owner conversation. You send the text message like I sent you. You have that quick oneline question you ask them to figure out revenue like I did. And then once you have how much revenue they make plus you kind of know what the margins of an industry are because you have chat GPT you can Google right now what type of profit or profit margin is on this type of business at this size and it will tell you you can figure out what the business is worth. So if I go okay Griselle makes $200,000 a year. she has a uh cleaning business. I go to chat GPT. The clean the chat GPT is going to tell me that cleaning businesses have about a 20 to 25% margin. So I go, okay, she makes 20 to 25% of $200,000. So now I take 20% of $200,000. I times it by 2 to 3x and now I have the value of the business. I didn't even have to pull out a calculator to do it. Now I can start thinking about the offer. The reason why most people will never do this is because it's scary. You're like, "Can I really ask somebody how much revenue they make in their business?" You go, "No, they're going to murder you for doing that. What are you worried about?" Like, you just do the thing that most people won't because you can literally measure your success by the number of difficult conversations you're willing to have. All right, so that's step one. The second way that I go and find businesses for sale that nobody knows about is called my personal P&L review. You ask yourself, where do I spend money that isn't Amazon? Aka, where else do I spend money where the business is small enough where I could actually get to the owner? I want you to open up your credit card statement. Then I want you to look at what do you spend money on. You can categorize it really quickly in Excel uh by just filtering it. Then I want you to take out any big business. Uh you guys know all the names of the big one. If it's Amazon, you probably can't buy it. Then I want you to list them by, okay, all of these businesses look small enough I think I can get to the owner or even better, I know the owner. Now I want you to look at those businesses and think, am I interested in them? And how big do I think they are? And then I want you to start working the process. So, we're going to do the exact same thing in this spreadsheet. Who's the owner? What do they do? How much monthly spend do you spend with them? What's the total revenue? And can you add value to the business? So, here are some examples. This is these are real businesses I did this with and taught other people how to do it, too. SFP was called StrikeFire Productions. They're a podcast production company. I was spending $3,000 a month with them to manage my podcast back in the day. I asked Jonathan, the owner, "How much do you guys do in revenue per year?" He said, " $350,000." I go, "Wow, cool. Like, what's what's the hardest thing going on in your business right now?" He goes, "Getting new customers. I literally can't. I love producing podcasts. I hate sales. I hate going after people." I was like, "Ding, ding, ding. That's super interesting. So, what if I go to Jonathan like I did and say, "Hey, if I grow your revenue by bringing you additional customers, could I get a percentage of all the additional revenue that I bring you in equity?" And he said, "Yes." And then we did the same thing with a company called Stateless. And then uh Michael B is my accountant. I don't own any of of his business, but I went through the same process with him. Now, what are the parameters on can this work for a company or can this not work for a company? It can't be publicly listed or huge. You got to be able to get to the owner. Small enough that you can actually contribute. You know, if if you're an intern and you have no business experience, but the business you're going after is a $5 million a year business. I don't know. Probably not much you can do. If you happen to be in podcast production and you've been doing it for a while and the business is a million-doll a year business, there might be some value you can do there. And then you want to make sure that you actually want a portion of this company or the whole company. And that's how I've bought business after business. This is my actual Excel spreadsheet from StrikeFire Productions. You can see the deal that I did. You can see every single month how much money we made here on the sheet. You can see it looks like, let's see, in month uh one uh I I'm C uh Jonathan's J. I made $5,852 uh on that deal. Jonathan made $8,000. The next month, not as good. He made five, I made four. But do you want to know how much money I spent to buy 49% of that company? $10,000. So, I'm making all of my money back inside of three months plus profit. And that's because I helped him grow his business and only took a percentage of the business that was bigger than what he already have. It's also how I bought out one of my former partners. I bought him out over six months. I put down a down payment on the business. I backed out the company's a assets. And then all of a sudden, I had 100% ownership instead of 50/50. This is how you do your personal P&L review. Same process. Download all your expenses. You're going to list them all out. You're going to ask yourself, "Do I want to own part of this company or not?" You're going to have the uncomfortable owner conversation. and then you're going to make an offer. Now, the truth of the matter is in doing deals, the number one reason people won't do deals is because they say don't they don't have any money. You can't invest with zero, but you can show up with zero dollars. You can learn with zero dollars. You can network with zero dollars. You can bring in sales with zero. So, saying that you don't have any money is just not an excuse to not do a deal. You just don't have the knowledge on how to be valuable even without cash. The next way I want you to think about finding offmarket deals is called the nineto-5 strategy. I want you to think about where you work and I want you to look around and think about is the business that you work in or any of the vendor businesses that you work with a ripe candidate for a seller financing avatar business. So, do you have an older boss? Have they been running the business for a while? Does that boss not have somebody to transition the business to? Does it seem like they're ready for the next thing? If so, you might be like one of the members of our contrarian community, Jay, who bought a business that makes $1.5 million in revenue. And how did she do it? Well, it was actually one of her former co-workers, and he financed the whole deal for her. What happened? Well, this is a real conversation from Jay. You know, my she's saying my old coworker originally wanted her to run the company for him because he knew that she had some experience and she said no. Uh but then when he said he would give her part of the equity, she changed her mind and he was like, "I'm about to retire. My wife really wants me to go skiing with her. Would you consider taking this over kind of step by step over the next three years until you own the whole business?" And she said, "Yes." And one of the keys to being a person that somebody is actually interested in transitioning their business to is that you start before you're ready and before the seller knows they're ready. One of my favorite lines from my dad is be the type of person who reaches out to others when you don't need something. And so you want to be the one to reach out to business owners and offer help when they don't need something and when you don't too. The reason that Jay nailed this is because she had a perfect seller financing avatar in her seller of her business. He didn't have any kids to take over the business. He thought about selling to an employee but wasn't 100% sure that the guy who had offered that to him could run the company. He didn't trust him. The business didn't have very many prospective buyers. It was a government contracting business. He was tired, burnt out, ready to exit. Now, he could have sold to private equity, but he really wanted his employees to be taken care of, and he didn't want to deal with the huge earnout and all the hassle and the well, the colonoscopy that is when private equity comes in and tries to buy your business. And so, he was pretty perfect. Okay. So, because of all that, Jay was able to take over this business and pay the owner back over a 10-year period. And I think the number one reason that the employee to owner framework works is because you'd way rather work with the devil you know than the one that you don't. If a business owner knows that you are trustworthy and they trust you in the business, they're more likely to let you take over. Okay. I next want to go into the rolodex to ROI method, which if we're not chasing deals, right, like we do on market, if we're attracting them, how would we do that? And I'm going to give you some quick hits. I want you to go to places that you would never go to normally because they sound super boring, like the local chamber of commerce. In these businesses are a ton of 60 plus business owners. And it's very easy to strike up a very specific conversation. What do you do for a living? Oh, I buy businesses. Really? That's cool. What type of businesses? Local businesses in the Southwest in professional home services. What do you do? I own a home services business. Cool. How long you been doing that for? 10 years. Wow, that's a long time. I bet sometimes you're ready to get out of that business, too. Haha. Sometimes I am. Great. Have you ever thought about selling that business? Not saying like to put any pressure on this, but would it be interesting to see what like a third party might evaluate your business as? And worst comes to worse, you have a price and maybe some terms from somebody. Oh no, I guess that wouldn't be that bad. Great. Let's meet for coffee. This is the entire conversation. You are basically saying, I buy businesses that, and I gave you your deal box that are in your deal box, and I would love to discuss further with you this beautiful business that you have. You press on the pain a little bit. I bet there are days you want to sell that business and you are in the game. Now, the other thing that I like to do is your rolodex is not just people that you're networking with at Chamber of Commerce events. It's also your friends and family, professionals like accountants, attorneys. Um, these are people where everywhere they are interacting with small business owners, they just don't know it. That local coffee shop, small business. Uh, this, you know, local restaurant, small business. How about the person who does your taxes? Maybe small business. And most of those people know tons of other owners. And those owners probably tell them sometimes that they're looking to sell, but nobody walks around saying, "I buy. I am a business buyer." That's going to be different because you're going to do it. Now, if you're looking for people who are really going to refer business to you, I want you to remember this one line. The best predictor of future behavior is past behavior. So, if you think somebody's going to change, they're likely not. What you're looking for in people who are going to refer deals to you is that they've referred deals before. It sounds weird because then you'd think, "Oh, they already have somebody to refer deals to." But that's not how it works. It's something called recency bias. You just want to be in touch with them more often than anybody else. So, I want you to start saying to these centers of influence, "Hey, have you ever referred, you know, somebody like a business owner to somebody else who's selling their business?" And if they say no, then you go, "Great. Nice to meet you. Bye." If they say yes, you might want to keep a conversation going. The truth that I wish that I had learned about a billion years ago is every room you are in likely has an owner ready to sell. And your net worth in this space actually is your net worth. So if you can just tell people that you buy businesses, you don't even have to be good because it's not that common to buy businesses. So you can be uncommon. One of the last ways I want to talk about offmarket deal sourcing is social media. Now obviously you see me all over the place. Most people are just consumers of social media. Why am I on here all the time talking about business buying? Is it because I want you guys all to buy a business? Sure. But it's because I want you to send me your deals. I want you to tell me when you have a business you want me to invest in. I want you to list your businesses for sale on Biscout. I've created an entire ecosystem around this. You can do the same thing. So, in order to attract people, you can do something as simple as optimize your LinkedIn profile like we teach all of our members at Contrarian Community. on it. I want you to say, "I buy businesses." And then you might go, "But Cody, I don't buy businesses. I haven't bought one yet." And I go, "But today you're declaring that you buy businesses." And on a go forward basis, that is going to be part of your identity. I am searching for businesses to buy and I buy this type of business. So you've got to make sure you actually share those goals and share them consistently. Once you are documenting as opposed to sharing, then more people will come to you. I also think that LinkedIn, while it is a hellhole in that DM space with messaging from all sorts of nonsense vendors who just AI slop all over it, it is also a great place for connecting with business owners. And so if you can stand out like a human, just be like, "Hey, Cheryl, this is Cody. I'd love to connect about your business. I see you run a local handyman business in Austin, Texas. I'm based here. Could we talk?" That might actually work. And so I do that a lot on LinkedIn. And you know, one of the things that we've seen from our members, this is an example of Aubrey doing it right here. He just goes out to family offices who own a bunch of businesses consistently, and that's where he finds most of his deals. You don't have to say anything fancy or special. You have to be good. You have to be brief. You have to be gone. The other place that is so weird for me to consider buying businesses because I'm like just slightly too young for this is Facebook. Facebook groups are amazing for buying businesses because it's an older crowd. You know what I'm saying? So, if you go in there and you search for landscaping businesses in the Southwest, landscaping communities, landscapers united, you're going to be shocked. Like, look at these. In the, you know, 20 mile radius of where I was searching, there's three groups with like 50 members who are all landscaping companies. The next one's another boring one for you, but boring is often where the billions are. I want you to identify industry specific associations. So, when I was in cannabis investing back in the day, I not a big user, kind of square. So, like I didn't know where to go for cannabis related deals or investing. What do I do? I just go online. I search for the three or four biggest industry conferences. I went to all of them. Iworked like crazy. And by the next year, I was keynoting one of the bigger ones. Why? because I just went super niche into that specific industry. There are industries for everything. Coin Laundry Association, go to Reddit, you'll find like 400,000 handymen in one location. There are conferences like this is the HVAC conference for every industry. This HVAC contra conference has like 8,000 attendees at it. There are businesses all over the place in these industry niches. when I wanted to invest in Latin America back in the day. I ran a billion dollar and assets under management business in Latin America at First Trust. I also had never been to Chile before. Uh I was living in Dallas at the time and I went and ran uh our business in Chile. How did I end up doing that? Because I went to a couple industry conferences, one called Lavka and uh this one was a Latin American Venture Capital Association. So I go to this association, I get to know the people in charge of it. Nobody's ever reaching out to like industry association heads. They're not like getting slammed in the DMs like Gary Vee. So when you respond and say, "This is so cool. I love what you're doing. I'd love to meet with you." What do they say? Cool. Nobody thinks this is cool. At which point you have an entry. Then the other thing I want you to think about is these online forums are incredible. Whether it's Discord for younger industries, Reddit for like millennial type industries or Facebook groups for older industries, they have lists on lists of lists of people that you can probably go and buy businesses from. Slightly same vein, industry publications. Do you know that there is a publication for every single boring business industry that I can find? This is an example of the HVAC and refrigeration industry publication, which by the way is an incredible place to document if you want to buy a business. You're probably better off advertising for like 22 cents in this publication that you're buying an HVAC business than you are paying for Facebook ads. And so it's just you are narrowing your audience explicitly. One of the most powerful things you can do though, more powerful than anything else, is go steal somebody else's 10,000 hours. I believe highly in stealing my mentors hours. So with us that might mean that you join the contrarian community because I believe in collapsing time frames. If you want to buy a business then why don't you get on the phone with like you know 20 of our consultants who all they do is help people buy businesses every day and have done billions of dollars in transactions and help you get to your goal by stealing somebody else's 10,000 hours. That to me is much better than the word that I hate more than anything which is networking. I think networking is like what people do when they are in corporate culture and like have forgotten that you're human sort of. So I don't actually believe in networking organizations at all. I believe in getting in communities and getting deep in industry specific arenas because that's where the action happens, not like going to a networking event. And if you hate the idea of going and doing all of this networking and going and engaging with a ton of people and setting up your deal network, then I got you. Like, first of all, just be cool. It's not that big of a deal. You can go out and meet people or you can join the community. But if all of that makes you cringe, then let's do what we millennials and Gen Z do, which is like, apparently we don't like to talk to people in person. We just do it on the internet. Let me show you what this looks like if you use our offmarket deal scraper. So if you want to do offmarket deal scraping without talking to anybody, you come into Biscout, you click on offmarket leads. this case, I already saved a bunch for you. So, what you're going to do is you're going to request a lead list. In this case, again, we're going for Austin, Texas, cuz that's where your girls located at. Then, we go to industry, and I'm saying laundromats cuz I got a thing for laundromats. And then, I'm going to request a lead list. It's going to pull up right here on my uh on my offmarket deal searches, and I'm just going to click into them. I'm like, "Okay, look. We've got 55 different potential businesses for me to reach out to." And look what we have here. We have the name, the address, the location. So, Austin, Texas. The phone number. We also have all the social sites for every single one of these locations. We have estimated revenue. These are going to be all over the place. Um, we have founding year. So, this one was started in 1980. And then you can heart them one way or the other. What I love about this is now I can reach out via email or I could reach out via Twitter or even LinkedIn and I can get right to the owner. So, in this case, I'm going to look through and say, "Huh, these look like, you know, some of these aren't exactly right, but I think we got like 30 or 40 laundromats here. Let's hammer through this list, reach out to them, and see if any of these are going to be our offmarket leads." And then once you have one of them that you like, I'm going to save it. And when you go back to your offmarket list, you can see Cody's got, you know, I've got four leads here saved. I've contacted a few of them. I've sent a follow-up and I got a little CRM built in here where I don't even have to leave my house. I can just be pinging business owners direct from my computer. Isn't that cool? All right, we got one more thing for you guys to do, which is how are you going to keep your promise to yourself and make sure you actually find a business to buy? Last segment, maybe the most important segment, so hang with me here. If you want to do deals, you have to be consistent, like we talked about before, because deal sourcing is one of the most time-consuming portions of finding a business to buy. You kind of got to kiss a lot of frogs before you find the prince in dealm. So, it's up to you to be consistent with your search. Uh Warren Buffett has a famous quote that says, "You can't get a baby by getting nine women pregnant in one month." And I think that's true in deals, too. You got to let that dude bake. You know, you got to keep that baby in that oven for 9 months. And so, it's the same with dealm. Then the question becomes, how do we make sure that we have a process where we get better at finding deals and sourcing them every single day? And that's when you can ask yourself, you know, do you want to just have short-term fun or do you want to get rich? I would use our goal tracker. Basically, the goal tracker goes inside of your contrarian CRM and it looks at the number of businesses and NDAs, non-disclosure agreements you sign per week, the number of business listings reviewed. You get those autosourced, by the way, for you or you can just keep your own spreadsheet. The number of deals in your deal box, so you can actually see right here. All right, I right now have 10 deals in stage one. I have four deals in stage two. I have two deals in stage three. And so I can see, am I really being honest about how much I am working on this or not? Then you can also follow up with how many brokers actually get back to you on time. Do you have a bunch of like basically lines out in the lake and nobody's nibbling? So you just got lines and lines and lines and it's going to keep getting tangled. So it tells you about how to get rid of those deals. Very simple. Here's what we think the stages are. Number of business listings reviewed. I want you to look at 50 to 100 of those to get your deal done. Number of NDAs signed. Usually I want that to be something like if it's a 100 deals, 50. If it's 50 deals, 30 LOIs submitted. These are non-binding, meaning you don't have to stick with them. Letters of intent. This is you saying, "Hey, I want to buy a business from you." I want you typically to submit somewhere between 20% of the deals for an LOI. And then I want you to contact the brokers for those. Um, finally, SIMS reviewed. This is basically, have I gotten the data and information on each business? Have I looked inside of their data room? Have I seen what's on their actual transaction documents? And if I've done that, then have I actually had combos with the owners monu. And finally, have I submitted deals or not? This is going to be your your deal tracker. If you want to get some examples of how long this typically takes, Emily here who's in the group, Emily ended up buying a home services business, but you can see her journey. She passed on one stone manufacturer of business. She got caught with three bankers. Went through six bankers for her vocational school. Um, she's talking to another broker right now. So, she's having to talk to somewhere between five and six people for every deal that she's closing. You can ask yourself a couple questions here. You can ask yourself, are the actions I'm taking today going to lead me to a life that I want, or am I just doing what I want to do as opposed to what's needed? Whenever I get stuck, I always ask myself, am I saying that won't work for me instead of trying to figure out how that could work for me? Only you know the answer to that. Because the truth is, you got to put in the work. You're probably not where you want to be in life because you've done what you wanted and not what's necessary. So that's why accountability matters so much. Track your progress and your goals. Share your goals with others and your accountability buddies and actually do the things you say you're going to. That is when you are one of the few who doesn't give up. who's like Agnes and bought a business, who's like Tom and bought a business because they keep track of the things that they said that they were going to do. They input it into a funnel and they make sure that that funnel has enough volume to have the outcome that they want. I'm going to show you what our funnel looks like at a very high level so you can steal my homework. So, I call this the contrarian deal flow funnel. It basically keeps track of the status of each deal, when to reach out to again, if you should kill the deal, and what's the reason. So, here's how it works. The early stages of a deal are called initial outreach and signing NDAs and getting financials. So, this is where you're getting like the name and legal structure of a business, the industry, the broker info if there is one. Um, you're figuring out am I doing on or offmarket deals. You're getting like highle financials, meaning you're only getting their revenue, profits, offer price, and cash flow. Um, that's like seller discretionary earnings, what goes in your pockets. Then the middle and end stages of the deal, that's where you get an initial assessment. That's your early stage. due diligence. That's where you make an offer on the business and that's where you get it accepted or or rejected and you close. In this level of the deal, we're getting deep financials. This is where you're like going to the house that you're going to buy, you know, and they do an evaluation of the house and you have the guy come out and go, "Ah, this is a mess. This is a mess." That's this stage. You're also going to get a lot of operational details, the customer base. You're going to talk to some employees. You're going to go deep. And when we do this, that is how we eat the entire elephant. Because every single day we're taking 10 to 20 minutes to move forward on our deals. I think a lot of times the reason people don't close a deal is because they weren't taking the right actions. If they looked at the actions they were taking every day in their funnel, they'd be like, "Oh, I haven't finished painting the house." "Well, I never did buy the paint." You're like, "Well, how would you finish it? How are you surprised? You didn't buy the house. You didn't, you know, you didn't finish the house. You didn't buy the paint." So, we want to make sure we're actually honest about what stage we're at because I realized something 10 or 15 years ago. I wasn't where I wanted to be in my life at that time. I had been in finance for a while, but I was working for other people. I felt trapped. I was spending way too much money. So, even though I was making a lot of money, it was going right out the door. And um and I remember one of my mentors told me that where he was at that day was not because of the actions that he takes dayto-day recently. It was because of actions he decided to take 10 years ago. And so you got to ask yourself like right now, where do I want to be 10 years from now? Am I doing the things today that will lead to the life I want to live in 10 years? And then I took a little graph and I plotted it. I was like, all right, if I keep doing what I'm doing right now, I can probably predict how much money I'm going to make. I can predict how much I save. I can predict what job I'll have. Why? Because I know what I did for the past five, three, one year. So just take that, times it by 10. And when I looked at that, it scared the out of me. Honestly, I was like, "Oh my god, I'm going to be working for this long and this hard and I'm still going to kind of be caught on the hamster wheel and I won't have actually made a material change because I have like flaws in my character and my execution. That means that I will get stuck here again because I'm not going to make a material change." And then I said, "Okay, so what if I took the risk and did the thing I needed to do, which at that time for me was buy my first business." I was like, "What if I just followed through on this? Let's say I bought business number one and then I bought a business every year for the next five and 10 years and there was one trajectory where I made money and if this is the axis I like barely, you know, made money, right? And my savings kind of went up and down like this and I still had to work a ton in order to do it. And then there was an inflection point where once I decided to buy a business, my life completely changed. So I have to ask yourself, do you believe that you will take the actions to get what you want out of this life? And if you do that, it's not impossible to buy a business. It's not impossible to find a business. It's not impossible to do deals.