How to Buy a Business With No Money in 2023

I'm going to tell you guys the hands down smartest way I've ever seen to get to five figures in monthly income and it is the best way to hit your first ten thousand dollars a month especially in 2023 according to me it has the lowest failure rate it allows for income on day one and it's how people like Warren Buffett made his millions I know it's not the stock market it is how the largest percentage of people on the Forbes 500 list made their money and yet it is the only strategy that you and I can do that they also do believe me they aren't doing Shopify stores or Amazon FBA or ad agencies no they're not for you it all starts with two words that I made sort of famous boring businesses boring business boring businesses so your first ten thousand in monthly income or your next million can come from one thing buying people's businesses and using other people's money to pay for it what if I told you right now that not only can you do this but owners need you to do it there are too many businesses for sale and not enough buyers it's not my opinion it's just math so by the end of this video you're going to know how to completely replace your W-2 income by buying a business you're going to learn how you could finance a business using other people's money in order to buy a profitable business you're going to learn the four different ways that weak cash flow and buy businesses and there's no better time to do this why 75 million baby boomers 10 000 retiring a day we are amidst these waves Harvard did a case study of who earns more College Consultants Bankers Etc or those who buy small businesses yes who wins sorry Harvard it's going to be those who acquire businesses entrepreneurs win by a long shot how long of a shot this long of a shot also people who own small businesses typically have a higher net worth 91 of all people with a net worth above 5 million bucks own their own small business the next reason is the average small business is profitable and has been for more than five years in fact there's a famous study called the Lindy effect which basically means that the longer something's been in existence the more likely it is to continue to be in existence except obviously perishable Goods so owning a small business that's been around for 10 years is actually less risk than that startup you're thinking about starting right now that you're going to blow a bunch of money on you're going to spend a bunch of time on and you're going to hope and dream and pray that it becomes the next big thing that is the next big thing that actually is very unlikely to happen but there are four things that stop people from achieving all of that the first reason is they don't know about this opportunity why because Wall Street KKR Carlisle they don't want you guys to know about it they want to buy all the businesses instead of have little guys like you and I do it two is people don't know how to find businesses to buy they don't know that all around them are actually small businesses waiting to be bought but nobody thinks about it you have to learn to reframe your mind three they don't know how to buy a business they don't know the actual process from one to ten to acquisition that I teach that I built from my 15 years plus in private Equity it's not complicated but it is work but the number one reason why people actually will not buy a business is this last one it's one word that stops everyone else and triggers most people and it's money so how do you buy a business when you have little money I don't have any money let me show you exactly how I did it I just bought this internet business called approachment.com for zero dollars down on that will do three hundred thousand dollars this year it was doing about 60 when we bought it we bought it for 60k over multiple years I bought this laundromat for a hundred thousand dollars that cash flows sixty seven thousand dollars a year for zero down but it's not just me Hannah Ingram publicly talks about a car wash she bought and makes 140k a year she did it when she was like 22 for zero dollars down and then Johnny who's an absolute stud he's in his 20s he didn't finish college and he bought a Biz that makes 250 000 a year that's top line revenue I don't remember what the profit is but he bought it for a couple thousand dollars and I could go on and on but let's go where most people won't but you will because you're here there's four main ways to buy this first is Cash Second Bank or SBA loan third Finance through seller that's called seller financing and fourth outside Capital raise so let's break them down cash you use all your own money to buy a business pretty straightforward you can do that if you're rich cons you're out the money you can't use it anywhere else you have all the risk couple Pros maybe you get a better deal probably just like with real estate and you get it done fast but this is my least favorite way to buy most businesses second is the SBA loan this is the government giving you free money the government will give you up to 90 percent of the purchase price of a business to buy it like pause on that for a second the government will pay you to buy a business yes they will the cons are it's debt which means you're on the hook if the business fails well as the U.S government love more risk interest rate involved very structured less flexibility and getting a loan from A bank is like a colonoscopy can I say that on YouTube it's annoying but the pros are it's like free money basically the straightforward process lots of people help you in the SBA in the actual government organization still my second least favorite way I hate working with 90 of banks I mean don't don't you also I find that sometimes you lose the deal because the SBA takes too long now Third Way outside Capital go ask friends and rich people to give you some cash the cons are it's hard to do it first most people don't know how to and how rich are your friends that's the constraints Pros are less rest you're not the only one on the hook as you are with debt faster to close and potentially you get a better deal also because you're bringing cash to the table even though it's other people's cash now this one's actually my second third I can't decide least favorite because I'm selfish with good deals I hate giving away Equity that's a whole different subject we can get into it's kind of technical if you guys want to go deeper hit me in the comments and say I want to understand why Equity is more expensive than debt I'll tell you my favorite my favorite two magical words seller financing this is where the seller pays you through future profits of the business to buy his business like a loan but the seller is the bank this happens for 60 percent of all small businesses that are bought meaning super common now cons can take longer to do to negotiate it some sellers won't do it for sure and you have to know about it but you're here so you got that part now the pros is you need way less cash in fact sometimes zero cash there's less risk on you the seller gets great tax benefits you get a ridiculous deal and you make up any terms unlike with a bank pause for a second there people will tell you this is not possible that's because they don't know what they're talking about they don't know what you're talking about people love to tell me on Twitter why these deals won't work they've probably never done a deal it's as common as a mortgage for a house not gonna work every time but it will work over time if you're saying you're looking to grow your bank account and not deplete it by using cash up front so I love doing zero cash deals all day long in fact in private equity in my old world we call this lbos leverage buyouts it's a fancy word for saying we have banks that pay for us to do deals but then people say to me okay if it's so great for you it's Gotta suck for the seller right not the case extra profit from interest meaning they get their purchase price plus they get like a little check in the mail from you every month or quarter it's just the interest costs faster than loan financing taxes from the sale are spread out because it's annuity they don't get a lump sum they agree to sell their financing which can mean the difference between actually even getting their business sold or not we already know this most small businesses will not sell crazy statistic is that most small businesses that get listed in the US will never sell they'll close so why are so many business owners out here trying to sell the 5Ds divorce departure disability dissolution death think you can guess what most of those are they're tired they're sick they're ready to leave they've had some sort of legal event they need to sell and you are their answer so let's go through an actual a deal in seller financing so I can show you how this works live okay Revenue you can see here 332 thousand dollars and we've got the profit of a hundred and twelve thousand dollars we bought this business for 2x the purchase price which means 224 000 as the cost now in this one they originally wanted a 10 down or twenty two thousand dollars down to pay for the business and the rest of it they would Finance the seller would give us two hundred and four thousand dollars to buy this business that means under these terms we would make a monthly profit of nine thousand three hundred and thirty three dollars and if you add that interest payment that we would have to make for the seller financing loan of 212 bucks a month we've been making about 9 121 dollars a month profit in our pocket or about 109 000 a year now that cash on cash return number and cash on cash return really just means with the money you put down AKA twenty two thousand dollars how much money do you make on it but in this instance let's say we didn't have the twenty two thousand dollars down like the person who actually bought this business did not instead of taking the offer of 224 he said what if I pay you 245. I increased the price of the business but I want zero dollars down you finance the whole business for me I'll pay you a little bit of a premium for that and I'm going to take the whole business beautiful way to negotiate seller financing where you put zero dollars down to acquire a business that's going to make you a hundred thousand dollars a year and this is just one deal look at this next deal I won't go through every single section of it but probably take a screenshot this is 1.5 million dollar deal that netted us thirty five thousand seven hundred forty two dollars a month this is a real deal we did we're 428 000 this actually is a plumbing company so that means we make 188 cash on cash return for this deal and look at that the seller finances the business the seller pays for me to buy this business this is not only possible it happens every single day and now you know how to do it next up let's teach you how to negotiate it all right so the real key to seller financing is this one work negotiation it's trying to say hey this is Samuel Samuel I want to buy your business but instead of me giving you I just threw a bunch of cash at him a bunch of money I want Samuel to give me the money to buy his business how do we get that to happen it's pretty straightforward if I was to have this conversation it would go something like this I'd say to the seller you've already been talking about buying your business and I think you have a business that could really fit in with what we do but I just want to make sure we're on the same page for something most businesses are bought and sold with something called seller financing I'm sure you to get this deal done quickly and at the best terms possible how about we do this deal with seller financing which basically means you're going to use your profits of the business for me to buy it I'm going to give you an annuity over the course of the life of this deal so for the next three to five years you are going to get an annuity a payment every month or a payment every quarter in order for me to take over the day-to-day operations of running your business every single day and because of that we don't have to involve a bunch of banks or the government to see this deal not go through I just wanted to make sure we both understood we were on the same page with using seller financing and what you're going to find is most business owners are going to go uh oh okay okay yeah I'm sure we can figure something out and right there my friends you took the first step in learning how to negotiate seller financing what do you need to do now well the truth of it is you've already learned the opportunity in buying small businesses you've seen this 10 steps it takes to buy small businesses and now you're starting to learn how to negotiate seller financing and using other people's money to buy profitable businesses think about this for a second maybe you are going to be the solution for not one more Starbucks on a corner but instead your coffee shop on the corner oh and if you're selling a business I'm always buying I'll take it [Music]

Channel: Codie Sanchez

Views: 321,502

Keywords: codie sanchez, boring business, seller financing, buy a business

Id: StVBPKLBAb4

Length: 11min 37sec (697 seconds)

Published: Fri Mar 03 2023