On this episode of the On Purpose with Jay Shetty podcast, Codie Sanchez emphasizes the wealth-building potential of business ownership and acquiring equity stakes in companies. She advises adopting an "owner's mindset" and proactively seeking opportunities by leveraging relationships and structuring win-win deals.
Sanchez highlights the prospect of acquiring businesses from retiring baby boomers, even in seemingly mundane industries like plumbing or roofing. The discussion challenges the notion that wealth stems only from innovative sectors, underscoring the financial upside of Main Street service businesses. Sanchez's insights provide a framework for aspiring entrepreneurs to build wealth through calculated business acquisitions and ownership.
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Codie Sanchez stresses the importance of adopting an "owner's mindset" for building wealth. She notes that 70% of millionaires are self-made and 68% own equity in businesses, underscoring how business ownership provides long-term upside and control that jobs and investments alone cannot match.
Sanchez emphasizes that the wealthy tend to be business owners and dealmakers, not just employees or investors. She advocates negotiating for equity stakes, or "skin in the game," even without upfront capital. Jay Shetty shares how sharing profits with a partner supported his business's growth. Sanchez advises starting with manageable deals, even pooling resources to acquire stakes in businesses.
Sanchez highlights actively seeking acquisition opportunities by building relationships and fostering a "reticular activating system" to spot potential deals.
She advises objectively evaluating deals based on value alignment with personal goals, structuring compelling "win-win" deals with milestone-based risk mitigation. Sanchez cautions against partnering with someone not fully invested.
Sanchez educates on the opportunity in acquiring businesses from retiring baby boomers. She notes many wealthy individuals made fortunes from seemingly "boring" service businesses like equipment rental or plumbing companies.
Sanchez references the Forbes wealthy list having many who made fortunes in stable, mundane industries like roofing. She and Shetty advocate overcoming the cultural bias that wealth only comes from innovative, exciting businesses.
1-Page Summary
Codie Sanchez illuminates the importance of developing an "owner's mindset" and the wealth-building power that comes with having "skin in the game" in a business.
Sanchez stresses that an owner's mindset is essential to acquiring wealth, as reflected by data showing that 70% of millionaires are self-made, and 68% have ownership in a company. This indicates that having control over a part of a business, even a small one, provides long-term financial benefits and autonomy that a job or investments alone cannot provide. Sanchez urges individuals to shift their perspective, fostering a positive and open stance towards money, aligning more with an "owner's mindset" that can ease the path to acquire wealth.
Sanchez implores those seeking financial freedom to start small in business, not to be daunted by inexperience or a lack of specific skills. She emphasizes the need to understand and leverage personal worth and outlines that accumulating "skin in the game" in a business, such as equity, over time is vital.
Sanchez points out that wealth predominantly resides among entrepreneurs and investors who have taken calculated risks through business ownership or investments. She elaborates that one doesn’t need to start as an entrepreneur to gain ownership; rather, focusing on acquiring "skin in the game" is the crux of wealth-building.
Jay Shetty shares a personal anecdote, explaining how opting to share profits with a business partner enabled their vested interest, ultimately supporting his bus ...
Developing an "owner's mindset" and getting "skin in the game" through business ownership
Codie Sanchez shares insights into better dealmaking practices when acquiring or investing in small businesses. She underscores the importance of diligence in evaluating potential deals and partnerships, advocating for a methodical and relationship-driven approach to business.
Codie Sanchez emphasizes the importance of building a network and actively seeking out business acquisition opportunities. She played a game when she was young where she would 'collect mentors' by asking them questions without expecting anything in return, fostering relationships that could lead to opportunities.
By engaging with the business world and nurturing an interest in deals, one’s brain becomes better at spotting potential business opportunities, Sanchez explains. She likens this to developing a “reticular activating system” in the brain, training it to recognize useful details in one’s environment like those related to business deals.
Codie Sanchez explains that one should objectively evaluate potential deals based on their inherent value and alignment with personal business goals outlined in a "deal box". She suggests structuring compelling "win-win" deals and using milestone-based deliverables for risk mitigation to ensure the deal is beneficial for both parties.
Sanchez advises being tactical when raising money for investments and stresses the importance of negotiations as a common practice among the wealthy. She also cautions against partnering with someone who is not fully invested or is distracted by multiple ventures, emphasizing the focus required for success.
San ...
Strategies for finding, evaluating, and negotiating deals to acquire or invest in small businesses
Codie Sanchez and Jay Shetty discuss the often-overlooked potential of small "main street" service businesses as reliable wealth generators.
Sanchez educates youth on the importance of seizing the opportunity to take over baby boomer businesses. With baby boomers owning 60% of all small businesses, totaling $68 trillion in wealth in the US, there lies an evident potential for wealth transfer to younger generations. Sanchez emphasizes that while younger individuals are drawn to day trading stocks, NFTs, and cryptocurrency speculation, a more stable and lucrative alternative could be investing in small service businesses.
She introduces the concept that "boring businesses," such as a vending machine business, applauding their surprising profitability. Sanchez argues that these ordinary businesses often have stable cash flows, low competition and can be acquired or grown relatively easily, countering the misconception that wealth is often created in more "shiny" industries. She references her family member’s success with an equipment rental company as a prime example of obtaining wealth in what many might consider a dull industry.
Sanchez points to the Forbes 100 list, where many of the wealthiest individuals made their money in stable, if mundane, industries. The richest woman in the world, as per the 2022 list, began a sizable roofing company, dismissing the notion that only "glamorous" industries bring significant wealth. This is further emphasized by Sanchez's observation that private equity firms are purchasing these businesses more frequently, moving from owning 4% of US companies in 2000 to 20%.
Shetty underscores the need for a cultur ...
The value and potential of "boring" or "unsexy" businesses as sources of wealth
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