And how to find businesses to buy so good, no one believes they’re real.
Hi and welcome to the Contrarian Crew! This week we’re covering how you, yes you, can find deals that no one else knows about.
Our truck collided with yet another pothole, the rain pouring down did nothing to lessen the impact...
Old roads equal big holes. We were driving, or in reality bouncing, as far as the road would take us. Moving back into trails we hoped not too many feet were trotting.
It was my 35th birthday and we weren’t looking for an escape, we wanted an adventure.
So we climbed 17 miles, across mountain terrain so stunning it made us forget our aching legs for 8-9 hours. A funny thing happened. When we began, the trail felt more like an airport security line than a nature hike. People laden down with cameras, walking sticks, and Patagonia vests ambled around. Their backpacks often tinkled with bells, yes bells, bear spray, and even to my chagrin, a new contraption that makes a weird clanking noise to ward off the apparently bear-infested location. Nothing like a nature hike in the errrr silence?
The beginning of the hike up into the mountains was easy, and accessible. You could even take a ferry straight to it. So naturally, it was filled with humans. They climbed 500 yards to a lookout point over Jenny Lake in Jackson Hole, then Instagram memory completed, walked back to the ferry. Sweat never touching their brow, difficulty never mastered.
I looked out over the sea of people and felt such sadness. They missed it all.
- They missed the hours we hiked without a sound or human touch.
- They missed the moose that lay staring with its giant brown eyes as we tip-toed out of its way.
- They missed the deer so close she might as well have bumped us to get off “her” trail.
And of course, they missed the real lake, Lake Solitude.
Tucked into the valley, a glacial lake of otherworldly blue where the sun shone on patches of green grass next to sheets of ice. But more than the views they missed the challenge.
Some people go on vacation to get away from it all. They vacation to sip daiquiris beachside, to read smutty books, to overeat and over drink. I’ve done it too. Too many times to count. But as I add years alongside my wrinkles I’ve realized that the joy is in taking time to not get away from it all but to find it.
To find you.
To find ideas and inspiration.
To find out what you’re capable of.
To challenge yourself.
To realize that the true joy in life is to build a life you don’t have to escape from. That instead you get to escape into.
That’s the goal they never told you about as they built adult Disneylands, created all inclusives, invented buffets, and bottomless mimosas. All those distractions, ahem entertainment, were built to smother the voice inside you.
So this birthday I chose to go find her again. After all, Michelangelo said, “I saw the angel in the marble, so I carved until I set him free.”
You don’t get to free yourself by covering yourself in escapism and excess, you free yourself by carving away it all and seeing what you are truly made of.
The Art of Deal Finding
I shared this deal on Twitter. It went a little viral. You know how that goes, the good, the bad, the vitriolic.
I shared this not to show how stupendously brilliant and wonderful I am (wink) but simply that ridiculously amazing deals are… all around. The trick is in seeing the opportunity despite the noise.
It’s knowing how to find win-wins. It’s realizing that statements like, “All small businesses sell for 2-6x and thus this is BS,” are squarely in the category of humans who like to tell you things, having never actually done things. There’s a whole library of books those types of people haven’t written but like to talk about.
So I’ll tell you the story of how I found this deal and how you can make your own magic happen in buying businesses and making moves.
Timeline to Unfair Deals
Step 1: This deal slid into my Twitter DM’s as first a service that was something I needed. Let’s call it a professional service; for example, businesses like legal, accounting, IT, consulting, bookkeeping, etc. *Oh side note, I don’t share all the details on businesses for two reasons 1) I pre-approve it all with the operator who runs it, that’s only fair. 2) I’m not trying to put my name on all my businesses, why?
Step 2: I loved the pitch and the niche, so I became a client. After being a customer for about 3 months I realized two things; the service was awesome but their operations were sh*t. They were late on items that could have easily been processed out, they were filling a huge niche and if I could hazard a guess couldn’t keep up with growth. Most businesses start to die here.
Step 3: I began writing down all the things I loved about the business and all the opportunity areas I saw as a customer. From SOPs, to time-wasting I saw, to growth opportunities they weren’t leveraging.
Step 4: I got to know the owner. I made a few new client introductions. I moved my way into the inner circle. Then I began casually asking how they are doing. How’s business? What are the pain points? I got curious.
Step 5: I realized the owner was completely overwhelmed. They were great at their professional service aka a wonderful attorney, but self-admittedly terrible at business operations and growth.
Step 6: I asked them what their goals were with the business, I mentioned how impressed I was with their knowledge set. As they opened up the owner made comments like, “No one ever asks about how I’m doing running the business. No one is curious about this stuff.” I’d smile, shrug my shoulders and say, “I’m a former journalist, it comes with the territory.”
Step 7: I laid it out there for them. I said:
“Listen “John,” I think you have a wonderful business that has incredible growth potential. Candidly, I’d like to be involved in it and potentially invest. That said, I think we both know in its current state you won’t be able to handle growth and you probably are not growing fast enough. Is that right?”
He agreed.
“What if I invest, we take that money and hire a COO to operationalize your business and as that stabilizes I help you 10x your business by helping you grow. If we did that at the right price and terms would that be of interest?”
A big, dare I say relieved, yes.
That is how I got a deal that will cashflow me $240k this year (fingers crossed) for $150k.
Now, why would this guy do this deal with me? Because we have milestones in place. I need to help him increase revenue by more than the amount I am receiving in excess from the company and help him hire this new COO.
The trick is I have the COO picked out and I modeled out my plan to help him grow by about 5x more than I need to in order to get in at this amount. It’s a win-win.
Takeaways for You
I can just hear it now, some of you are sitting there writing down businesses in this very moment that you can go 10x with this strategy. You get it. You see the forest through the trees.
And if you are one of those humans your life will never be the same. Ever. You will never be the employee who doesn’t negotiate some upside ever again.
Second group of hominids… you are like… “This doesn’t apply to me! I don’t have this kind of network! I can’t 10x a business. PRIVILEGE!!” I just imagine half of the Twitter trolls with blood vessels bursting in their necks. To which I shake my head ruefully and lovingly say you have more than you think. You are more capable than you think. And I can promise you the moment you start asking, “How can this apply to me?” Instead of “Why this won’t work for me,” your entire life will change.
Here is the key. It’s very simple, every time you use a service or pay for something ask:
- Is this business small enough where I can get to the owner?
- Is it privately held?
- Could I add value to this business?
- How?
- Are there areas for opportunity?
- Is there upside?
- Is it profitable?
- Would my skills uniquely align to help this business in some capacity where I could leverage knowledge, network and potentially money to get an unfair advantage that is ACTUALLY a WIN-WIN?
Then take the answers to those questions on a path to equity.
So you see, most won’t do this, but the few of you who do… please pay it forward. Help the next generation get into the owners seat right next to you. There’s plenty of room.
Question everything & stack cash,
Codie
