This is the second time that I’ve read Main Street Millionaire by Codie Sanchez. It is a very insightful and very practical read on how to buy an existing small business and grow your way into wealth. Why did I read it again? It covers a lot of topics in a broad way. So you get so much out of it which should be areas to think about rather than follow step by step in its entirety. I keep it as a reference guide since I’ve started looking for a small business to buy.
I’m not expecting to become the next Elon Musk – however crazy that may be – but I think at this stage in my life I just want a bit of control over the direction of my life and a bit more independence rather than doing another 9-5 job.
I’m not criticizing or downplaying that by the way. A 9-5 job doing something you love is a blessing in my view. You can still get rich from this but I agree with Codie, that the key to wealth is ownership.
Your salary will never set you free. Your financial freedom can only come through ownership. More specifically, through equity done the right way.
Sanchez, Codie. Main Street Millionaire: How to Make Extraordinary Wealth Buying Ordinary Businesses (p. 4). Ebury Publishing. Kindle Edition.
Research
The method that Codie describes in her book is called the RICH method – Research, Invest, Command, Harness. Now I’m not going to spell out each of these processes, buy the book for that!
Doing the Research and scoping your first acquisition can be very ambiguous and daunting. For me I find it very similar to my ‘Lost’ missions whenever I go traveling. I always set a moment or plan in my whole trip where for 2 or 3 hours I will deliberately go wandering around through the streets as far as I can go with my mobile phone locked in my luggage back at the hostel! The aim is to purposefully get lost and make my own way back without tech. Interestingly, I always make it back one way or another. Okay yh one time it took me 7 hours after I decided to get on a random bus arguably stupidly but I still made it back!
Buying my first acquisition kind of feels like this. Codie gives the advice of finding out what you’re passionate about and what you may have the skills and experience for. I think to be honest this is a bit more difficult than it sounds.
Personally, I have a passion for traveling, reading, and a bit more technical skills like financial modelling or computer coding. Being able to translate that to a business that I could acquire is quite difficult predominantly because I don’t see these types of industries as being that profitable or scoring highly on Codie’s criteria for a business to acquire.
Have you ever noticed that the clearer you are on what you want, the faster and easier it is to get it? On the flip side, the more vague you are about what you want, the harder it is to stay motivated and go after it. You can only hit the bull’s-eye when you have a clear target. That applies 10X when you’re buying a business.
Sanchez, Codie. Main Street Millionaire: How to Make Extraordinary Wealth Buying Ordinary Businesses (p. 42). Ebury Publishing. Kindle Edition.
There are some important tips on what NOT to buy: retail, food, lifestyle businesses/owner dependencies, or asset heavy businesses. The retail industry is far too competitive to really harness and 10X your profit. 60% of all restaurants close within the first 18 months so this is high risk. I’ve also come across owners who claim they have a business.
In reality, it’s just them doing freelance type jobs for clients. My most recent example was when a business broker tried to sell me a surveying ‘business’ with the owner doing the surveys and was looking to move back to his country. That is not a business in any shape or form. It is purely a lifestyle operator. I think this also speaks for freelancing. It’s hard to make a decent income off of this. If you do well-done. But it is not a business you can sell.
Invest
Once you find a ‘boring’ business – uncomplicated, simple, recurring revenue ideally, you want to start the process of Investing. Seller financing and profit buyback is a method that is talked about quite extensively in the book. This is where you agree with the seller that you will put X% down and then pay the rest (a higher agreed price) as an annuity using the profits of the business.
One part that I really connected with was on the part about using Attorneys (in the US) or solicitors in the UK. Don’t settle for the cheapest. You get what you pay for.
If you think hiring a professional is expensive, wait until you hire an amateur. —RED ADAIR
Sanchez, Codie. Main Street Millionaire: How to Make Extraordinary Wealth Buying Ordinary Businesses (p. 123). Ebury Publishing. Kindle Edition.
I’ve done a few property deals in my life. Some good, some bad. Don’t ever invest in property as a business. It breaks one rule, and that is, it is asset heavy. Most property investors rely on capital appreciation in order to come out positive. But this carries more risk than return, and it is not passive income – trust me! One mistake I have made is hiring cheap solicitors.
I had one transaction where the purchasing solicitor failed to make me aware of a defect in the lease. When it came to selling, I couldn’t sell the property without a deed of variation. It took 1 year, without income, further legal costs and immense stress. I did sell, but the key lesson here is don’t settle for amateurs, they cost you more in the long run. That solicitor, I actually took to court and managed to settle in the end. The whole situation was such a headache which dissuaded me from doing another property investment as well as upping my due diligence in any transaction – which you can read about in this book.
Command
Command – and the 30-60-90 advice. You never want to go into a business and start making decisions from day 1 without listening to employees and understanding how things currently work. There are key steps in how to improve efficiency, cutting deadweight, utilising digital platforms and motivating employees / operators. All of this is mentioned and described in the book.
One memorable example in the book on what NOT to do is what this new Clearlink CEO did at the company’s virtual town hall. You can see the Youtube video below which went viral.
Remember how Maya Angelou said, “People won’t remember what you say, they’ll remember the way you make them feel”? Scratch that in acquisitions. They’ll remember everything.
Sanchez, Codie. Main Street Millionaire: How to Make Extraordinary Wealth Buying Ordinary Businesses (p. 171). Ebury Publishing. Kindle Edition.
Harness
Harness – how you can scale your business through vertical/horizontal acquisitions, hiring key operators so you can use key talent to run the business, and ensuring you have A players. I recently did an online course – “Coaching Skills for Managers’ which I think really complements this section of the book. It taught me on the process to ensure you have a vision for your venture, creating objectives and KPI’s and ensuring you have the right process in place for holding your employees accountable and motivated/empowered. You want to 10X your profit from acquisition to harness a higher selling price at the end of it.
That’s a very quick summary of the book where I think I’ve covered about 2%. In planning to write this review, I did a bit of a search on Codie Sanchez and I was somewhat a little shocked at the negativity of some posts on her. So the next few minutes I just thought to address any reservations you may have about Main Street Millionaire as well as give some context of the reality of buying and owning your own business.
Codie Sanchez
Codie is the author of Main Street Millionaire, the BigDeal Podcast (which I love) and the owner and host of the Contrarian Community. This post has not been sponsored by them in any way so this review is really my own.
Having started out in Wall Street working for major Private Equity firms buying businesses for large clients, she made the decision to acquire a laundromat and start a sequence of learnings, decisions and ventures leading to a multi million dollar empire with a 10,000+ community of Contrarians looking to do the same thing. This is through buying normal, boring businesses that you’re already probably transacting with in your daily life.
I guess being an influencer, by nature you’re going to be subject to abuse online. Some of the comments online like she’s a ‘scam’ or fake guru I can’t help but think, you know what, this is just someone telling you some information. You are free to interpret this how you wish, but to be downright abusive – I think these are people who just feel empowered by the veil that the internet and their keyboard provides. The book is just advice but you need to do your own work.
Codie explicitly says this isn’t easy. It’s the hardest thing you can do. I can vouch for this. I’ve had some successes but also some failures. Codie never says that this is a fool proof way of owning your own business, but it will give you a good foundation to start building.
Read with professional scepticism
In Accountancy and Audit we have a principle that says in auditing a company’s statements you need to apply professional scepticism. This means doing the work with a mindset that not all is as it may seem but it could be.
This book is incredibly valuable. In my experience having read a lot of property books from developers they do try and pitch you their eLearning courses. Not that there’s anything wrong with this but it just means you need to take the book with a bit of a wider mindset like “Okay sure I get that, but what if…?”
I’ve already started on my journey in finding a small business to buy using the process in this book and the help of AI. As a very rare book that I’ve read in full from start to end twice I really got a lot out of it. Not only does it give you the foundational tools to select and acquire your first business but also the character you need to employ to deal with others.
One of my deal partners likes to say, “Being likable beats being good nine times out of ten.” He’s right. We were supposed to pay a guy $70,000 down for a business we were buying, and I accidentally sent the guy only $60,000. My partner told me about six months later that we still owed him $10,000. I was red from my cheeks to my feet. How embarrassing! His response, “This is why you make sure they like you.” We paid the owner but he never even raised a peep. The power of affinity.
Sanchez, Codie. Main Street Millionaire: How to Make Extraordinary Wealth Buying Ordinary Businesses (p. 135). Ebury Publishing. Kindle Edition.
Closing Remarks
If you’ve found this review helpful and/or read the book, please comment and let me know what you thought. Please subscribe to this blog and check out my other reviews!
Thank you for reading and thank you Codie!
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