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00:00I'm going to tell you guys the hands-down smartest way I've ever seen to get to five figures in
00:04monthly income. And it is the best way to hit your first $10,000 a month, especially in 2023,
00:10according to me. It has the lowest failure rate, it allows for income on day one, and it's how
00:15people like Warren Buffett made his millions. I know it's not the stock market. It is how the
00:19largest percentage of people on the Forbes 500 list made their money. And yet it is the only
00:24strategy that you and I can do that they also do. Believe me, they aren't doing Shopify stores or
00:31Amazon FBA or ad agencies. No, they're not. For you, it all starts with two words that I made
00:38sort of famous. Boring businesses. Boring businesses. Boring businesses. Boring businesses. So your first
00:4310,000 in monthly income or your next million can come from one thing, buying people's businesses
00:48and using other people's money to pay for it. What if I told you right now that not only can you do
00:53this, but owners need you to do it. There are too many businesses for sale and not enough
00:58buyers. It's not my opinion. It's just math. So by the end of this video, you are going to know how
01:03to completely replace your W-2 income by buying a business. You're going to learn how you could
01:07finance a business using other people's money in order to buy a profitable business. You're going to
01:12learn the four different ways that we cashflow and buy businesses. And there's no better time to do
01:18this. Why? 75 million baby boomers, 10,000 retiring a day. We are amidst these waves.
01:25Harvard did a case study of who earns more post-college consultants, bankers, et cetera,
01:31or those who buy small businesses. Guess who wins? Sorry, Harvard. It's going to be those who
01:35acquire businesses. Entrepreneurs win by a long shot. How long of a shot? This long of a shot.
01:40Also, people who own small businesses typically have a higher net worth. 91% of all people with a net worth
01:46above 5 million bucks own their own small business. The next reason is the average small
01:51business is profitable and has been for more than five years. In fact, there's a famous study called
01:56the Lindy effect, which basically means that the longer something's been in existence, the more
02:02likely it is to continue to be in existence, except obviously perishable goods. So owning a small
02:07business that's been around for 10 years is actually less risk than that startup you're thinking
02:12about starting right now that you're going to blow a bunch of money on. You're going to spend a bunch
02:15of time on and you're going to hope and dream and pray that it becomes the next big thing.
02:20The next big thing. That actually is very unlikely to happen.
02:24But there are four things that stop people from achieving all of that. The first reason
02:30is they don't know about this opportunity. Why? Because Wall Street, KKR, Carlyle, they don't
02:35want you guys to know about it. They want to buy all the businesses instead of have little
02:38guys like you and I do it. Two is people don't know how to find businesses to buy. They don't
02:43know that all around them are actually small businesses waiting to be bought, but nobody
02:47thinks about it. You have to learn to reframe your mind. Three, they don't know how to buy
02:52a business. They don't know the actual process from one to 10 to acquisition that I teach that
02:59I built from my 15 years plus in private equity.
03:01It's not complicated, but it is work. But the number one reason why people actually will
03:07not buy a business is this last one. It's one word that stops everyone else and triggers
03:13most people and it's money.
03:15So how do you buy a business when you have little money?
03:18I don't have any money.
03:20Let me show you exactly how I did it. I just bought this internet business called approachment.com
03:24for $0 down that will do $300,000 this year. It was doing about 60 when we bought it. We
03:29bought it for 60K over multiple years. I bought this laundromat for $100,000 that cash flows $67,000
03:35a year for $0 down. But it's not just me. Hannah Ingram publicly talks about a car wash
03:40she bought that makes $140K a year. She did it when she was like 22 for $0 down. And then
03:46Johnny, who's an absolute stud, he's in his 20s. He didn't finish college and he bought
03:50a biz that makes $250,000 a year. That's top line revenue. I don't remember what the profit
03:55is, but he bought it for a couple thousand dollars and I could go on and on. So let's go
03:59where most people won't, but you will because you're here. There's four main ways to buy
04:03a business. First is cash. Second, bank or SBA loan. Third, finance through seller. That's
04:08called seller financing. And fourth, outside capital raise. So let's break them down. Cash.
04:13You use all your own money to buy a business. Pretty straightforward. You could do that if
04:17you're rich. Cons. You're out the money. You can't use it anywhere else. You have all the
04:21risk. Couple pros. Maybe you get a better deal, probably, just like with real estate. And
04:24you get it done fast. But this is my least favorite way to buy most businesses. Second is
04:29the SBA loan. This is the government giving you free money. The government will give you
04:33up to 90% of the purchase price of a business to buy it. Pause on that for a second. The
04:38government will pay you to buy a business. Yes, they will. The cons are it's debt, which
04:43means you're on the hook if the business fails. Well, it's the US government love. More risk,
04:48interest rate involved, very structured, less flexibility. And getting a loan from a bank is
04:54like a colonoscopy. Can I say that on YouTube? It's annoying. But the pros are it's like free
04:59money, basically. The straightforward process. Lots of people help you in the SBA, in the
05:03actual government organization. Still my second least favorite way. I hate working with 90%
05:08of banks. I mean, don't you? Also, I find that sometimes you lose the deal because the SBA
05:13takes too long. Now, third way, outside capital. Go ask friends and rich people to give you some
05:17cash. The cons are it's hard to do at first. Most people don't know how to. And how rich are
05:22your friends? That's the constraints. Pros are less risk. You're not the only one on the
05:27hook as you are with debt. Faster to close. And potentially, you get a better deal also
05:32because you're bringing cash to the table even though it's other people's cash. Now,
05:34this one's actually my second, third, I can't decide least favorite because I'm selfish with
05:39good deals. I hate giving away equity. That's a whole different subject we can get into. It's
05:44kind of technical. If you guys want to go deeper, hit me in the comments and say, I want
05:47to understand why equity is more expensive than debt. I'll tell you. Now, my favorite, my favorite,
05:52two magical words. Seller financing. This is where the seller pays you through future profits of the
05:59business to buy his business. Like a loan, but the seller is the bank. This happens for 60% of all
06:05small businesses that are bought, meaning super common. Now, cons can take longer to do to negotiate
06:10it. Some sellers won't do it for sure. And you have to know about it, but you're here. So you got that
06:15part. Now, the pros is you need way less cash. In fact, sometimes zero cash. There's less risk on you.
06:21The seller gets great tax benefits. You get a ridiculous deal and you make up any terms,
06:26unlike with a bank. Pause for a second there. People will tell you this is not possible. That's
06:30because they don't know what they're talking about. You don't know what you're talking about.
06:34People love to tell me on Twitter why these deals won't work. They've probably never done
06:37a deal. It's as common as a mortgage for a house. Not going to work every time, but it will work
06:43over time. If you're saying you're looking to grow your bank account and not deplete it by using cash
06:47upfront. So I love doing zero cash deals all day long. In fact, in private equity, my old world,
06:52we call this LBOs, leveraged buyouts. It's a fancy word for saying we have banks that pay
06:57for us to do deals. But then people say to me, okay, if it's so great for you, it's got to suck
07:03for the seller, right? Not the case. Extra profit from interest, meaning they get their purchase price.
07:09Plus they get like a little check in the mail from you every month or quarter. It's just the interest
07:13costs. Faster than loan financing. Taxes from the sale are spread out because it's annuity.
07:19They don't get a lump sum. They agree to seller financing, which can mean the difference between
07:23actually even getting their business sold or not. We already know this. Most small businesses will
07:27not sell. Crazy statistic is that most small businesses that get listed in the U.S. will never
07:33sell. They'll close. So why are so many business owners out here trying to sell? It's the five Ds.
07:38Divorce, departure, disability, dissolution, death. I think you can guess what most of those are.
07:42They're tired. They're sick. They're ready to leave. They've had some sort of legal event. They
07:47need to sell and you are their answer. So let's go through an actual deal in seller financing so I
07:52can show you how this works live. Okay. Revenue, you can see here $332,000 and we've got the profit
07:58of $112,000. We bought this business for 2x the purchase price, which means $224,000 as the cost.
08:06Now in this one, they originally wanted a 10% down or $22,000 down to pay for the business and the rest
08:13of it, they would finance. The seller would give us $204,000 to buy this business. That means under
08:19these terms, we would make a monthly profit of $9,333. And if you add the interest payment that we
08:26would have to make for the seller financing loan of $212 a month, we've been making about $9,121 a month
08:33profit in our pocket or about $109,000 a year. Now that cash on cash return number and cash on cash
08:39return really just means with the money you put down, AKA $22,000, how much money do you make on it?
08:44But in this instance, let's say we didn't have the $22,000 down like the person who actually bought
08:49this business did not. Instead of taking the offer of $224, he said, what if I pay you $245,000? I
08:55increase the price of the business, but I want $0 down. You finance the whole business for me. I'll pay you a
09:01little bit of a premium for that. And I'm going to take the whole business. Beautiful way to negotiate
09:05seller financing where you put $0 down to acquire a business that's going to make you $100,000 a year.
09:09And this is just one deal. Look at this next deal. I won't go through every single section of it,
09:13but probably take a screenshot. This is $1.5 million deal that netted us $35,742 a month. This is a real
09:20deal we did or $428,000. This actually is a plumbing company. So that means we make 188% cash on cash return
09:28for this deal. And look at that. The seller finances the business. The seller pays for me to buy this
09:34business. This is not only possible, it happens every single day. And now you know how to do it.
09:39Next up, let's teach you how to negotiate it. All right. So the real key to seller financing is this
09:44one word negotiation. It's trying to say, Hey, this is Samuel. Samuel, I want to buy your business.
09:52But instead of me giving you, I just threw a bunch of cash at him, a bunch of money. I want Samuel to
09:59give me the money to buy his business. How do we get that to happen? It's pretty straightforward.
10:04If I was to have this conversation, it would go something like this. I'd say to the seller,
10:08you've already been talking about buying your business. And I think you have a business that
10:11could really fit in with what we do. But I just want to make sure we're on the same page for
10:15something. Most businesses are bought and sold with something called seller financing.
10:18I'm sure you already knew that. That's what turns me on about you.
10:23And so because of that, to get this deal done quickly and at the best terms possible,
10:28how about we do this deal with seller financing, which basically means you're going to use your
10:32profits of the business for me to buy it. I'm going to give you an annuity over the course of
10:37the life of this deal. So for the next three to five years, you are going to get an annuity,
10:42a payment every month or a payment every quarter in order for me to take over the day-to-day
10:46operations of running your business every single day. And because of that, we don't have to involve
10:50a bunch of banks or the government to see this deal not go through. I just wanted to make sure
10:54we both understood we were on the same page with using seller financing. And what you're going to
10:57find is most business owners are going to go, uh, oh, okay. Yeah, I'm sure we can figure something
11:01out. And right there, my friends, you took the first step in learning how to negotiate seller
11:06financing. What do you need to do now? Well, the truth of it is you've already learned the
11:09opportunity in buying small businesses. You've seen the 10 steps it takes to buy small businesses.
11:14And now you're starting to learn how to negotiate seller financing and using other people's
11:18money to buy profitable businesses. Think about this for a second. Maybe you are going
11:22to be the solution for not one more Starbucks on a corner, but instead your coffee shop on
11:27the corner. Oh, and if you're selling a business, I'm always buying. I'll take it.
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