In the ever-evolving world of business, being different often proves to be a path to success. Betting on boring businesses might not sound like an exciting journey, but Codie Sanchez, known for flipping the script of traditional entrepreneurship, proves otherwise. This blog post summarizes an insightful conversation with Codie, offering an array of intriguing ideas for budding entrepreneurs.
Business Is Painful, Yet Rewarding
Codie began by sharing her perspective on the hardships of running a business. Many owners have been in the game for years, even decades, and find themselves yearning for an escape – often, selling their businesses. However, an astonishing statistic shows that around 70% of these businesses don't sell; instead, they're merely shut down. Codie finds this a disheartening fact, as it often indicates owners' inflated expectations or a lack of knowledge about monetizing their assets.
The Merits of the "Boring" Businesses
While people conceive businesses like tech startups or sophisticated SaaS companies as good investment avenues, Codie vouched for the "boring businesses" - laundromats and car washes, among others. Despite their mundane operations, businesses like these are often less risky, profitable, and resilient in the face of economic downturns.
In the business industry, the largest hurdle is product-market fit - finding a product that satisfies market demand. With a boring business, this challenge is almost non-existent. It's also noteworthy that every business performs the same basic functions: marketing, sales, finance, operations, product development, and customer service.
The Power of the Roll-Up Strategy
Codie places considerable emphasis on the roll-up strategy, stating that it's like "private equity 101 done at the micro level." Simply put, the roll-up strategy involves buying multiple businesses within the same industry and consolidating them for increased profit and efficiency.
This strategy relies on capturing the "multiple expansion" – increasing the market valuation by buying at lower multiples and selling at higher multiples once you've scaled the business. Codie concurred that it only works effectively if you're not investing maximum risk.
The Power of Financial Independence
Codie impressively managed to tie financial independence to her business success. She believes in investing in herself and encourages others to do the same. This philosophy allows her to control her finances and releases her from being overly reliant on traditional fund investments, which she notes, tend to favor the fund manager rather than the investor.
The beauty of the business world lies in its diverse nature. While the high-risk, high-reward ventures are often the spotlight-stealers, the boring businesses might likely just lead you to financial independence. Codie Sanchez serves as an inspiring figure in this regard, demonstrating that success is attainable when you dare to think differently.
Listen to the episode here: How to Build Wealth Buying Boring Businesses | Codie Sanchez
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