In this episode, the host shares insights on wealth-building strategies through business acquisitions, emphasizing the importance of skills and negotiation tactics. The host, who successfully sold a gym for profit without initial investment, discusses the contrast between the spending habits of the wealthy versus the less affluent. They highlight the wealthy's preference for low-risk, guaranteed returns over high-risk, high-reward investments, illustrating this with a detailed example of acquiring a business using seller financing and bank loans. The host concludes by encouraging entrepreneurs to seek out existing businesses with motivated sellers, as these can offer significant opportunities for growth with minimal risk, echoing the sentiment that skills are a vital, untouchable asset in entrepreneurship.
And so I basically acquired a cash flowing asset for nothing, and then had just acquired a cash flowing asset for no money.
The quote explains how Speaker A managed to acquire a gym without any personal financial outlay, emphasizing the strategic nature of the acquisition.
The wealthiest people in the world see. Business as a game.
This quote encapsulates the mindset that the wealthiest individuals approach business strategically and competitively, similar to a game.
This podcast, the game, is my attempt at documenting the lessons I've learned on my way to building acquisition.com into a billion dollar portfolio.
The quote outlines the podcast's purpose, which is to share strategic business insights and experiences from building a substantial investment portfolio.
You absolutely just need skills. You can have nothing else in your life. And a beautiful thing is that no government can take it from you. No person can take your skills from you in a divorce.
This quote highlights the enduring value of personal skills and their invulnerability to external circumstances, presenting them as a secure form of personal capital.
Let's say you've got $50,000, all right? And you're like, okay, I'm thinking about buying a house, right? And I think for first house, you might only have to put 10% down.
This quote presents a common investment scenario where an individual considers using savings to make a down payment on a house.
I wonder how much money I could get for this money. Interesting, right? And so you leaf through the businesses that are in your area.
Speaker A suggests an alternative investment approach, which involves considering the potential return on investing in a business rather than real estate.
You could definitely negotiate a deal. And I'll tell you one of the deals that I did that was really good at the end of this.
The speaker hints at personal success in negotiating business deals, suggesting that such negotiations can lead to favorable investment outcomes.
"And I used it in the deal that I'll tell you about in a second, which is agree on price, then agree on terms, right?"
This quote highlights the two-step negotiation approach: first, establish the purchase price, then discuss the payment terms.
"I need you to seller finance three quarters of the deal."
This quote illustrates the negotiation for seller financing, where the seller agrees to be paid over time for the majority of the purchase price.
"You're going to finance that for three years. And then on top of that or five years, you could do whatever you want here."
The speaker suggests flexibility in the financing timeline, indicating that the terms can be adjusted to suit the buyer's needs.
"Then you get a note from the bank or SBA loan, which you have a $200,000 loan for, and you put your $50,000 down."
This quote describes how the buyer supplements seller financing with a bank loan, reducing the initial cash requirement.
"625 is the cost of the business. 437, you get seller finance, meaning you can pay that over time."
This quote provides a clear breakdown of the business's cost and the amount covered by seller financing.
"And then you've got $200,000 that you get a loan from the bank, which you put $50,000 for."
This quote explains the part of the purchase price covered by a bank loan and the buyer's down payment.
"So you upgraded your income from 60 to 250,000."
This quote emphasizes the substantial increase in personal income that can result from acquiring a profitable business.
"And within 24 months, all of that income will be yours."
The speaker points out that, after a period (24 months), the income from the business will fully benefit the buyer once the terms are fulfilled.
"It's actually a pretty decent deal."
The speaker concludes that, given the costs associated with starting a new business, acquiring an existing one can be financially advantageous.
"The only ask that I can ever have of you guys is that you help me spread the word so we can help more entrepreneurs make more money."
This quote is a direct appeal to listeners to support the podcast's mission of aiding entrepreneurs.
"It'll take you 10 seconds or one type of the thumb. It means the absolute world to me."
The speaker emphasizes the ease and importance of leaving a review to support the podcast.
"I'll tell you, one of the deals that I did that was pretty good. So I had four locations at this point. This is when I had the gyms, and I opened a fifth."
This quote serves as a lead-in to a personal anecdote that demonstrates the successful application of the acquisition strategy discussed earlier in the podcast.
"So the first two locations, I opened, the first one, I think, for $40,000... But the second one, because I thought I was smarter, we put 250,000 into the second location. And here's the fun thing. It made no more money than the first location did, which I always think is hilarious."
The quote illustrates the speaker's initial approach to business investment and the lesson learned that higher investments do not necessarily equate to higher returns.
"And so it was beautiful. It had all this equipment that was really expensive in it... I agreed on price, which I think was 40,000... And then I was like, cool, I'll pay you over the next year... So my first gym, I put 50 grand in. Second gym, I put $250,000 in. Fifth gym. Smarter, more experienced me puts no money in."
This quote emphasizes the evolution of the speaker's business acumen, showcasing a strategic approach to acquiring assets without immediate financial outlay.
"And in the first 30 days, we did 51,000 in sales. So this gym, in the first 30 days, literally paid for itself, period."
The quote highlights the immediate return on investment achieved with the fifth gym, which was a significant milestone in the speaker's entrepreneurial journey.
"And then twelve months later, I ended up meeting Russell and telling him how I was doing this stuff. And he's like, you should be teaching other people how to do what you're doing now. And so I ended up selling the gym for one and a half times more than, I quote, bought it for, which I then had the gym pay for it on its own."
This quote demonstrates the speaker's pivot from operating gyms to leveraging their expertise in a mentorship or educational role, as well as the successful exit strategy from the gym business.
"You always have to just get skills... there's no divorce, there's no government, there's no revolution, there's no financial crisis that can ever take your skills from you. And that's why when entrepreneurs hit zero, they can usually bounce back."
The quote conveys the speaker's belief in the enduring value of skills and their role in an entrepreneur's ability to recover from financial setbacks.
"Any number multiplied by zero. You could have a billion dollars. If you make a bad investment, it goes to zero, right?"
This quote emphasizes the concept that no matter the initial amount, a poor investment choice can render it worthless.
"The people who have the most money is that they actually have way lower risk tolerances than the people who have no money, which is hilarious..."
The speaker finds it ironic that those with the most to lose are often the most cautious, while those with less are more willing to take financial risks.
"Poor people use their money to buy things that have virtually guaranteed risk of going to zero with tiny risk of upside, right?"
This quote points out that individuals with less money tend to make investments that are almost certain to fail.
"Rich people buy stuff for $0 that have upside potential, but that doesn't have a billion dollar upside potential."
The speaker notes that wealthier people look for investments that cost them little to nothing but offer the potential for gain without the risk of total loss.
"It took me a long time, and I still am doing it now in shifting how, because I still get excited about. I see these cryptocurrencies, 20 xing and stuff in, like a month, and I'm like, man, that's crazy."
The speaker is sharing their personal experience with the temptation of high-return investments and the discipline required to resist them.
"Try and get something for nothing. See, if you're going to make an investment in any kind or you're trying to start a business, there's usually a business that's already for sale or has a motivated seller..."
This quote suggests looking for unique opportunities where businesses can be acquired under favorable conditions due to seller motivation.
"Guys making a million, 2 million, $4 million a year, who literally have told me, they're like, dude, if someone came today and offered me, like, guys who are making a million dollars a year in profit, like, if someone had offered me 200 grand right now, I would take it."
The speaker shares anecdotes of business owners willing to sell their successful businesses for much less than their profit margins, indicating potential opportunities for savvy investors.
"But the good news is that if you have a little bit of work ethic, you can make a tremendous amount of money with very little risk and do it the way the rich people that I know do it."
The speaker concludes by highlighting that with effort, one can achieve wealth with low risk, emulating the methods of the rich individuals they know.