Assumptions:
You want to buy one stable, boring-but-profitable small business and operate it for income.
Geography is flexible, but you’ll prioritize your city/region first.
Finding a good business to buy is the bottleneck. Public listing sites are crowded and push prices up. Meanwhile, many real owners are “secret sellers”: they’d sell for the right price and successor but aren’t listing.
Find a local business for sale at a good price.
Your return comes from operating profit after debt payments. Upside comes from simple improvements (pricing, basic marketing, process fixes) and, later, a resale at a better multiple—if you choose to sell.
This idea is inspired by the book Wall Street millionaire by Codie Sanchez. In the chapter "Seven Ways to Find Motivated Sellers" she gives tips on how to find someone who might be willing to sell their business:
1. ASK THE 4A CLUB. That’s your accountant, attorney, agent (real estate), and adviser (financial). Call or email them and ask if they know anyone selling a business that’s in your wheelhouse. Then ask your friends for the contact info for their accountants, attorneys, agents, and advisers. Rinse and repeat each month with check-in emails. “Hey, Alan the accountant, just wanted to ping you because I am still buying businesses :) If anyone comes to mind I’d love to pay you a sourcing fee for any deals you send my way. Thanks!”
2. ASK BUSINESS OWNERS YOU KNOW. Fellow business owners are a great source for potential deals. Start with warm leads (people who are your friends) and end with cold leads (local owners you’ve purchased from before). Use the biz-buying script above.
3. FIND INTERMEDIARIES. Intermediaries like bankers, business brokers, and mergers-and-acquisition advisers are greater sources for leads. My Contrarian Community member, Ryan, recently wrote on Facebook: “I’m looking for a business broker. Who have you worked with that is a 10/10?” Some of Ryan’s friends replied that they didn’t know what a business broker was, but three times as many had names and contact info of not just business brokers but SELLERS.
4. JOIN YOUR LOCAL CHAMBER OF COMMERCE (uschamber.com/co/chambers). These people are literally steeped in local boring businesses. It’s all they talk about. Spoiler: the meetings may make you want to gouge your eyes out.... These ain’t ragers. But they are full of your target avatar nibbling shrimp cocktail and drinking house wine. Get to know these folks and tell them you’re looking into buying businesses.
5. VISIT SMALL-BUSINESS DEVELOPMENT CENTERS (sba.gov). These are cobweb-filled gold mines of free resources, and they are all over the place. Oregon, for instance, has twenty regional centers and twenty-six satellite offices throughout the state. SBDCs offer training, market research, and planning. Their Capital Access team will help you find financing, and their succession-planning advisers provide confidential help to owners thinking about retiring.
6. SCAN YOUR SERVICE PROVIDERS. Pull together all your credit card and bank statements and transactions from the past couple of years into a spreadsheet. Delete the transactions from the big corporations like Amazon, Target, Costco, Home Depot, Walmart, and so forth. Focus on the small companies you paid recently. Maybe there is a landscaper you’ve used a few times, a plumber, a building contractor, or an accountant. Do any of these companies have a seller type that fits your Deal Box? Hint: you likely are already working with someone who is exactly the person you want to buy out. More on this in the Venmo Challenge.
7. FOLLOW UP EVERY FORTY-FIVE DAYS. Ask for permission to keep them updated, and then put a reminder in your calendar for a quick update every forty-five days. That’s enough to stay top of mind without becoming a pest. For instance, a member of our community buys insurance companies. He once made a multimillion-dollar deal with an agent he’d first contacted eight years before. They’d kept in touch because my friend used a customer relationship management system and committed to checking in with his contacts every two or three months. He’s been calling some of them for years. Being proactive this way is how you create deal flow. Over time, you can weed out the individuals who aren’t helping and get it down to a smaller group of five to ten people who consistently give you some actionable intel. Only rule? Don’t be a taker. Buy ’em a coffee, send ’em a cool relevant article, go wild and text ’em a meme.
Source/inspiration: Book (Wall Street millionaire by Codie Sanchez)