April 4, 2020

How To Make $10k/mo+ By Buying A Business


– Welcome to “Capitalism TV”. I’m Ryan Daniel Moran. Hey, here on the show
and inside our community, which is called The One
Percent, we make a point to highlight a business that even if you’re just starting out you can use and copy to get
to at least $10.000 a month and go full-time. And this month we’re talking
about buying businesses. I think this is the most
overlooked opportunity, even if you’re just starting out. Now, if you’re a full-time
entrepreneur already you should absolutely be
looking at buying businesses, but if you’re just starting out I want you to at least consider this as your ticket to becoming a capitalist. So today we’re going all in on talking about how
you can buy a business even if you don’t have
a dime to your name. It doesn’t take any money. We’ll talk all about it. So grab a seat, let’s have some fun. (upbeat music) All right, so, before
we jump in, quick story. This company right here, I
think I’m usually drinking because my neurotic brain
needs something to do so that I’m not doing this the whole time. I’m not looking like
Beto O’Rourke on stage. – You do have a lot of hand movement. – I am who I am. – This company right here, Zevia, was not started by the
person who owns it right now. About 10 years ago, a
nice little white boy by the name of Paddy Spence, actually I just assumed that he’s white. Is that not okay? (bell dings) Anyway, Paddy Spence, whatever
race or ethnicity he is, acquired Zevia and
reformulated the actual way that the product is made, and the business really took off. The interesting thing
about that is Paddy Spence didn’t come up with the idea. He didn’t prove the concept. He instead saw an opportunity and he said, “I like that, I wanna
do something with that.” I get a lot of questions from
investors or entrepreneurs who have like $10,000 or sometimes $20,000 asking what should I do with this money in order to generate passive income. And we could have a long conversation about the ways that I
invest for passive income. In fact, we’ve done a whole
lot of content around that here on the YouTube channel, but instead of answering the question of how do you use 10 or
$20,000 as your lump sum to try and generate passive income, I’d like you to consider instead using that money or using your skillset to go acquire a business that makes the type of passive
income that you really want. You see, if you’ve got a
small amount of capital when you’re starting, you have a couple options. You can either start
something from scratch, which is great, really what I
have done as an entrepreneur, and it’s what most people think of when they talk about entrepreneurs, people who are starting
something from scratch, bringing it to the marketplace, working like mad in order
to make that successful, and taking on all of the risk
of that succeeding or failing. That’s great. I believe in those people. I am one of those people. But there’s another way, too. You can also go look where the ideas are and simply acquire them, even if you don’t have a lot of money. We hold our yearly event called
The Capitalism Conference, and we had a panel that
was about buying businesses because I had my eyes
opened a few years ago when I saw that a lot of the
real money was being made by people who were waiting
for the opportunity, acquiring it, and then
growing the business. And they got paid along the way, the had immediate cashflow from day one, and they didn’t have to put up
any of the money or the risk. And here’s my favorite
clip from that panel at The Capitalism Conference. Putting anything in to try
and have upside is risk, and when you have 100K or less to invest, a conservative return
isn’t as sexy, right? So since we’re talking
about risk tolerance, there’s a couple of questions in the group about well with a smaller pot shouldn’t you just roll
the dice on something and hope that there’s a lot more upside because the conservative route isn’t as enjoyable or as sexy. Ace, you’re grinning from ear to ear. – So I’m a big believer that
I think it’s a combination. When you’ve got a small pot
you’ve gotta invest more time. In those early days of me doing deals, it was I’ve gotta find an amazing deal because I barely have any money so I’ve gotta do a ton more work. It may take more time, more effort. Today I’ve got more cash,
and so it’s more important for me to get that cash to
work as quickly as possible and I don’t have as much
time so I can’t put that time into finding the deal. So whatever the space is that you’re in, I think that putting that
time in is important. And then something that
was alluded to earlier, and this is my thought on savings as well. I think the initial goal should
be whatever expense you have trying to go and buy cash flow first and then have that asset
pay for your expenses. So that is a little bit
of a different concept. I don’t really believe in savings. I’m more about I don’t
wanna pay any expense. I wanna go and find the cash flow that can pay for that expense and then buy that cash flow. – So you’re saying using
the cash to buy assets and living off the return and using your time to generate
more of the seed capital to buy more investments. Is that what you’re saying? – Exactly. – Now, in a second I’m gonna introduce you to a friend of mine here in Texas. But before that I want you to see that you can actually start doing this on a really small basis if you feel some tenseness
or some hesitation around the idea of buying a business. In fact, early in my career,
this is back in like 2013, I used to buy and sell a lot of websites because I made my first money, I actually made my first
$100,000 as an entrepreneur from my college dorm
room building websites and selling advertising on those websites. Now, when I built all of
that I had this thought of how can I get as many
of these as possible so I can have a portfolio
of passive income that just sends money into my bank account and me not have to build the whole thing. And so what I started
doing was buying websites that followed the same
strategy that I had been doing while I was grinding away into
the wee hours of the morning building these passive income websites. So I started browsing
marketplaces of websites that I could buy for $1,000,
for $5,000, for $500. In fact, check this out. One of my best deals
was I bought a business that had 50,000 customers,
that ranked in Google, that sold a product, and
I bought the whole thing for six or $800. So that money came back like this, and later I flipped the business
for a pretty nice payday. So you can start really, really small by buying websites, which are businesses. Ads are just one way of making money from a website or a business. There’s lots of ways to make money. So if you know what to look for, if you know what types of things make money within a business, you can look for those
under priced opportunities, acquire the business, get
it making more income, and then you can either
sit on that and go buy more or you can sell it at a later date. Now I wanna go into some
actual tactical pieces of how you can start doing this. Okay, so now I wanna introduce you to a friend of mine here in Austin. His name is Shakil, and I first met Shakil
because he reached out to me because he listened to the
capitalism.com podcast. And so when I moved to
Texas he reached out, we had lunch, and we became friends. So he had really benefited from listening to a bunch of our podcasts
at capitalism.com, and he had used that knowledge in order to educate him on what
types of businesses to buy. Now this is really interesting. In the clip you’re about to see, Shakil talks about the fact
that he started a business at one point and he said, “Man, how do I skip this part? “How do I cut out all of
the coming up with the idea “and the late nights,
grinding and hustling. “How can I just completely get rid of that “and still have money? “And I would like to
be paid from day one.” – So I’m Shakil. I started my first company in 2014, and just like all you guys
there’s a lot of sweat equity that goes into it. It’s a lot of time. You have to build your story. You have to build experience. You have to get suppliers, products. You have to test a bunch of things out. And what I realized is
it took a lot of time to really do that. So I thought, “Hmm, how
do I hack the system “and buy a business in a box?” So in 2014 or ’15 I
bought my first business through, actually, Quiet Light Brokerage and made my money back in three months. And the way I did it was I always look for a good opportunity buy. There’s a lot of sellers out there that are not utilizing digital marketing, their email list, Amazon, for example. So in the last three years I’ve bought over a dozen businesses. The last one profiting
close to a million dollars. So I’m just, I buy any product, any niche, as long as it’s making good money. – [Ryan] Shakil, tell me why
you buy instead of build. – For me, it’s saving time. As you guys have heard all the presenters, it’s how do you build a brand? How do you build a story? I want to buy that story. I wanna buy that brand
is what I’m trying to do. You’re buying those SOPs, the IP, the failed strategies, what’s worked. I wanna use that and
really propel the company. Going from a zero to $100,000
in revenue takes a lot of time but to go from 100,000 to $500,000, it gets a little easier. And that’s where I come in and I automate, I build processes. I’m not afraid to spend
on digital marketing. But yeah, the whole
point is it’s really just to make my money back and have a high ROI on
the time I’m putting in. – I love how he says there that he’ll buy anything
that makes a lot of money. What he’s really saying there is he buys businesses that sell on Amazon. He buys content sites. He buys eCommerce websites. He buys lots of different businesses. He doesn’t have to be an
expert at any one thing. He doesn’t have to have a specialty in a certain type of business. He simply looks at the
numbers and buys those. Now, he obviously wouldn’t buy a business that conflicted with another one or took his attention
away from another one. But he’s building a portfolio of assets that make monthly income, and so he gets to play. He gets to come up with ideas that he wants to test in the business. He gets to take over businesses that are already making passive income. That’s really empowering
for a lot of people who are saying, “How do I get started?”. Well, you might not have
to start anything at all. You could completely cut that piece out, which is what Shakil did. Now at this point, the
question always comes up, “Okay, well how the heck
am I gonna get the money “to buy a business?” “Because if it’s making money “I’m gonna have to pay for that. Well, good news. There’s a lot of different
ways to acquire a business without putting up any of your own cash. Sometimes you might choose
to put up your own cash, especially if you’re starting
with a really small business and buying something for
a few thousand dollars. But if you’re going after
one of those bigger deals, something that’s making $10,000 a month then you might wanna consider other forms of acquiring that business without putting your life savings at risk and without putting your future at risk. There’s a bunch of
different ways to do this, but Shakil shared some of
his favorites in this clip. Shakil, you wanted to comment on this. You wanted to comment
on funding the scale. – Yeah, so I am not
backed by VC or anything. Everything that I buy is through leverage or my own savings. So, besides debt, what’s
really popular right now is SBA loans. So, and that’s the
number one reason I like to buy cash flow businesses is because you get financing on it. So with the SBA loan, you could
put down as little as 10%. So on $1 million purchase,
you’d put down $100,000. $900,000 loan over 10 years. But if you look at the
calculations of that on a business that you
buy for a million bucks, it should be making $300,000. So you’re able to make your
down payment back fairly quickly within the 12 months. – [Ryan] And have you ever had the fear of what if something tanks? – No, not really. I really try to buy the right opportunity. It’s funny, I joke with my
friends that some of them say that they make six figures per month. I say I carry six figures in debt. I am not really risk averse. I’m not really scared
of taking on leverage. But it’s really buying
the right opportunity. I think we’re all lucky
to be living in the day and age we are right now,
where financing is super cheap. You could get financing for
anywhere from five to 7%. And usually, for a small business, they’re going for a 3x
multiple or even lower, and that’s a 33% return on your money. Borrowing at 5%, getting a
33% return on your money, it’s a great time to
buying something right now. – So I have a little bit of an exercise that might be fun for you. Think about the life
that you want to live, and then think about
how much that might cost in order for you to live it. For a lot of people, especially
when you’re starting out, $10,000 a month is the number
that comes up pretty often. So just imagine that you
could live your ideal life for $10,000 a month. And then instead of saying okay, how do I make $10,000 a month, what if you simply ask the question what businesses already
make $10,000 a month that I can go acquire. And when you get practiced at this, you can see a business that
is making $10,000 a month and immediately know that it could actually be
making $30,000 a month. And if you start to play with this idea, knowing that you don’t have
to take a risk doing it, you don’t have to put up
your own money doing it, you don’t have to spend
your whole life savings, it creates more flexibility in the way that you make that $10,000 a month. That’s why this is so important
for people to understand. It doesn’t have to be you, late at night, building something. You can simply look for the
opportunities and acquire them. If you’d like some help, we have a community
called The One Percent. And we have a lesson inside of there that is all about buying businesses with myself and with Shakil. And inside you’ll discover
how to find opportunities, how to make sure they’re the right ones, how to fund them without
risking your future, and how you could make this
your primary focus in business. We’ll link to that in the description or if this approach isn’t
your favorite approach, every month we do a new
feature on a different way that you could make $10,000 a month or more here on the channel. So make sure you’re subscribed so you see all the goodness
here at Capitalism TV. Hey, I believe that once
you’re freed up financially you can pursue whatever
it is that you want. And the fastest way to do that is to just take over the income stream that somebody else has built. And this is one of the ways
that you could do that. Hey, if you liked this episode, please follow us on social media. I’m @ryandanielmoran on Instagram or at capitalism.com for all
our business-related stuff. And make sure you’re
subscribed to the channel. And we’ll see you on the next episode. Thanks for watching. (mellow, upbeat music)

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