Why is it often easier to build a 10x business than a 2x business?

The speaker suggests that aiming for a much larger goal (10x) can paradoxically be easier because it forces a more ambitious approach. Trying to build a smaller, 'safe' business might lead to it becoming just a job or not generating enough income.

What are the two key factors in business due diligence when buying a company?

The two most important factors are: 1) ensuring the numbers presented are real and represent actual cash flow, not just hopes and dreams, and 2) believing that these numbers are sustainable and will continue into the future.

What are the essential criteria for buying a business?

The business must exist for over 5 years, be profitable with positive cash flow from day one, have a leverage component (seller financing, bank loans), be simple to explain, and be something you are curious enough about to obsess over.

How do terms control the price in a business deal?

Amateurs focus on the price tag, while pros focus on the terms. Terms dictate the specifics of the deal, such as payment structure. One can offer a seemingly high price but structure payments over a very long time (e.g., $1/day) to control the actual cash outlay and effectively manipulate the perceived price.

What are the key takeaways or rules learned from a fraudulent cannabis business investment?

Three rules emerged: 1) avoid personal relationships at all levels of the deal (founders, bank, accounting), 2) only invest in trunched, milestone-based tranches, and 3) ensure financial oversight with daily bank account access to monitor capital.

Why is focusing on earning more important than obsessive saving?

You can only save so much before hitting a bottom, but earning potential is theoretically limitless. Becoming a better dealmaker and increasing revenue is more effective for financial freedom than solely focusing on cutting expenses.

What is the best next step for someone wanting to buy a business?

Start by getting a book on business acquisition. If you want to go deeper, take a course, and for even more support, join a community of like-minded individuals who are focused on financial success and business growth.

Why Playing Small Is Keeping You Broke

Codie Sanchez

Science & Technology4 min read23 min video

Aug 18, 2025|45,157 views|1,568|43

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Key Moments

TL;DR

Play bigger in business. Learn financial literacy & dealmaking to build wealth, not just a lifestyle business.

Key Insights

Women often play small in business due to negative self-talk and societal conditioning, hindering their ability to build significant wealth.

Aiming for a 10x larger business is often easier than a 2x, as it forces a broader approach that can still result in a successful lifestyle business.

The key to successful business acquisition lies in understanding financial literacy and dealmaking, particularly mastering terms over just price.

When buying a business, prioritize profitability, existence for over 5 years, a leverage component, simplicity, and personal curiosity.

Due diligence requires verifying real cash flow and the sustainability of numbers, avoiding 'hopes and dreams' or overly complex ventures.

Learn from mistakes, but ensure your first deal isn't a catastrophic failure. Focus on learning and protecting your ability to persevere.

Prioritize earning and dealmaking over excessive saving; focus on revenue generation and financial literacy to achieve true financial freedom.

Surrounding yourself with ambitious and financially successful individuals can be contagious and positively impact your own wealth-building journey.

SHIFTING FROM HUSTLE TO OWNERSHIP

The core message of this talk is to shift from a 'hustle mode' or focusing on social media attention to becoming a true business 'owner.' This involves understanding and mastering the language of business and finance, which is often not taught but is critical for building significant wealth. The speaker emphasizes that true wealth doesn't necessarily come from flashy startups but from acquiring and scaling simple, cash-flowing businesses. The goal is to move beyond building 'lifestyle businesses' that only provide a modest income, and instead, aim for substantial growth and financial freedom.

OVERCOMING LIMITATIONS: WOMEN IN BUSINESS

A significant portion of the discussion addresses why women, despite owning many businesses, are underrepresented in business acquisition. The speaker suggests this is rooted in women often telling themselves negative stories, such as not negotiating or believing men have an advantage. A key takeaway is the need to stop playing the victim and instead recognize their inherent power, fostering a belief in collective growth and wealth creation. The tendency for women to build smaller, 'lifestyle' businesses is highlighted as a major barrier to accumulating greater wealth.

THE POWER OF THINKING BIGGER

The concept of 'playing small' is detrimental to wealth accumulation. The speaker advocates for thinking much bigger, even to the point of apparent absurdity, citing an example of a goal to create 1 billion coders versus 1 million owners. This aspirational thinking, whether self-driven or through accountability partners, is crucial. The argument is that aiming for a significantly larger business goal (10x) is often more achievable than aiming for a smaller one (2x), as it forces a broader strategy and can even lead to a successful lifestyle business as a byproduct.

DUE DILIGENCE AND DEALMAKING ESSENTIALS

Acquiring a business requires a robust decision-making framework focused on practical realities. Key due diligence elements include verifying the reality of the numbers and ensuring they are likely to continue into the future, as businesses are bought on realities and cash flow, not hopes. The ideal business is profitable, has existed for over five years, includes a leverage component (seller financing, bank loans), is simple enough to explain to a layperson, and genuinely interests the buyer. Unprofitable ventures, unproven technology, or businesses the buyer dislikes are strong 'anti-signals'.

TERMS CONTROL THE PRICE: MASTERING THE DEAL

A sophisticated understanding of dealmaking reveals that 'terms control the price.' Professionals focus on terms, while amateurs obsess over price. By mastering dealmaking, one gains the ability to manipulate price and influence nearly any transaction. The speaker illustrates this by explaining how a seller would readily accept a $100 million offer for a $1 million/year business, but not if the payout is $1 per day over a century. This highlights that controlling the structure and conditions of a deal is paramount to achieving favorable outcomes.

LEARNING FROM MISTAKES AND PROTECTING CAPITAL

Business acquisition carries inherent risks, and it's common to lose money, especially on early deals. The critical approach is to ensure that initial mistakes are not 'killer' deals that lead to permanent discouragement. Instead, aim for 'non-bankruptible' deals where you can learn without being financially devastated. The speaker shares a personal experience with a fraudulent cannabis business, emphasizing the importance of establishing strict protocols like avoiding personal relationships within the deal structure, using milestone-based investing, and ensuring strong financial oversight, including daily bank account access.

FINANCIAL LITERACY OVER SAVINGS

The speaker challenges the conventional advice of focusing heavily on savings, arguing that one can only save their way to zero. Instead, the emphasis is placed on earning more and becoming a skilled dealmaker. The personal narrative of experiencing financial scarcity, like being unable to afford groceries, fuels the drive to achieve financial freedom where price is no longer a concern. This freedom is seen as the true benefit of accumulating wealth, enabling the ability to buy what one wants without worry.

THE PATH FORWARD: EDUCATION AND COMMUNITY

For those ready to buy a business or simply improve their financial acumen, the advice is clear: educate yourself deeply. This involves reading books, taking courses, and joining communities focused on business and finance. Proximity to ambitious individuals who are already achieving financial success is crucial, as these aspirations and habits can be contagious. By immersing oneself in the 'language of business' and dealmaking, individuals can set themselves up for significant financial success over the long term, turning potential into tangible wealth.

Mentioned in This Episode

●Organizations

●People Referenced

Business Acquisition Do's and Don'ts

Practical takeaways from this episode

Do This

Ensure the business has been in existence for more than 5 years.

Verify the business is profitable and cash flowing from day one.

Look for businesses that can be explained simply, like to a grandparent.

Choose businesses you are curious about and will remain interested in for years.

Focus on controlling terms in a deal, as they dictate price.

Use leverage like seller financing and bank loans, not just your own money.

If buying, aim for milestone-based investing and have financial oversight.

Surround yourself with people obsessed with making money and who have achieved similar goals.

Learn the language of business and dealmaking deeply, making it a fluency.

Avoid This

Don't buy businesses that are currently losing money with only future growth promises.

Avoid businesses with complex, proprietary technology you cannot understand.

Do not buy businesses you have zero interest in or actively dislike.

Avoid buying 'beat-up houses' or businesses with underlying issues that require extensive fixing.

Do not invest in a business where the founders, bank, and accounting firm have personal relationships.

Avoid giving large chunks of money upfront; opt for trunched, milestone-based investments.

Never fall in love with a deal; maintain emotional detachment.

Don't get carried away by charismatic founders or partners without due diligence.

Don't obsess over price; pros obsess over terms, which control the price.

Common Questions

A significant factor is playing a victim mentality and telling ourselves negative stories, such as not negotiating or believing men have it better. This self-limiting mindset prevents women from pursuing larger business opportunities.

Topics

Dealmaking

Mentioned in this video

organizationSMB Boardroom

A program for small business owners aiming for seven figures, offering support for growth and challenges.

organizationContrarian Community

Cody Sanchez's business buying community and education curriculum, designed to provide buyers with an advisory team, investment committee, and deal team.

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