Everyone wants to find a way to build a steady income with minimal effort and investment. And even though this may seem nearly impossible to do, Codie Sanchez has proven that it is not only possible, but highly profitable. I’m George Moulous, founder of Ecommerce Brokers, and I will be sharing Sanchez’s proven methods to buy businesses for cheap or even free, and give my thoughts on it as well. Keep on reading!

About Codie Sanchez

Codie Sanchez runs a multi-million dollar business empire based around investing into “boring” businesses. She owns a YouTube channel where she advises people on how they can do the same with little to nothing down.

Sanchez describes boring businesses as those that are in high demand, do well, and are run passively, not requiring too much effort. Some examples include laundromats, vending machines, ice dispensers, and car washes. She doesn’t just focus on how to build a boring business, but also how you can use other people’s money to pay for it.

Three Options to Buy a Boring Business For Cheap

So how do you buy boring businesses for cheap or even free? Well, here are the three main strategies Codie Sanchez has shared that I will expand on:

Seller Financing

Seller financing is quite self-explanatory; it is when the buyer gets the loan directly from the seller instead of a bank. With the investment given, the buyer pays off the debt over a pre-determined period, normally around 2-5 years. However, much like a bank loan, interest is also applied here, usually around 5 percent. In some deals, you may not be charged any interest.

But, why would a seller agree to this? The main reason as Codie Sanchez explained in her video, ‘How to buy a business with no Money in 2024,’ was that there are “Too many businesses for sale and not enough buyers.” And that’s exactly why a seller would do this: to finally get a deal across the line.

In fact, it is an integral part of getting a deal done these days. 60 to 90 percent of online businesses sold in the last two years have had some form of seller financing or earnout financing. On average, 20 to 60 percent of the deal is financed by the seller. Still, some deals can actually be financed from 80 up to 100 percent, but it is quite rare. Codie Sanchez speaks about this fact quite casually, but it is a huge consideration when you’re buying businesses.

For online businesses that are profitable, stable, you won’t get those sort of terms. Maximum you can expect is 40 to 50 percent. However, when it comes to brick and mortar businesses that have been on the market for some time, aren’t doing too well, and the seller wants to sell immediately, you can get those kinds of excellent terms.

Earnout Financing

Earnout financing is also a key way for people to buy a boring business without a heavy investment. In this, the buyer pays a portion or all of the valuation to the seller over time based on the post-acquisition performance of the business. One big benefit with earnout financing is that in case the business doesn’t do as well, maybe making half of the amount of the valuation, it will be less risk for the buyer.

Bank/SBA Loan

Codie Sanchez mentions how it’s difficult to get conventional bank loans with good terms and that also allows for some flexibility. Due to this, they aren’t the go-to method for buying businesses. Moreover, even though interest rates have slowly been coming down from their peak in 2023, they are still quite high.

These are the reasons small business administration (SBA) loans have started gaining popularity, and is what Sanchez also suggests. She is 100% right about this, and I fully agree as they are definitely a less expensive option for buyers compared to conventional bank loans.

My Thoughts

My personal thoughts are that Codie Sanchez is definitely one of the best business buying gurus out there. However, there is one thing I think people should note about Sanchez’s videos, especially those pertaining to this topic.

The multiples of the businesses she is acquiring are generally quite low, around 1.5 to 2x. This is normal for brick and mortar businesses as they have a limited buyer pool and geographical limitations. But when it comes to the profitable online businesses, you’re going to have to pay a bigger multiple, as they can be run from practically anywhere. This which makes paying off loans a lot tougher.

Overall, she has the skill of being an excellent negotiator to get low multiples, with the seller financing the whole or 90% of the deal. Quite extraordinary!

Buy a Business Today

If you want to get a business with little to nothing down, you now know the three main ways to do so. If you’re looking to buy or sell a business, feel free to reach out to myself and my team at Ecommerce Brokers. We can advise you on how you can get the best deal out there according to what you’re looking for. Contact us today for a free consultation!