The Millionaire Side Hustle

Summary Points:

1. The fastest way to build wealth while working a 9-5 is buying cash flowing businesses.

2. You have advantages as a current W2 employee that will give you an edge for financing your acquisitions.

3. By buying the “right” companies and focusing on finding the “right” people to run them, you will achieve a wealth building shortcut that has been previously reserved for private equity players.

4. By having W2 salary stability, you are able to devote more cashflow resources to your growing businesses.

Changing Your Mindset

The purpose of this weeks newsletter is to break some preconceived ideas on building wealth.

No doubt many of you grew up thinking that the only way to grow wealth while working a 9-5 job was to max out your 401k, or to save up for years to put a down a deposit for a rental property.

Some of you might think that in order to build serious wealth, you need to quit your 9-5 cold turkey and jump feet first into entrepreneurship.

Both are doable strategies and can be used to build wealth, but they are not the fastest, nor the most powerful.

The fastest way to grow wealth while working a 9-5 is buying cash-flowing businesses.

Leverage and Insurance

Your current W2 job provides a couple of things that can be a major advantage when buying your first business.

• Consistent Income: Banks are much more likely to lend to you because they have a clear understanding of the amount of income you are making and for how long you have been making it

• Current professional record: When you begin talking with lenders, it is an advantage to point to a current job that you hold and recent experience that lends credence to your ability to run the business you want to acquire.

Banks are always calculating risk when they are evaluating a potential deal. The more things that you can do to alleviate that risk, the better.

Buying and Hiring “Right”

The core of being successful in business acquisition is knowing how to buy and hire the right people.

Hundreds of books can be read on each of these topics but if I could distill it down into a single phrase it would be this:

Begin with the end in mind.

It seems simple at its face. But it is a hard thing to get right.

I coach clients on acquiring cash-flowing businesses that will give them financial freedom. But before I can help them, I have to understand what they ultimately want.

A lot of times, they don’t really know what they want. They have an abstract idea that has yet to be formed into an actionable mission statement.

If they want to buy a business and keep their current W2 career, but replace their current W2 salary with cash-flow, and find someone else to deal with the daily operations, then we will have a very particular strategy in our search.

Without a well-thought out plan, you will likely fail. This is not a game to play without a plan to win.

Finding an Operator

If a GM is needed to run the daily operations for the business you just acquired then you are looking for someone who will grow the business, treat it like their own, and respect your vision and wishes.

As you read that last paragraph you are thinking that a person of this caliber must be impossible to find.

I use the think the same way, until I learned how to attract that exact type of person.

Incentives are the key.

Incentives can fix a lot of problems that businesses routinely face.

Want more sales? Incentive your salesmen. Want more clients? Incentivize your referral sources.

The trick is knowing the right kind of incentive for the role that you are wanting to fill.

In the case of a GM (General Manager) that will run your business, there are two ways to incentivize them that I have found success with.

1. Compensation tied to revenue

2. Earning equity

The type of person who would want to run your business and be in charge of daily operations and hiring and firing your employees, is a person that has what it takes to start there own business. Right?

Why would they work for you when they have the skills and know-how to grow their own business? A few reasons.

1. Little access to investment capital

2. Bad credit

3. Excessive debt

They can have 1 or all 3 of these reasons. In my experience, a lot of good candidates have had a business before but something happened where the business failed and they are still trying to get out the financial pit they fell into.

The ideal situation they are looking for is one where they can make good money (maybe great money) if they hit certain well-defined KPI’s (key performance indicators) and have a feeling (or reality) of ownership.

They thrive in that type of environment.

You are offering more than just a job, you are offering a career that they are in control of.

Here is an example of a compensation structure that I have used in one of our companies.

Base salary: $70,000

Bonus: 1% of gross sales up to $2M and 2% of gross sales after $2M threshold.

Google 5 star reviews: Every 5 star review is $150 dollars (Goal is 100)

At the end of the year we did just over $3M in sales and he achieved 100 5-star Google reviews.

That meant that our GM made a total compensation of $125,000. And that is just the beginning. As the business grows, so will his compensation and his KPI’s.

There are a thousand ways to build an incentive plan and this is just one. The point I am making is, you need to create something that will drive results and build confidence in your GM.

Closing

If buying a cash-flowing business to build wealth excites you or you need help optimizing your current business, send me a message at [email protected] and we will get a time set up to talk through your goals and how to make them a reality.

This is not rocket surgery (wink). Take the first step.

Talk soon.

Ben