Unlocking Success: The Power of Boring Businesses and Unconventional Wisdom

In the world of entrepreneurship and investing, we often hear stories of tech startups and unicorn companies that seem to dominate the headlines. However, there's a different path to success that doesn't involve sleeping in your basement or pouring everything into a high-risk venture. Cody Sanchez, a successful entrepreneur and investor, shares her insights on why boring businesses can be incredibly profitable and how unconventional wisdom can lead to success.

The Myth of the Unicorn Startup

One of the biggest misconceptions in the business world is the idea that success looks like a tech VC-backed startup. Sanchez argues that this narrative, while appealing for Hollywood, is often a miserable existence for most people. The typical story goes something like this:

• You don't make money as the founder for 3 to 7 years
• You have to sleep in your basement to start the company
• You must pour everything into the business
• You have to completely leave your family
• After 7 to 15 years, you might get your face on the cover of Forbes

While this path can work for some, it's not the only way to build a successful business. In fact, Sanchez suggests that there are more sustainable and enjoyable ways to achieve entrepreneurial success.

The Beauty of Boring Businesses

Sanchez advocates for what she calls "boring businesses." These are companies that may not be glamorous or headline-grabbing, but they provide essential services and can be incredibly profitable. Some examples include:

• Laundromats
• Car washes
• HVAC services
• Roofing companies

The appeal of these businesses lies in their stability and potential for consistent cash flow. Unlike high-risk startups, boring businesses often have established markets and proven business models.

The Advantages of Starting Small

One of the most counterintuitive pieces of advice Sanchez offers is that starting small can be a significant advantage. Many aspiring entrepreneurs believe they need substantial capital to get started, but Sanchez argues that the opposite is true:

"When you're small and you don't have a lot of money to invest, and you think that that's bad, it's not. It's actually great because the ROI on small deals is usually much higher."

This approach allows entrepreneurs to:

1. Learn the ropes without risking large amounts of capital
2. Iterate and improve their business model
3. Build a track record of success
4. Scale gradually as they gain experience and resources

Sanchez's Investment Philosophy

When it comes to investing in businesses, Sanchez has a clear set of criteria:

1. Buy realities, not dreams
2. Focus on profitable businesses
3. Avoid turnarounds
4. Be able to explain the business to her grandmother

This straightforward approach helps her avoid overly complex or speculative investments and focus on businesses with proven track records.

The Importance of Deal Clarity

Sanchez emphasizes the concept of "Deal Clarity" when evaluating potential business opportunities. This involves considering three key factors:

1. Profit: The business must make enough money and be financially feasible.
2. Passions (or Obsessions): The entrepreneur should be genuinely interested in the business and able to sustain their enthusiasm over time.
3. Probabilities: The business should align with the entrepreneur's skills and strengths, maximizing their chances of success.

By considering these factors, entrepreneurs can identify opportunities that are not only profitable but also personally fulfilling and well-suited to their abilities.

The Power of Boring Industries

Sanchez shares several examples of "boring" industries that can be surprisingly lucrative:

Line Striping

Painting lines for parking lots and roads may not seem exciting, but it can be a highly profitable business. The key is securing commercial contracts, particularly government contracts, which can lead to significant and stable revenue streams.

Crime Scene and Hoarding Cleanup

While not for everyone, specialized cleaning services for crime scenes and hoarding situations can be lucrative due to the specialized skills and equipment required. Sanchez mentions a woman who built a $12 million annual revenue business in this niche.

HVAC and Plumbing

These essential services are always in demand and can provide stable, long-term income. As Sanchez points out, "My attorneys will be out of a job before my plumbers are."

The Role of AI and Technology

When it comes to the impact of AI on various industries, Sanchez believes that boring businesses are less likely to be disrupted in the near term. She notes that AI has primarily affected industries like design, writing, and creativity – areas with less regulatory oversight and standardized processes.

However, Sanchez does acknowledge that some aspects of boring businesses may be impacted by technology, such as robotics in warehouses. She advises entrepreneurs to stay informed about technological advancements and be prepared to adapt their businesses accordingly.

Building a Portfolio of Businesses

Sanchez's approach to entrepreneurship involves building a diverse portfolio of businesses rather than focusing on a single venture. She categorizes her businesses into three types:

1. Bond-like businesses: These provide steady, low-risk returns of 3-7% per year.
2. Minor growth businesses: These grow at 10-20% per year and may incorporate some basic technology improvements.
3. High-speed tech companies: These businesses use cutting-edge technology and may employ AI consultants.

This diversified approach allows Sanchez to balance risk and reward across her portfolio.

The Challenges of Scaling

As entrepreneurs scale their businesses and build larger portfolios, new challenges emerge. Sanchez compares this to Sauron's eye from Lord of the Rings – when she focuses her attention on one business, it tends to perform well, but problems can arise when her attention is diverted.

To mitigate these challenges, Sanchez emphasizes the importance of:

1. Hiring experienced operators
2. Building strong infrastructures within each business
3. Maintaining a balance between hands-on management and delegation

The Impact of Social Media Fame

With over 6 million followers across various platforms, Sanchez has experienced both the benefits and drawbacks of social media fame. She notes that while negative comments can be challenging to deal with, the upsides include:

1. Access to unique experiences and perspectives
2. The ability to share stories and insights with a large audience
3. Connections with like-minded individuals and potential business partners

Sanchez advises those seeking social media success to be intentional about curating their audience and maintaining authenticity.

Lessons from the Coal Mines

One of the most surprising insights Sanchez shares comes from her visit to a coal mine in Western Kentucky. She observed that the miners, despite working in challenging conditions, displayed a level of camaraderie and job satisfaction that she had rarely seen outside of elite military units.

This experience led her to question some common assumptions about white-collar work and happiness. She suggests that there may be value in physical labor and working with one's hands that many people overlook in pursuit of office jobs.

The Importance of Human Connection

In times of stress or uncertainty, Sanchez emphasizes the value of human connection. Rather than turning to books or social media for answers, she recommends:

1. Reaching out to peers who have faced similar challenges
2. Seeking face-to-face conversations and physical touch
3. Joining entrepreneur forums or support groups

These connections can provide not only practical advice but also emotional support and a sense of being understood.

The Future of Entrepreneurship

Looking ahead, Sanchez believes that ownership and local businesses will play a crucial role in shaping communities. She argues that centralization and the dominance of large corporations often lead to poorer experiences for consumers and less engaged business owners.

Her upcoming book, "Main Street Millionaire," aims to provide readers with the knowledge and tools to:

1. Buy and operate local businesses
2. Understand mergers and acquisitions
3. Negotiate deals and equity
4. Build wealth through business ownership

Conclusion

Cody Sanchez's unconventional approach to entrepreneurship and investing offers a refreshing perspective in a world often dominated by high-risk, high-reward narratives. By focusing on boring businesses, starting small, and building diverse portfolios, entrepreneurs can create sustainable, profitable ventures that align with their skills and interests.

While the path may not lead to instant fame or billion-dollar valuations, it can provide a fulfilling and financially rewarding career. As Sanchez's experiences demonstrate, success often lies in unexpected places – from car washes and laundromats to specialized cleaning services and line striping businesses.

By embracing the power of boring businesses and applying unconventional wisdom, entrepreneurs can unlock new opportunities for success and build thriving enterprises that contribute to their local communities and personal wealth.

Article created from: https://www.youtube.com/watch?v=j2aQ7DZpQa8