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The business YOU should buy (The SOWS method) by Codie Sanchez

Codie Sanchez is a reformed journalist, turned. institutional investor to now a Managing Director and. Partner at Entourage Effect Capital, a private equity. firm focused specifically on investing in the legalized. cannabis industry. (@Codie_Sanchez) Founder and CEO of Contrarian Thinking.

In the fast-paced world of business, the idea of buying a business for zero dollars and turning it into a profitable venture may seem far-fetched. However, Codie Sanchez has developed a strategy called SOWS that breaks down the process into four simple steps. This article explores the SOWS method and how it can be applied to identify and acquire businesses that may seem unattractive but hold significant potential for growth.

5 Key Takeaways

  1. Stale Businesses: Look for businesses that haven’t changed much and need technological updates. These businesses are often overlooked but can be revitalized with modern technology.
  2. Old Businesses: Target businesses that have been around for a while. The Lindy Effect suggests that the longer something has been in existence, the more likely it will continue to exist.
  3. Weak Competition: Seek businesses that don’t have strong competition. Avoid industries dominated by giants like Google or OpenAI.
  4. Simple Businesses: Focus on businesses that are easy to understand. Avoid complex industries like biotechnology or AI technology.
  5. Boring Equals Profitable: Simple and boring businesses often hold the key to profitability. They are easy to understand and can be transformed with the right approach.

Stale Businesses: A Hidden Opportunity

Stale businesses, such as laundromats or car washes, that haven’t embraced technology, are often overlooked. However, these businesses can be revitalized with technological updates. Codie’s purchase of a 12-year-old website called “approachment” illustrates this point. By recognizing the potential in a business that hadn’t changed in over a decade, she was able to turn it into a profitable venture.

Old Businesses: The Lindy Effect

Old businesses benefit from the Lindy Effect, meaning the longer they’ve been around, the more likely they’ll continue to exist. Codie’s experience with “approachment” showed that an old business can be bought at a discount and transformed into a profitable entity.

Weak Competition: A Strategic Advantage

Weak competition is an advantage. By avoiding industries with strong competitors, you can find businesses that have room for growth. Codie emphasizes the importance of competing against weaker players rather than giants like Google or OpenAI.

Simple Businesses: The Power of Simplicity

Simple businesses are often underestimated. People are drawn to complex terms like “biotechnology” or “proprietary,” but the real value lies in understanding simple businesses. Codie’s focus on simple, boring businesses like laundromats or car washes has led to success.

Boring Equals Profitable: The Unseen Potential

The SOWS method emphasizes that boring businesses often equal billions. By focusing on simple, stale, old, and weak businesses, you can uncover hidden opportunities for growth and profitability.

Lessons Learned

  • Embrace Simplicity: Don’t be swayed by complex jargon. Simple businesses often hold the key to success.
  • Look Beyond the Obvious: Stale and old businesses may seem unattractive, but they can be transformed with the right approach.
  • Avoid Strong Competition: Focus on industries where you can have a competitive edge.

Final Thoughts

The SOWS method offers a fresh perspective on business acquisition. By focusing on stale, old, weak, and simple businesses, you can uncover hidden gems that hold significant potential for growth. This approach challenges conventional wisdom and opens up new avenues for investment and entrepreneurship. Whether you are an aspiring entrepreneur or an experienced investor, the SOWS method provides actionable insights that can guide your business decisions and lead to success.

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