Rich People Behavior Ep 288

Summary Notes


In a discussion about financial growth and investment strategies, Speaker A shares insights on acquiring wealth through skill development and smart investments rather than traditional methods like home ownership. They recount personal experiences of rebounding from financial lows by leveraging skills, and highlight the irony that wealthier individuals tend to be more frugal and risk-averse. Speaker A advocates for buying existing businesses at a bargain by negotiating price and terms separately, as demonstrated through their own successful gym acquisitions. They contrast the spending habits of the poor with the investment strategies of the rich, emphasizing the value of acquiring assets with minimal risk. Speaker B supports the conversation, reinforcing the concepts discussed. Speaker A concludes by encouraging listeners to seek out undervalued business opportunities, underscoring the importance of patience and diligence in achieving financial success.

Summary Notes

Financial Habits of Wealthy Individuals

  • Wealthy individuals tend to spend less money despite having more.
  • They have a decreased desire to spend money.
  • Wealthier people find ways to acquire things for less money out of pocket.

"These people actually spend less money. They, they have, they have less desire to spend money."

This quote emphasizes the observation that individuals who have accumulated wealth often exhibit more frugal spending habits and possess a lesser impulse to make purchases compared to those with less financial resources.

Importance of Skills and Self-Reliance

  • Skills are highlighted as invaluable assets that cannot be taken away by any external force.
  • The speaker sees skills as a form of security and empowerment.
  • Skills are deemed essential for financial recovery and success.

"You absolutely just need skills. You can have nothing else in your life. And a beautiful thing is that no government can take it from you. No person can take your skills from you in a divorce. Those are always your own, which is something that, I don't know, for some reason feels magical to me."

The speaker expresses a profound appreciation for skills as a personal asset that remains secure from external loss or seizure, signifying the importance of self-reliance and the intrinsic value of personal abilities.

Investment Opportunities and Decision Making

  • The speaker discusses different investment opportunities, such as real estate versus business ownership.
  • The process of saving for an investment is related to the individual's income and savings habits.
  • The speaker suggests considering the potential return on investment before committing funds.

"So right now, I think if you were to look at, quote, investment opportunities, right, you could invest in buying a house... Now let's look at an alternative scenario where you are still making that same amount of money, 60 and you saved up 50. And instead of buying a house, you have a long conversation with your spouse and you say, or maybe you don't have a spouse, whatever with yourself, and you say, I wonder how much money I could get for this money."

This quote contrasts the traditional investment in real estate with the idea of investing in a business. It suggests that individuals should carefully consider how to maximize the return on their saved capital, whether through purchasing property or exploring local business opportunities.

Strategies for Acquiring Businesses

  • Contacting brokers is advised to get an idea of local businesses and pricing.
  • Buying from a broker might result in paying retail prices, so negotiation is key.
  • The speaker hints at sharing a personal success story related to business acquisition.

"And by the way, the best way to do that is, one, you should contact brokers, not necessarily to buy a business, but to get an idea of some of the businesses that are in the area and what price ranges look like. But if you buy from a broker, you're going to pay retail. You could definitely negotiate a deal."

This quote provides practical advice on the initial steps to take when considering purchasing a business, emphasizing the importance of market research and the potential cost savings of negotiating a deal rather than accepting the listed retail price from a broker.

Valuation and Negotiation Tactics

  • Understanding business valuation based on earnings, with an example of a business making $250,000 a year in profit being valued at $625,000.
  • The concept of "agree on price, then agree on terms" as a negotiation strategy.
  • The process of seller financing a portion of the business purchase.
  • Utilizing bank loans or SBA loans to cover a portion of the purchase price.
  • The importance of a down payment in securing a loan.
  • The financial breakdown of acquiring a business using this method and the potential for income increase.

for it, you get it for two and a half times earnings. Right, which would be 525, hopefully. I think. Two and a half. No, that's 625. Excuse me. $625,000 is what a business you might pay for a business that's doing $250,000 a year in profit.

This quote explains the valuation of a business at two and a half times its annual profit, using $625,000 as the example valuation for a business with $250,000 in profit.

And I used it in the deal that I'll tell you about in a second, which is agree on price, then agree on terms.

This quote introduces the negotiation tactic of first agreeing on the price of a business before discussing the terms of the purchase.

I need you to sell or finance three quarters of the deal.

This quote explains the concept of seller financing, where the seller agrees to finance a portion of the sale price, in this case, three quarters of the deal.

Then you get a note from the bank or SBA loan, which you have a $200,000 loan for, and you put your $50,000 down.

This quote details the use of a bank loan or SBA loan to finance the remaining portion of the business purchase, including the necessity of a down payment.

So if you're thinking about this, the guy who's selling the business, he sells for 625, but he's only getting 200,000 up front. You're only putting 50 of that 200, and you're taking a loan for the rest of it.

This quote summarizes the financial arrangement of the business purchase, highlighting the seller's immediate cash receipt and the buyer's use of loans and a down payment.

Business Acquisition Benefits

  • The significant income increase from acquiring a business that generates substantial profit.
  • The possibility of full ownership of the business income within a short period, such as 24 months.
  • The potential for business growth and operational improvements by the new owner.
  • The comparison of acquisition costs to the expenses of starting a new business from scratch.

And within 24 months, all of that income will be yours.

This quote indicates that the income from the acquired business will fully belong to the new owner within 24 months, assuming the terms of the deal are met.

And if you compare that to what it would cost you to start your own business in terms of investment and like existing book of business client lists, all the knickknacks you have to buy that you don't even think of, zoning permits and all the fees and licenses, it's actually a pretty decent deal.

This quote compares the cost of acquiring an existing business with the various expenses associated with starting a new business, suggesting that acquisition can be a cost-effective strategy. Services

  • offers services to business owners aiming to grow their businesses significantly.
  • The platform invites business owners to apply and discuss potential strategies for business expansion.

Mosey Nation, real quick. If you are a business owner that has a big old business and wants to get to a much bigger business, going to 5100 million dollars plus, we would love to talk to you, and if you like that, or would like to hear more about it, go to

This quote is a call to action for business owners interested in growing their businesses, directing them to for further information and assistance.

Personal Business Experience

  • The speaker shares a personal experience of business expansion by opening multiple locations.
  • The initial investment for starting a business location is mentioned, emphasizing the aim for minimal initial investment.

So I'll tell you, one of the deals that I did that was pretty good. So I had four locations at this point. This is when I had the gyms and I opened a fifth location.

This quote provides a personal anecdote of the speaker's experience in expanding their business by opening additional locations, in this case, gyms.

Initial Gym Investment and Expansion

  • The speaker found an old gym that required minimal investment due to existing infrastructure.
  • Subsequent gym investments increased in cost, with the second location having a $250,000 investment.
  • Despite higher investments, the additional locations did not necessarily yield higher profits.

So I lucked out there. But the second one, because I thought I was smarter, we put 250,000 into the second location.

This quote illustrates the speaker's initial luck with low investment costs for the first gym and increased spending on the second location due to overconfidence.

Strategic Acquisition and Financing

  • The speaker acquired a fifth gym from an owner facing personal issues, negotiating a purchase price of $40,000 or $50,000.
  • The payment for the gym was negotiated to be spread over twelve months, with no upfront cash from the speaker.

And so I agreed on price, which think was 40,000. I think it was 40 or 50. So that's what I agreed.

This quote details the negotiation process for acquiring the fifth gym and the agreed price.

Immediate Profitability and Mentorship

  • The fifth gym was immediately profitable, generating $51,000 in sales in the first 30 days.
  • The speaker was mentored on the acquisition and later advised by Russell to teach others their methods.
  • The gym was eventually sold for 1.5 times the acquisition cost, with the gym's earnings covering the initial agreed price.

And in the first 30 days, we did 51,000 in sales. So this gym, in the first 30 days, literally paid for itself, period.

This quote highlights the immediate success of the fifth gym, which became profitable enough to cover its own acquisition cost within the first month.

The Value of Skills and Resilience

  • The speaker emphasizes the importance of skills, which cannot be taken away by external circumstances.
  • Skills provide a foundation for entrepreneurs to recover from financial setbacks.
  • The speaker experienced a low point with only $1,100 in the bank after owning six gyms but was able to bounce back.

You always have to just get skills. Or this is just my opinion, is that because there's no one who can take them from you, there's no divorce, there's no government, there's no revolution, there's no financial crisis that can ever take your skills from you.

This quote stresses the enduring value of skills over financial capital, as skills are immune to loss from personal or economic crises.

Wealth Preservation and Risk Management

  • The speaker reflects on the necessity of getting rich only once and the increased risk aversion among the wealthy.
  • Wealthy individuals are cautious because the consequences of poor decisions can be catastrophic, potentially undoing years of progress.

And that's why people who are wealthy are more risk averse. Because the downside risk of losing everything is always bigger, right?

This quote discusses the mindset shift towards risk aversion that often accompanies wealth accumulation and the desire to preserve what has been earned.

Risk Aversion Among Wealthy Individuals

  • Wealthy individuals tend to have lower risk tolerances compared to those with less money.
  • People with less money often invest in high-risk, low-reward options like lottery tickets.
  • The richest people look for investments with minimal risk of loss and a reasonable upside.
  • Wealthy individuals prefer a guaranteed small return over a high-risk, high-reward investment.

"I have noticed from the people who have the most money is that they actually have way lower risk tolerances than the people who have no money, which is hilarious, because it's like the people who have the least amount of money then go buy lottery tickets, which are literally the worst investment you could possibly make."

This quote highlights the irony that those who can least afford to lose money are often the ones who engage in the riskiest financial behaviors, such as purchasing lottery tickets, which have a high likelihood of resulting in no return.

Investment Strategies and Perspective

  • The speaker emphasizes the importance of seeking investments or business opportunities with low downside risk.
  • They discuss the allure of high-return investments like cryptocurrencies but prioritize avoiding loss over potential high gains.
  • The speaker advises being patient and looking for deals where one can acquire assets with little to no initial investment.
  • It's important to have the character traits of successful people, such as patience, to make sound investment decisions.

"They would rather have a guaranteed small return with no risk than a potential for huge return with guaranteed risk."

This quote encapsulates the investment philosophy of preferring stability and a guaranteed return over the uncertainty and high risk of potential large gains, which is a common trait among the financially successful according to the speaker.

Acquiring Businesses with Minimal Investment

  • There are business owners willing to sell their businesses for less than their annual profit due to burnout or other motivations.
  • These opportunities are not widely advertised and require diligence and effort to uncover.
  • A little work ethic can lead to significant financial rewards with very little risk by following the methods used by wealthy individuals.

"I'm telling you, I talk to business owners every day. I mean, guys making a million, 2 million, $4 million a year, who literally have told me, they're like, dude, if someone came today and offered me, like, guys who are making a million dollars a year in profit, if someone had offered me 200 grand right now, I would take it. I just am so tired of this business."

This quote provides a real-world example of how businesses can be acquired for much less than their worth from owners who are motivated to sell, often due to fatigue or a desire for change.

Character Traits for Success

  • Success requires having the right character traits before it can be achieved.
  • Patience is essential when seeking out financial opportunities.
  • Making a good deal is often a matter of taking the time to find the right opportunity rather than rushing into decisions.

"That's why you have to have the character traits of being successful before you will see the success."

This quote stresses the importance of developing the traits commonly associated with success, such as patience and diligence, as a prerequisite to achieving financial success.

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