I’m embarrassed to tell you this.

But 5 years ago I didn’t know how to read an income statement.

I was 28 years old. I had been running businesses for 8 years. And I had no idea what those financials meant.

Every month I just looked to see if my bank balance had gone up or down.

I was too ashamed to ask anyone to help me out.

I felt like I missed the boat.

Then I went to business school and took an accounting class. But it was soooo boring. I’d fall asleep in class.

The professor droned on and on about retained earnings, and balancing the credits and debits.

It had no applicable value to me.

Then all of a sudden when I decided to buy my first business I had to learn to read financials fast. It was like drinking from a fire hose. And by that point it was too late. I missed important things I should have caught because I was inexperienced.

The truth is many of you reading this email are in the same position.

From employees to owners. Everyone knows they SHOULD know how to read a simple financial statement. But they don’t.

And maybe you’re embarrassed now because of you lack the knowledge like I did.

You no longer need to be embarrassed.

I’m making a course for people like us. You can sign-up and receive it anonymously. So nobody will ever know you didn’t know how to do it.

I think everyone in the world needs this course.

I’m going to charge for it. Because then I can hire people to make future learning products. It’s going to be a win-win.

It’s going to be $150 for a class with 8 study modules all delivered over email.

For $150 you’re going to get a better lesson than I got paying $80,000 per year for my business school.

It’s going to be lessons you can apply to your life. And your work.

I’m going to show you how I compare different public companies. I’ll go in-depth but I’ll keep it relatable. I’m going to give you exercises so you can practice too. Because it’s going to take a little practice to commit this new knowledge to memory.

I started a waitlist this week, and a few hundred people already signed up. Join us.

You can sign-up for the waitlist here.​

When I talk about investing, I often am asked the following question:

How do you source businesses?

Well, I’m here to share my full playbook with you.

For many of you, this is going to be interesting because you want to buy a business.

For some of you this section won't be relevant because you're not ready to buy a business. So you can quickly skim this section if this lesson doesn't apply to you.

There are 3 levels of deal sourcing: Broad, Focused, and Narrow. The closer you get to narrow, the more success you’ll have finding a good business. But Broad is a good place to learn and expand your understanding of what businesses are available.

When I first started my company Enduring Ventures, I didn’t know the world of businesses out there. I simply had never heard of most businesses.

So we started Broad. This allowed me to review thousands of companies to understand what I like and don't like. Once I found a business I liked I “zoomed-in”.

For example: I didn’t know there were broadband businesses owned by small business owners.

Once I learned that there were thousands of small broadband companies, with sticky customers and good recurring revenue, I got interested in the industry. I built an email list of owners in the industry, and I reached out to them.

One owner responded to my cold email and sold me his business.

You can follow a similar strategy.

How to source a deal

BROAD Search -

Broad is a good place to learn, and explore the world. But you're unlikely to find the best opportunities when you search broadly.

Start with business selling websites - BizBuySell, Kumo, Axial. These have the widest reach. But also the lowest quality.

Read local newspapers - pay attention to companies advertising or in the periodicals.

Check forums - find sub-forums on Reddit, IndieHacker and Hacker News

Follow business buyers on Twitter - some samples accounts to follow, Sieva Kozinsky (me), Xavier Helgesen, Andrew Gazdecki, Codie Sanchez

Build an audience on Twitter and Linkedin - the more your audience grows, the more people will reach-out to you with deal opportunities. This is more helpful if you build an audience in a very specific niche (see "Focused" search below)

Build a list of business brokers - and email them once a quarter to remind them of the criteria you are looking for

Ask anyone, including your friends - you'll see our Scout program is designed for this. Everybody knows a business owner. You just need to ask them.

Here's a sample email you can BCC and send all your friends:

Hi, I’m looking to buy a business. That’s my main goal in life. If you have a family or friend that have mentioned they want to sell their business please let me know. Here is my contact {insert_contact}. If you intro me to someone I buy a business from I’d be happy to pay you $10k if I’m successful as a thank you and referral fee.

FOCUSED Search

Niche industry sites - some industries have a niche site. For example in Software there is Acquire, Rejigg, Quiet Light Brokerage, Axial, and Flippa.

Build a list of owners by geography or business size - You can run non-targeted outreach process: postcards, phone calls, emails, fax. You'll need build a list of companies by location or revenue size.

Build an audience talking about a specific industry - this can be any medium, including podcast, newsletter, and twitter If you're hyper-targetted, you can have a small audience of 500-1000 people and get meaningful of value.

NARROW

As you get more narrow in your search, you are more likely to get more value.

This is because 1) when you go deep on an industry, you understand it better which means you have a better grasp of what makes a good business and price 2) you are more likely to get an off-market deal, which often leads to a better price.

Industry specific outreach - if you've picked a specific industry you love, you can focus all your attention here and send them postcards, phone calls, emails, fax...etc. Some investors will use interns for this, some will use international labor. I've also done this myself without support. Try a product called Yesware, it will cold email for you automatically.

Meet with industry investment bankers and brokers - the best investment bankers will specialize in a particular industry. Cozy up with them to see what types of deals they're selling. Even if you don't end up buying it's a good learning opportunity.

Attend industry specific conferences - each industry has a tradeshow and association. For example, when I wanted to learn about the hotel industry I attended the AAHOA (Asian American Hotel Owner Association). It's a huge event, and I got to meet owners, brokers, and suppliers over just a couple of days. Keep in mind some conferences are designed to meet owners. Others are large trade shows for owners to see products. To determine which is best for you, ask the investment bankers and other owners to guide you on the best events.

Talk to suppliers or distributors - I find the suppliers and distributors know a lot about the owners they sell to. If you can get them on the phone, you may be able to find some owners who want to sell their business.

​

Was this list helpful to you? Do you have anything to add?

🔑 Next week...I'll share an interesting HVAC Deal, and how I think about the returns.

Have a great week,

Sieva

‍

Please let me know what you think of this newsletter!

👉​💰💰💰💰💰 Top-notch!​ ​

👉​💰💰 It’s ok​ ​

👉​Not great, try again​​

Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.