Rapid Response: Stop creating businesses. Buy one instead, with Codie Sanchez

Codie Sanchez argues that people primarily seeking profit, rather than driven by a personal ambition to build a company, should consider buying an existing business. She says an established business is generally easier to assess than a startup: startups may take three to four years to become profitable, and she estimates that 90% fail within 10 years. By comparison, she cites a failure rate below 13% over 10 years for SBA-backed acquisitions. Buying is not risk-free, however, and usually requires borrowing or seller financing.

Ownership does not guarantee freedom or financial security. Sanchez says some owners become controlled by their businesses, have no clear exit, or operate companies that are not profitable. She distinguishes lifestyle businesses from scale and exit businesses, noting that a roofing company generating $10 million a year may be a scale business without necessarily being built for an exit. Buyers should be clear about what they want from ownership before choosing a company.

Sanchez says the average small-business owner makes $65,000 a year, and that many owners struggle because their companies do not produce enough profit. In her account, the top 10–20% of businesses are about 30 times more profitable than lower-performing companies. That gap suggests that effort alone is not the answer: choosing a strong business and concentrating on the factors that drive its performance can matter more than simply working harder.

To improve performance, Sanchez favors repeatable systems over improvisation. Her “12 profit levers” address areas including pricing, customers, hiring, products, pitching, and promotion. She describes assessing a company with an owner score, comparing its results with market performance across those areas, and reviewing progress every 90 days. The approach draws on a benchmark dataset of 30,000 businesses, with the aim of identifying where an owner’s attention could have the greatest effect.

She says businesses can often make meaningful improvements without major innovation. Faster responses to customers, better employee incentives, and more intelligent—and often higher—prices can address basic weaknesses. Sanchez recalls an HVAC owner focused on AI integration who had missed a Friday morning call that might have come from a commercial client. Her point was to ensure the business answers the phone before investing attention in technology that may be less essential.

Prospective buyers still need to scrutinize a business rather than rely on an initial valuation or listing assessment. Sanchez says data can help identify companies that appear priced out of the market, but treats such ratings as a starting point, not a substitute for further due diligence. She also says partnerships helped her begin with partial ownership when she was not ready to take on an acquisition alone. Partners can bring mistakes and regrets, but can also diversify risk on a first deal, making clear terms important.

Sanchez does not think everyone should run a business, but argues that ownership can take forms beyond owning an entire company. Employees who understand how their employer makes money may be able to negotiate for equity, revenue sharing, or profit sharing. She says owning part of the business where they work can give employees more influence over its outcome than owning a stock, while still requiring them to understand how the company generates returns.