An Excerpt from Main Street Millionaire

Guides on entrepreneurship often encourage readers to pursue innovation and build wealth by creating new products and services for potential customers. But what if the key to success lies in the existing businesses within our neighborhoods?

Codie Sanchez has found success by acquiring "Main Street" businesses in seemingly unexciting yet consistently profitable industries like plumbing, construction, cleaning, and electrical services, which often go unnoticed by white-collar workers. In her new book, Main Street Millionaire, she shares her journey and offers tips for readers who want to build their wealth from what's already available.

In this excerpt from the book's first chapter, Sanchez points out that many thriving companies are forced to close simply because there are no successors to take over from their founders. This creates a valuable opportunity for aspiring entrepreneurs to continue these legacies while pursuing their own success.

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THE SECRET GOLD MINE ON MAIN STREET

Did you know that Main Street Millionaires own half of all job-generating businesses in the United States? That’s nearly three million companies providing jobs for thirty-two million people and making $6.5 trillion in annual revenue. If you enjoy a nice paycheck right now, it is highly likely you can thank a Main Street Millionaire for that.

But there is a dark side to being a Main Street Millionaire: they’re getting too old for this sh*t. Talk to any boomer business owner over the age of sixty-five, buy them a beer or six, and they will admit that they want to exit their business . . . but have no idea how.

Throughout history, the answer was to hand the business over to the kids. Ah, the times they are a-changin’. These days, only about 30 percent of businesses transition from one family generation to the next. The kids don’t want Dad’s plumbing business. They want to dance on TikTok, even if plumbing makes millions.

Here’s the craziest part: most of these MSMs will end up permanently shutting down their businesses. When they retire, they won’t hand off or even sell their cash-printing machines. Instead, they will simply turn off the lights and put the CLOSED sign up one last time. Game over.

Don’t believe me? It’s already happening, with businesses all over the world.

Hidekazu Yokoyama spent thirty years building a profitable, thriving logistics business in Japan. Last year, he tried to give it away, for free. He is not alone. In a country where the average business owner is sixty-two, and where 60 percent of them don’t have a transition plan, free is often the only option.

Hidekazu is in his seventies, and his legacy was wanted by no one. Not his kids. Not his employees. No one. Think about that for a second. It’s not like he was trying to give away a dilapidated, fixer-upper house in an undesirable location. He was trying to give away a successful business worth millions. And no one wanted it!

This struggle of an aging population could be the cause of one of the most devastating recessions in Japan, as tens of thousands of small and medium-size companies go out of business while the population shrinks. Do you know what will happen to Japan if that transpires?

In an apocalyptic 2019 presentation, Japan’s trade ministry said that by 2025, around 630,000 profitable businesses could close permanently, costing the economy $165 billion and as many as 6.5 million jobs. That’s nearly 1 in 10 jobs in the whole country.

It is already happening. In 2021, forty-four thousand businesses were abandoned. And 90 percent of those businesses—most of which were profitable and could have been transitioned to a new owner— closed forever. This still blows my mind.

If the magnitude of this problem isn’t hitting you yet, I promise you it will. It hit me and my family. My uncle founded Eb Holmes Plumbing in Phoenix, a thriving business that made him millions of dollars for several decades. At its height it was worth several million. Then one day, Eb got older and sicker. Suddenly, the company meant much less to him than spending time with his wife and kids.

So, what did Eb do with the business? Did he sell it and make millions? Hand it off to a member of his family or one of his trusted employees? Nope, neither. He slowly closed it down. In fact, he had to pay money, and his wife had to do a lot of work to shut it down compliantly.

On the one hand, it’s understandable. Eb was in his seventies. He was tired. He didn’t think of selling his business as an option; I think he would say it wasn’t a sellable asset. Or that even if he’d wanted to do it, he didn’t have the energy to go through a sale or find buyers to buy it from him.

Still, this plumbing business was generating millions in revenue. Eb spent his entire career turning it into a cash-flowing asset, which allowed him and my aunt to live the American Dream. It allowed them to take boat trips down to Mexico. It even bought them a little two-prop plane and a cabin in the mountains.

But it didn’t matter. Eb’s business first scaled down, then shut down. His customers, his team, his processes . . . poof. All gone. Don’t get me wrong, his incredible legacy continues on in his family and impact, BUT could it also have lived on in the actual business?

As tragic as this story sounds, it’s a lot more common than you think. And like I said, it’s playing out all over the world, and it’s coming to your neighborhood soon. This is the big emergency we’re all facing. Millions of boomer business owners are stranded in their companies, with no one to hand it off to. Their businesses are too big for their competitors to buy out yet too small for Wall Street to acquire. So, the owners just keep working, and working, and working.

The impact of millions of small businesses quietly disappearing over the next two decades will be catastrophic to our economy. It’s going to make the Great Depression seem like a cakewalk.

And therein lies your opportunity. My dear reader, you should be leaning forward in your seat by now. This is where your freedom awaits. YOU could be the new owner. YOU could be their succession plan. YOU could preserve their legacy, serve your community, gain financial freedom, and help save America. These owners are quietly desperate to save their businesses. They are praying for a miracle. They are praying for YOU.

This is the gold mine on Main Street.

Excerpted from Main Street Millionaire: How to Make Extraordinary Wealth Buying Ordinary Businesses by Codie Sanchez, in agreement with Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright © Codie Ventures LLC, 2024.