29) Brad Sugars on Financial freedom, buying businesses without your own money

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29) Financial freedom, buying businesses without your money with Brad Sugars

What to do if starting from 0

What could you do if you are starting from $0, with the right education?

Brad Sugars started the ActionCOACH brand in 1993 in Brisbane, Australia. Today the company is ranked as the leading business coaching franchise by Entrepreneur magazine. ActionCOACH operates in over 80 countries and has more than 1,000 coaches around the world, coaching 15,000 business every week. The franchise has received numerous awards including Fastest Growing Franchise, Franchisee Satisfaction, Best Overall Company and has been named the number one business coaching franchise in the world every year since 2004. Using the coaching strategies that have helped thousands of companies around the world, Brad Sugars and his executive team helped lead ActionCOACH and its coaches to some of its most profitable and best years ever… in the face of challenging economic conditions. Brad Sugars and his team continue to build “business re-education” to new, more innovative and exciting levels.

Episode 29 – Financial freedom with Brad Sugars

Transcribed by Arianne Elnar

[00:00:00] Brad Sugars: If you’re not willing to do the learning work, you can’t have financial freedom, you just can’t. You have to study money. If you want to be successful with money, you have to study it. And that’s why I love what you do. I love listening to Mary Buffett’s podcast on your thing the other day. You know, if people aren’t subscribed to your stuff, they really need to subscribe to it. One podcast isn’t enough. You’ve got to keep listening.

[00:00:28] Host: Welcome to Financially Free Podcast with your host, Ney Torres. One of the reasons Ney could retire when he was 25 years old is because he was coached by the best and now through this podcast so can you.

[00:00:40] Ney Torres: Welcome come to the show, Mr. Sugar.

[00:00:42] Brad Sugars: Ney, wonderful to be with you. Financial freedom is a wonderful subject. I love talking about it.

[00:00:47] Ney Torres: This one is going to be interesting because your nature to the same mindset and I know you don’t, you just speak your mind the way it is as a good Australian does. They’re known for doing that. What’s your intake of Financial Freedom by the way?

[00:01:03] Brad Sugars: You know, look, ultimately it takes about 10 years to become financially free. It depends on when you start learning it. I was lucky enough to start learning about financial freedom at about 13 years old and then really stayed at from 16 onwards. And so, by 26, I was retired financially. I’ve gone back to work, obviously because I just retirement or a so-called retirement was very, very boring and I just loved the game of business and the game of investing. I think it’s a lot of fun.

[00:01:34] Ney Torres:  We were just talking a moment ago. And you said something that — it’s a different point of view of mainstream media right now which is most Instagram personalities out there talk about hustling or grinding. You have a different perception. What’s your perception?

[00:01:50] Brad Sugars: The reality of it is I started with — when I was a young man, the hustle and grind mentality didn’t really exist, but you worked hard. I worked my tail off and I worked 12, 14, 16-hour days, five, six, seven days a week. What I know now as you know, I don’t know, I’m now 49, I realized that hustle and grind is just the new stupid. What I did back then is I didn’t know enough to be able to run my business properly. See hustle and grind just covers up a lack of there’s something wrong in the business. Fundamentally, if you have to work that hard, there’s something wrong with your business model, something wrong with your product model, something wrong with your sales, your marketing. If you’ve got to work that hard, there’s something wrong in the call business. So ultimately for me, it’s like, yeah, hustle and grind is the new stupid. I do get a little bit annoyed when I see that coming out of all of the gurus out there today.

[00:02:49] Ney Torres: How does the day in the life look for you or a week or a month?

[00:02:53] Brad Sugars: The average week I worked Tuesdays and Thursdays from 9 till 3, when the kids are at school. The last few months of COVID, I’ve worked pretty hard although I did just take three weeks off to travel the country with my family. We have five kids, so we have a pretty busy life from that perspective but I only worked two days a week. I have nine companies that I run and it’s just an interesting — actually we might have 10 next week because what I do is I buy companies and I fix them and sell them and that’s basically my life but I don’t want to work 24 hours a day, seven days a week. I’m not that person. I would rather be the person that my philosophy on business is you build a business that works so you don’t have to. I build companies that are assets. I build companies that make me a return, that return be money and my CEOs run the company. I generally will work with my CEOs either an hour, a week or an hour a month depending upon how long they’ve been with me or how close the company is to just being purchased. If we’ve owned it a long time, generally it will only take me an hour, a month to work with the CEO. And if we’ve just bought it, generally, I’m going to be working with them about an hour a week to get things up to where they need to be in order for the business to be making a good profit.

[00:04:11] Ney Torres: I want listeners to know Brad is the real thing, the real deal. When he says he went to — what is the camping you said with the family. he really means he rented to full blown Rockstar buses to go through the United States. It’s not like he was camping like —

[00:04:30] Brad Sugars: Well, we, you know, was a great way to see the country. Our drivers would drive overnight and we would wake up in a new part of the world and go and see another part of the world for a couple of days. And we did camp though. We had campfires at night. I mean, we stayed in the RVs and I mean, they weren’t RVs. They are actually two of buses for rock bands. My buddy owns that company and he said, “well, there’s no one using it.” I said, “I’ll go use them.” So, we did. And our drivers were wonderful and the kids had a great time. They had their bus and my wife and I had our bus.

[00:05:02] Ney Torres:  You know, I’ve always thought about camping and I don’t really like it that much, but if I go your way, definitely that’s the way to do it.

[00:05:12] Brad Sugars: A lot of my friends have said the same. They’re like, what is the company you used to do that?

[00:05:18] Ney Torres: Yeah. Before we start talking about the strategy because today, I want to talk about what will Brad Sugar do if he was starting from zero. Before we go there, I just want to ask a couple of questions I’ve always had because I started learning about ActionCoach, your company that you created probably 15 years ago. I started in sales partners with a Blair Singer and he is in the same industry.

[00:05:44] Brad Sugars: I met Blair dang, I make it — I believe I might’ve been 20 or 19 when I first met Blair through the Money and You Program. And through Blair, I met Robert Kiyosaki and started teaching for Robert over in Hawaii and [00:06:00] yeah, long, long story short but, you know, that education  piece that the DC Court over put together with Money and You, and ran that around the world was a great spark for a lot of wonderful entrepreneurs.

[00:06:14] Ney Torres: Yeah. I wonder about that we shouldn’t talk about that later, but yeah, in that environment, I started learning about ActionCoach because you guys are the biggest guys. In that industry. I know you have; I think I went once with John (inaudible) to the Arizona State University football field. You have a sweet theater, a huge one.

[00:06:34] Brad Sugars: [00:06:34] Yeah, yeah, yeah. The Cardinals football team is my football team. So, a wonderful team. They do an okay job when you come from Australia, you have to pick a team and it’s like, all right, and I literally picked the team based on the fact that they had a much nicer stadium with better suites than a San Diego or San Francisco did at the time. And now that I’m married to an American, my wife is from Massachusetts. So, I’ve adopted the Patriots as well as my other football team.

[00:07:06] Ney Torres: So, you’d take a jet from Las Vegas to catch a game in Arizona, Phoenix. Then you go back for lunch.

[00:07:12] Brad Sugars: Yeah, it was funny. I used to joke with John because my friends that lived on the other side of town there in Scottsdale, I would be home before they were and it was because of the traffic down there, it was crazy. But you know, I — being Australian, one of the things we learned to do is. We, we learned that lifestyle is more important than anything it’s about, you know, what is — how much do you enjoy life? How much fun do you have? And maybe that’s our convict roots. I always joke with the English, every time I go to England. I always joke with them that, you know, you guys sent all the fun people to Australia 200 years ago. And they have a little bit of a giggle but they don’t really laugh because they know it’s true. And that’s just the way the world is. And I know when I first moved to America back in 1998 and I sat down and I was meeting people and it really intrigued me that people would work at a job they hated to provide for a family that they didn’t really even know anymore. You know? And it was like you guys are kind of crazy, you know, and so when I started teaching how to build a business that works without you. People were like that’s kind of weird, you know, you can’t be successful if you don’t work that many hours, can you? You know, and yeah, it was an interesting philosophy shift for a lot of people to learn that the goal is not to be always working. The goal is to build something that can work for you and without you so that you don’t have to actually consistently turn up all the time. And, you know, I made a lot of people who make a lot of money who. If they don’t show up, they don’t make a dime. And it’s like, yeah, look, there’s different philosophy, different philosophy.

[00:08:46] Ney Torres: For sure and this is exactly what we see in this podcast is there’s people that make money some way that other people say it’s impossible to make. And what I like about you, you have your own mindset, you created your own reality, and it’s always good to share that. [00:09:00] One. Another question I have for you is, I keep hearing this phrase in your interviews is you were probably 20 and you have complaints with your dad that you didn’t have the employees you wanted like you said something interesting. What was that?

[00:09:14] Brad Sugars: Dad was always a very blunt man and I remember, I think I was 20 maybe 21 when I went to him and I said, you know what dad, I just can’t get good people because, you know, when you’re recruiting, you’re always trying to find the best people and that sort of stuff. And he just looked me dead in the eye and he said, “Son, you get the people you deserve. You’re an average manager running an average business. Highest caliber of employee you’re going to get is average.” And you know, at the time that stung quite a bit, but let’s be blunt. Great people want to work in great companies that are doing great things. Great people want to work for great leaders. They want to work for, you know, and this is one of the challenges that a lot of startup companies have is that, you know, the best caliber of employee they’re getting is not that high. And so, we have to learn methodologies for recruiting and getting the best people. I was on a chat with some of our clients that ActionCoach yesterday and they asked a question which my answer was, “Listen, if you’re hiring people that are underqualified, if you’re not — let me rephrase that, if you’re not hiring people that are overqualified, you’re hiring people that are under-qualified. And if you let’s say, you want to double your business, you have to hire someone that’s worked in a business and it’s double the size of yours. Not someone that’s worked in one that’s half the size of yours. You know, if they haven’t done it before how do you expect them to be able to do it for you or teach you how to do it or show you how to do it? So, I always like hiring overqualified people rather than under-qualified people.

[00:10:50] Ney Torres: What did your dad do? Because that’s a very wise thing to say.

[00:10:54] Brad Sugars: Yeah, my dad ran piping companies. So, they manufactured big pipes and stuff like that. His real interesting thing, I remember when I was about eight or nine years old my dad and mom came to us and said, “Listen, dad’s got to go away. For a month, he’s going away to learn business.” And we’re like, what do you mean? And he was sent away for 30 days of management training when he got promoted to manager and that, and the thought that always comes to me today is, you know, how much management training to companies give their employees today? It’s like, you know, it’s five minutes. Here’s the keys, here’s the security code. You’re now the manager, you know, there’s very little management training put into people these days. And so, you know, it’s very simple. My latest book I go through a whole segment on it on human development and Pulling Profits out of a Hat is the book name and what we go through there is if you don’t build your people, they can’t build your business for you. Your job is to build your people. Your people will build your business. You know, if it’s only you building your business and it’s going to be a dang hard job, but if you build the people and they can build the business then the business grows much faster.

[00:12:10] Ney Torres: It’s clear. Very good. So, the reason I am excited to talk to you is because you have a world point of view, most people think or talk about their niche market which is either the US or Europe or something like that. But you can really talk about globally because your brand is pretty much everywhere.

[00:12:29] Brad Sugars: Yeah. We operate in 83 countries. I’m very proud to say that we coach business owners in three communists’ countries, Russia, China, and Vietnam. I mean, it’s kind of unique to be able to do that but like in Vietnam now the level of entrepreneurial-ism coming through Vietnam right now is phenomenal. Just phenomenal. And I just sit back and I look at what’s going to happen when the entrepreneurial-ism and like India, the phenomenal level of millennials because the age group of India. I mean, it’s more than 50% of India is in the millennial age group. It’s phenomenal to see that entrepreneurial group just taking hold of the world. I’ve big interests in India over the coming 10-20 years.

[00:13:15] Ney Torres: So here’s my question, what will Brad sugar too? If I’m a — let’s call me evil demon somewhere, right? And I come and I take you out of your body. You’re not bread sugars anymore. And I put you in somebody else’s body. You’re starting from zero. What do you do?

[00:13:31] Brad Sugars: Probably, the first thing I’ve got to do, if you put me in someone else’s body is get fit but so from a financial viewpoint, the first thing I look for as a business, the first thing I look for as a business is for sale where I can buy it with no money down.

[00:13:50] Ney Torres: What you just said is very important because when they learned that for the first time, that was a shock like “what? Buy a business? You don’t start a business, you buy one.” Why will that be for first of all?

[00:14:01] Brad Sugars: Well, starting a business is very costly and from a time perspective, most of all, but if you’re starting a business, you’ve got no customers, no cashflow, no nothing. If I go and buy a business, I’ve already got cashflow. I’ve already got things. Now what I want to buy is a business that’s undervalued. What I want to buy as a business that’s run pretty badly. You know, like if I teach real estate, I don’t teach you to buy the most beautiful house on the street. I teach you to buy a pretty ugly house that needs fixing up. It’s on a good street. It’s a good type of house but you know, it needs fixing up. And so, I do the same with business and that’s pretty much what I’ve done all my life. I buy companies that need fixing. Right now, I’m in the middle of negotiating to buy a gymnasium chain and through COVID they shut down and, you know, here they are, they haven’t reopened yet. They’re in struggles. Their management’s all a mess.  The product is brilliant. The actual concept is really, really good. Their customer base loves them but they’re just badly managed. And so, I’ll buy that business and turn that around and make good money out of it. It’s only running a one city in the United States. I can expand it by either franchising or capitalizing it and opening it up across the world. But if I go back to just the me with no money, I would look for a business that is a pretty good business where the owners or managers or people running it hate the business now. You know, I’ve bought so many businesses over the years where it’s been like a husband and wife and they started the business together. And now not only do they hate the business, they hate each other and they want out at all costs. So, if you hear that statement, I want out at all costs then there’s a pretty good chance I can buy that business for A, very little money and B, no money down. Like I can settle on this and I’ll pay you over the next three years type thing. You know, those sorts of deals are there. I wrote my book Billionaire in Training around that subject of understanding because most people go to buy a business. They’ve never bought a business before. Why wouldn’t you at least study how to buy a business? I, you know, I used to once a year, run a three-day course on how to buy businesses and how to buy, build and sell companies.  I think I’ll do one virtually and then in the near future because it’s just such a subject that people don’t understand, they just don’t understand it you know, I would buy that business. I would look to buy it and I would look to hold it for somewhere in the vicinity of six weeks to six months and turn it around and sell that business and then move on and do another business. You know, I’d get a chunk of capital from that first one and then use that chunk of capital to actually be able to put some down money for a next business, but still negotiate hard to buy it build that next business against three, six months of ownership turn and sell that business. And then once I started having a decent sized business, I would start investing again in real estate. I would, you know, real estate for me is one of the ultimate investments because and the funny thing is about real estate most people teaching real estate investment really don’t understand real estate investment. I asked them, what is the number one reason you invest in real estate? And most of them tell me stupid things like, “Oh, you know, it’ll grow in capital value or, you know, I collect the rent” or that sort of stuff. And they don’t even realize the number one reason real estate is a great investment is you only ever pay for 20% of it. You put down 20% deposit, you put a tenant in who pays for the other 80% of the asset. Now, if the asset goes up in value, fantastic. If it doesn’t go up in value still fantastic because I’ve made 400% return over 20 years of paying off the mortgage. And as long as I’ve got a rental income that is capable of paying off the mortgage and as long as I buy in an area where I’m not going to have massive time of no rental, massive vacancies then real estate is the best investment in the world. If you want to retire in 20 years and you’ve got 20% of your retirement funds already then, you’re fine. You just put that 20% into [00:18:00] real estate someone else pays for the other 80% in life’s good. And I mean, there’s so many more things I can teach about real estate but that’s the fundamental core of it. And people just, even the teachers of real estate, don’t get that that’s the fundamental reason real estate is brilliant is that you only ever pay for 20% of it.

[00:18:15] Ney Torres: Very good. I really recommend people to read his books. How many books have you written?

[00:18:21] Brad Sugars: I’ve written over 20, but we have 17 that are currently still being published. Several of them we combined into one and all that stuff. So, but yeah, there’s 17 currently published. If people are looking for wealth my books, the Wealth Coach and Billionaire in Training. I wrote the Wealth Coach because I have lots of kids and I wanted my kids to learn money. So, I wrote a book for kids to understand money. And funnily enough, I gave it to one of my adult friends and said, “Read this and see if your kids would like this.” And he came back to me. He said, “Dude, this isn’t for kids. This is for me.” I don’t know all of this stuff. So, I was like, okay, good. It’s a book for adults and kids then.

[00:18:59] Ney Torres: And did you know, I think I have your board game. Did you make a board game?

[00:19:02] Brad Sugars: No, no, I did. I made a board game. It still sells today actually. We played in a lot of companies because it teaches businesses how to actually grow their business. And so, I find that people learn better when they’re having fun.

[00:19:16] Ney Torres: Yup. Sure. True. I still have that.

[00:19:18] Brad Sugars: It’s called Leverage by the way.

[00:19:19] Ney Torres: It’s Leverage, Leverage, that’s it. Yes.

[00:19:22] Brad Sugars: You’re going to have to pull it out and play it again now.

[00:19:25] Ney Torres: Okay. So that’s super clear. The thing that people probably are going to be asking right now is really, is that easy to buy? It sounds easy. It’s probably not that easy. It takes execution, but I didn’t know you will just aim to hold it for six months. Isn’t that too soon?

[00:19:40] Brad Sugars: No, no. Usually if you get in and you fix the sales and marketing of a business, it doesn’t take more than a quarter or two quarters to do that. When you look at the management of most businesses and management is quite atrocious. And so therefore putting in very basic management systems, and if people want to jump on either my YouTube channel or my Facebook or [00:20:00] my LinkedIn. I’m on all social media except Pinterest. I’m not really a very crafty person but if people want to I did a whole video on the difference between management leadership and, you know, I do that stuff all the time that education because I think that it’s very important to learn that but turning a business around, doesn’t take much more than six months. In fact, in some cases it can be done in a matter of weeks just because the knowledge base I have versus the knowledge base of the current owner is entirely different. You know, the hardest part of financial success is the learning. The learning is the most difficult part and that’s where most people aren’t willing to do that therefore they never end up with it. As I have a saying of, you know, “don’t complain to me about the results you didn’t get for the work you didn’t do.” If you’re not willing to do the learning work, you can’t have financial freedom. You just can’t. You have to study money. If you want to be successful with money, you have to study it. And that’s why I [00:21:00] love what you do. I love listening to Mary Buffett’s podcast on your thing the other day, you know, if people aren’t subscribed to your stuff, they really need to subscribe to it. One podcast isn’t enough. You’ve got to keep listening.

[00:21:12] Ney Torres: For sure. Thank you very much for the promotion. Buying a small business, fix it, turn it around by and fix it.

[00:21:19] Brad Sugars: And not necessarily small. In the early days, I would have done it as a small one.

[00:21:23] Ney Torres: What is small? Give me some reference for people listening.

[00:21:26] Brad Sugars: You know, under millions. You know, in the early days I was buying businesses for tens of thousands, then I got to hundreds of thousands nowadays it’s millions but oftentimes even multimillion dollar businesses, I will buy them for part of the money today and part of the money next year, and part of the money and two or three years type thing, you know, you don’t have to buy them with cash up front. Most people wanting to sell their business, they’re not looking for cash up front at a hundred percent. A percentage of the cash. Yes, but not all of it. So, you know, there’s another business I’m looking to buy, which is a locksmith business, which that’ll be in the tens of millions but I don’t think I’ll need to put down more than a couple of million in cash.

[00:22:11] Ney Torres: Interesting. I remember there was a time in Phoenix, Arizona when I just moved to the United States for the first time, I was looking for businesses for sale and I can tell you selling a business is rather hard. Maybe you have a different perception or maybe for your it’s easy but you know, something I’ve don’t. But when people are trying to sell their business, it’s very complicated because first, you don’t want employees to know because — or else they’ll just walk away, you know, it’s kind of secretive and they’re willing to finance most of the sales price.

[00:22:46] Brad Sugars: Yeah, look. There’re ways to sell it where, I mean, again, it takes me a day at least to teach people how to sell a business. Because again, it’s something people have never done before. And if you’ve never done it before going to do it for the first time is scary. You want to do it for the first time. And like there’s some great books out there on how to sell your business, but people won’t read and won’t study it. And therefore, they’re sitting there going, “Oh, I wonder what I should do.” And therefore, they’ll walk away with less than what there is. I remember one of my students from the UK, who came in the middle of selling his logistics business, you know, like transportation, trucking, all of that sort of stuff and it was a global logistics business and he was selling the group out of China and he showed me the deal. And I just looked at it I said,” why would you even bother selling it for that? That’s just insane. You might as well just keep it because based on what you’re getting for it, you’re going to have to turn around and replicate it for you to do that. For you to sell it for a reasonable number, it needs to be this.” I went and told him and so he went from going for a multiple of like, I think he was getting a multiple of six times earnings and we ended up renegotiating and getting a multiple of 29 times earnings because, you know, people don’t understand how to sell. And so, these are simple things that if you’re not willing to learn it, you’re going to get beat up out there in the marketplace. You’ve got to remember the people buying from him had bought many companies before and guess what they knew what they were doing. And if you’re one of those people that doesn’t know what they’re doing, and you get in a negotiation with someone that does know what they’re doing, you’re going to lose. It’s not a complex thing.

[00:24:28] Host: Did you learn something today? How can you apply your insight? What’s next for you? The fastest way to make things happen is to just share this podcast episode with more people that may find it valuable to talk about it with them and surround yourself with likeminded people. Hope you found this valuable. Don’t forget to subscribe. See you next time. This podcast references opinions and is for information purposes only not intended to be investment advice, seek a duly licensed professional for investment advice.

Financially Free Podcast with Ney Torres
Episode 28