Today’s episode of the podcast, Robert Hirsch from Freedom
Factory talks about “Time to Find Freedom and Buy Your Own
Business.”
Listen to the podcast, watch the video, or read the
transcript below.
Additional Videos From Freedom Factory
Key Difference Between Owning a Business and Owning a Job
What is the Process to Sell My Business Quickly?
Transcript of Podcast
Hey, it’s Robert from Freedom Factory, and I want to talk to you
about something that is a really strong belief of mine, but I was
in a forum meeting with my fellow group of entrepreneurs and one of
my friends looked at me and he said, is buying a business really
the most undervalued asset class? You’ve said that to me often, but
I don’t know if I necessarily believe it. So I wanted to go through
some simple math and the way I look at buying a business and the
way I look at other investments. For example, if you buy a business
for four times earnings, and let’s say you don’t make any changes,
it’s flat, it doesn’t grow, whatever. Your changes don’t work.
That’s going to give you a 25% return, meaning it’s going to pay
for itself in four years because you bought it four times
earnings.
Now, on the other hand, let’s say you go buy a stock. Let’s say
that stock has a price to earnings ratio, which is really just a
multiple of 33 well, you’re buying it at 3% so I mean, what you’re
really hoping for is maybe 5% after taxes.
So when I look at what that looks like in three years or five
years, and use any financial calculator that you want, and you look
at the time value of money, those returns make such a massive
difference. Warren Buffett’s business partner is a guy named
Charlie Munger. And Charlie Munger, they asked him, they said, if
you were a young man and you were starting again, and there was no
Berkshire Hathaway, what would you do?
And he said, I would buy as many software of service companies
as I could at five to seven times earnings, which is generally what
they go for with low churn, meaning they don’t change. And I would
change my whole time to forever. So once again, he would buy
software as a service companies at five to seven times earnings.
With very low churn and it would hold them forever. So he also sees
that small businesses are the most undervalued asset class in
America. So if you’ve ever thought about buying a business or how
do you find a business that trades at three times earnings or four
times earnings or five times earnings, why don’t you give us a call
at Freedom Factory?
Because I’ll tell you, some of the deals that we see are just
incredible. And I think money is made on the buy, not on the sell.
And if you can buy the right business, especially want to take
advantage of your unique abilities are stupid human trick. And I’ve
talked about that in other videos, but what I mean, let’s say you
find a great engineering company that has a sales problem and
you’re an extraordinary salesperson. All of a sudden, if you buy
that at 4x and you can double it in two years. Well, your return is
unbelievable. So if you’ve ever thought about buying a business or
selling a business, give us a call here at Freedom Factory. I look
forward to talking to you soon.
Thank you so much for watching. Please like and subscribe.
Contact Freedom Factory
Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com/
https://g.page/freedom-factory-denver
Also, Follow Freedom Factory here
Best Business
Brokers – video portfolio
Available on Youtube:
Managing Partners
Learn more about the managing partners, Tyler Tysdal,
and Robert Hirsch.
Freedom Factory 