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

Context

Codie Sanchez is the founder and CEO of Contrarian Thinking, a finance and media company, and the author of the new book Own or Be Owned. She returns to Rapid Response after her 2024 book Main Street Millionaire, which told people to buy profitable small businesses. Her company has now worked with around 15,000 small business owners, and she says most of them are owned by their business rather than the other way round. For PMs, the episode is a sharp look at running a business on systems and data instead of instinct, and at where AI helps and where it misleads.

The Big Idea

Profit comes from running a business on a repeatable system, not from working harder or winging it. AI does not replace that system. It only speeds up whatever is already inside you.

Codie says the top 10% to 20% of companies are about 30x more profitable than the bottom, and the gap is mostly systems. She tells owners to fix boring basics first and layer clever tech on top later.

Key Insights

Cowboying it kills profit

• What: "Cowboying" means winging decisions on feel instead of running a system. It feels good to an owner, which is why it persists.
• Why it matters: without a system you have no data on why a decision worked or failed, so you cannot repeat wins.
• Example: Codie let go of two executives paid hundreds of thousands of dollars a year because she could not get them to use a system.

Most small businesses are not profitable

• The average small business owner makes about $65,000 a year, which she notes is below minimum wage in California and below US median income.
• Her group has worked with about 15,000 owners. Most have no exit and most businesses are not profitable.
• Her point: pain is easier to bear when the business makes money, so profit comes before passion.

Owners work on the wrong things

The problem is rarely effort. Owners are buried in a to-do list and tread water every day. What they need is faster response to customers, better employee incentives, and smarter, usually higher, pricing. She says this is "not rocket science", just hard to see from inside the business.

Pick one business type

Codie describes three types of business: lifestyle, scale and exit. Most owners want all three at once, which does not work. Switching between them from month to month is, in her words, being a cowboy. Her own roofing example is a scale business where most money goes back into the company.

Buying beats starting on the odds

• Starting a business takes three to four years to be profitable, with a 90% failure rate inside ten years, by her figures.
• Most small business owners make roughly $46,000 to $65,000 a year.
• She says SBA-backed acquisitions fail less than 13% of the time over ten years.
• Her advice: only start from scratch if you cannot sleep for wanting to. Otherwise buy one, because you can see if it works before you commit.

AI advice for owners is generic

Twelve months ago she thought AI chat advice would be a game changer. Now she finds it aggregate, tends to say what you want to hear, and skips the difficulties. It also lacks real industry data, will make numbers up, and never says "I don't know". Her workaround is very specific prompts, such as data for home services businesses in the Southwest, but she still trusts a human P&L review more.

AI amplifies what you already are

She does not think AI turns a normal person into a superhero. Outlier solo founders would probably have built big companies anyway. Her play is to add a little AI and branding to a boring local business, like the handyman down the street, rather than compete with billionaire tech founders.

Mental Models & Frameworks

The 12 profit levers

Codie's system covers every part of a business, from what you price to who you sell to, who you hire, what you sell, how you pitch and how you promote. The idea is that each of these should be systematized, not left to mood. It borrows from private equity practice, applied to small owners who never had access to it. She says the hard part is not the method, it is that winging it is more fun.

Three inputs for a working system

• Owner score: shows what kind of owner you are. For example, artists or founders price 30% to 40% lower than a "closer" or "ball hog" type.
• Market score: how your business scores on the 12 levers against a data set of 30,000 businesses.
• 90-day review: look at the data every 90 days and fix the system again.

A system, she stresses, does not mean being rigid. It only means you know why you are changing things.

Match the plan to your type

Codie says advice fails when it ignores the person's unique skills. She notes that copying Elon Musk's biography does not work if you are not him. Her book ends each chapter with different steps for different owner types.

The P&L review

A P&L review compares your spending to the industry average. Her example: a business spending 2% of revenue on advertising and marketing when the industry average is 15%, and already earning a positive return on ad spend. The fix is obvious once you see the gap, but a general AI chatbot will not find it unless you already know what to ask.

Trade-offs & Nuance

Ownership versus employment

• Codie says not everyone should own a business. Some can own parts of companies through shares, rev share splits or profit sharing.
• An employee who understands how the business makes money can negotiate a cut of it.
• She admits that on the wrong day she might say she would work for someone else.

Fractional ownership lowers first-deal risk

She started by owning part of a business with partners, not the whole thing, because she was too nervous for a full acquisition. Her Contrarian Academy matches operators and investors, with shared best practices on terms. She says diversifying risk lowers the chance of going bankrupt on a first deal. She also admits you will probably make mistakes and have some regrets about the partner.

Personal brand is not for everyone

Codie built hers by accident during COVID, starting with a newsletter. She would not do it if she only wanted to make money. Most small businesses do not make money off a personal brand, and she says the sprinkler guy down the road often earns about 5x what a typical YouTuber does. Staying relevant is hard, and you do not want to build "a business of you".

Stocks, homes and business compared

• A stock is a bet on someone else's ability to keep building, and your day-to-day work has no effect on it.
• A home is another monthly liability, and a home that ties you to a job you dislike is a cost.
• A business is the one place you can trade time for long-term dollars, and even a loss teaches you something.
• She adds that stocks are a strong accelerator once you already have capital.

Common Mistakes

Mistake: Adding AI before basics

• What happened: a Florida commercial HVAC owner proudly described an AI integration. Codie called his business at 10:15 on a Friday morning, nobody answered, and she got a cute AI jingle then voicemail.
• Why it hurts: he could have lost a commercial client.
• Better approach: get an answering service first. Find where the money is and do that, then add the fun layer later.

Mistake: Trying to be all three

Owners who chase lifestyle, scale and exit together end up with no clear plan. Pick the one you want, know your score, and run a system on top of it.

Mistake: Trusting AI without stress testing

Because AI never says "I don't know", it will invent answers when it lacks the data, and you will not know. Ask for narrow data and where it comes from, and verify with a human who knows your industry.

Practical Application

Score yourself as an owner

Work out your owner type before making strategy choices. Codie says types differ, for example in pricing habits: artists and founders price 30% to 40% lower than closer types. Adjust your pricing and hiring around your blind spots.

Run a quarterly system review

• Do: put a review on the calendar every 90 days.
• Then: compare your numbers on pricing, customers, hiring, product, pitch and promotion against industry data.
• Why it works: it turns gut feel into evidence, so you learn why decisions worked or failed.

Do a P&L benchmark

Take one cost line, such as advertising or marketing, and compare its share of revenue to your industry average. If yours is far below and returns are positive, that is a concrete lever to test.

Fix the boring basics first

Before building AI features, check the simplest customer touchpoint works. Call your own business line during work hours. If nobody answers, fix that before adding anything clever.

Write your business type down

Decide if you are building lifestyle, scale or exit, and write it as a one-line goal. Codie says knowing what you want dictates the strategy.

Questions to Consider

• Where in your product or team are decisions made on feel, the way a cowboy would, instead of on a system that records why a choice worked or failed?
• If you called your own customer support line right now at a busy time, would a real person or a working fallback answer?
• Which of your current AI experiments is a "cute" extra layered on top of a basic step that is not yet working?
• Are you aiming for lifestyle, scale or exit with your current roadmap, and do your team's priorities all point at just one of those?

Bottom Line

Winging it feels good but it is why most small businesses do not make money. Codie Sanchez says to know what kind of owner you are, run the business on a repeatable system reviewed every 90 days, and treat AI as an accelerator of what you already have, not a shortcut.

Resources Mentioned

Tools & Products

People to Follow

Codie Sanchez

Founder and CEO of Contrarian Thinking and author of Own or Be Owned and Main Street Millionaire. She teaches people to buy and run small businesses, and reports working with about 15,000 owners.

Notable Quotes

"It's not that they're not working hard. They're not working on the right things." (Codie Sanchez)

"I think it is an accelerator for what is already inside of you one way or the other, which is actually a pretty dangerous game." (Codie Sanchez)

"Do you want to make money or do you want to riff?" (Codie Sanchez)