The Private Equity Playbook Most Small Business Owners Never Get Access To

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributor Rachel Warren talks with Codie Sanchez -- former Wall Street investor, New York Times best-selling author, and founder of Contrarian Thinking -- about the private equity frameworks she's now deploying for everyday small business owners. They discuss:

• Why most founders have accidentally built a job rather than a business
• What the $650 billion wave of PE capital moving into Main Street means for owners who are unprepared for acquisition.
• The five tools any business owner can implement immediately to start running their company the way private equity actually does.

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A full transcript is below.

This podcast was recorded on Oct. 11, 2026.

Codie Sanchez: In those 1,600 businesses we've analyzed, you want to know how many were overpriced? Zero. There was not a single one.

Rachel Warren: That was Codie Sanchez, former Wall Street investor and author of Own or Be Owned. On what she found after analyzing over 1,000 small businesses up close. I'm Motley Fool analyst Rachel Warren. Codie has spent years helping business owners diagnose and fix what's actually broken, and she has the data to show what separates the businesses that make real money from the ones that slowly grind their owners into the ground. In this conversation, we get into why the playbook designed for billion-dollar Silicon Valley start-ups is actively hurting small business owners. What private equity knows about running profitable companies that most founders never learn, and what the $650 billion wave of PE capital moving into Main Street means for the businesses getting acquired and the owners who are completely unprepared for it. We hope you enjoy.

Welcome back to Motley Fool Conversations. I'm Motley Fool analyst Rachel Warren. Today, I'm delighted to welcome my guest who is completely flipping the script on how ordinary Americans think about building wealth. Codie Sanchez is a former Wall Street investor, venture capital allocator, and the founder and CEO of Contrarian Thinking, one of the fastest-growing investment media and business advisory platforms in the world. Codie is already a New York Times bestselling author for her foundational work, Main Street Millionaire. But she's now back with her new book, Own or Be Owned. Build a business so good, it doesn't need you. That officially hits shelves on September 18th. Codie, welcome to the show.

Codie Sanchez: Thank you for having me.

Rachel Warren: I want to start by just diving right into your book. The core thesis of Own or Be Owned. It really introduces a sharp distinction between running a business and merely replacing a traditional salary with a more demanding job. So talk us through the core themes of your book what led you to write it.

Codie Sanchez: Well, we've now helped about 1,621 business owners over the course of at least a year grow their businesses more profitably. The reason that we did that was to try to figure out, why is it that we all feel like as business owners, it's really hard, it's usually not very profitable, and even when we're winning, there's all of this misery that goes around with business ownership. This is a thing that we've all heard many times. Like, I left my nine-to-five to work at 24/7.

What I've realized is that private equity, for instance, does not run businesses like this. They can have a portfolio of hundreds of businesses. Those businesses can be profitable, consistent. Why is that? The first reason you might think is because they have a lot of capital, and so they can just have a lot of money to burn, but they actually have to cash-flow the business. The reason I wrote the book is I was a private equity investor for years, and I just thought, man, normal small businesses don't have these same systems and processes. So instead, they run off of gut and what everybody else, all of their competitors, are doing, who also don't have a system or a process that is consistently run. The idea is, can we take private equity systems that have been proven to make businesses profitable and cash flowing for decades and apply them to normal small businesses without having to take part of their company when we do it? That is what Own or Be Owned is, is a system I wish I had back when I thought it was really miserable to run one business, too.

Rachel Warren: Yeah, talk us through some of those systems. You're speaking with a small business owner, their business is not profitable. They're trying to scale. What tends to be the issue there, and then what are the solutions that your system presents?

Codie Sanchez: There's nothing new under the sun, except that in small business, it's like common sense. Then, as I jokingly say, with my team, it works so well, we never do it again. I think in business, that is a lot of businesses. We have something called the 12 profit levers. This is a mixture of all the things I learned in private equity and running 1,600 small businesses through the system and realizing, wait a second, almost every business has one profit lever in your business where right now you don't realize it, but you're bleeding money or leaving money on the table. The first three, if I was to look at your business right now, I can almost guarantee one of these three things is holding you back from being as profitable as you want to be.

The first one is actually quite easy. You don't have to get another customer, you don't have to spend another dollar. It's just your pricing is probably wrong. This is not that sexy to talk about. Everybody wants to talk about leads and sales and offers. Fine. If you're an incredible salesperson, do that. But for most small businesses, they're underpriced 30 to 300%. In those 1,600 businesses we've analyzed, you want to know how many were overpriced? Zero. There was not a single one, and this is cross industry that was overpriced in their market, based on market-based pricing. First is your prices are probably too low, and you probably don't have enough high-ticket prices. No. 2 is in your business right now, you're probably selling to the wrong persona. You're probably selling to somebody who is like you as opposed to your richest potential customer. Number 3 is you probably are missing what we call a process for profits. You probably don't have a consistent way for both you and the business units to make profits every single month. If I can get inside your business, I'm going to probably beat up those three things first.

Rachel Warren: One of the things that struck me from your book was this idea that a highly successful quarter but also a deeply burned-out business owner can be identical on a standard P&L statement. If you’re an analyst, you’re an investor, you’re looking past that surface-level revenue; how can you see if an enterprise is actually suffering from this hidden owner dependency?

Codie Sanchez: In our world we say that to be the hero in your business is to be addicted to heroin, because if you are the single key man risk in your business and everything surrounds you, you have probably a too low paying job with a terrible boss you can't escape: yourself. The main thing you’re looking for if you’re an investor is: does this enterprise actually have a business owner that is only doing high-leverage tasks — the things that they should be uniquely focused on? Is there a management layer underneath it? So if something happens to the key man, the company can still operate. Is the management layer properly incentivized so that they stick around if the owner isn't there? Then on top of that, do they have really clear structure and dashboards so that the CEO to the management layer, so the team can see if they're executing properly?

I think one of the great lies we were told in business, and I felt prey to it many times was, you hire great people and you get out of their way. You've heard that before? Then you try it, and you're like that didn't work out. Why? Because you actually have to hire great people. You have to give them very clear vision. You have to incentive align them to execute on that vision, and then you have to track their performance pretty religiously. If there's anything wrong, continue to iterate on it. If you just hire great people and get out of their way, you're going to burn a bunch of money and lose a business.

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Rachel Warren: One of the things that struck me from your book was this idea that 65% of small businesses die within a decade because independent owners, as you say, are just kind of guessing in parallel. Talk us through that. And are there certain business models that tend to be more resilient than others? It's actually wild.

Codie Sanchez: The statistics on small business, first of all, if you're not doing that well in business right now, don't feel too bad because I don't think people realize that less than 1% of business owners ever hit $10 million in revenue, less than 10% ever hit a million. Again, somewhere between 65 and 90 depending on duration, don't make it at all. Everybody that you see on X and everywhere, who's talking about all the millions that they make, yeah, half the time, they're not even talking about revenue. They're certainly not talking about profit. They might be talking about GMV. We see this a lot. Like we do $200 million in revenue in our companies, and it's like, well, you're an affiliate website. Are you counting all of your affiliate revenue? Take it with a grain of salt. You're probably doing better than you think you are, and the people that you think are doing pretty well are probably not doing as well as they say they are, and that's OK. I would start there.

But first, I think it's less about industry. There are some industries I don't like. I don't like drop shipping. I don't want a boss with a platform that can change everything on me in a minute and knows all my inside details and can copy me instantly. I love businesses like restaurants: super high failure rate, really difficult inventory and labor management, tiny margins. I don't really like hotels, personal preference, but typically the margin's not big enough. You have 24/7 service, and it's like real estate masquerading, and it's a business. There's a couple that I don't like, but it doesn't mean you can't make millions or billions in them. I think the more important thing is become a really good operator, and then it doesn't matter. Insert business Y, business Z. They're actually the same thing. We jokingly call it special snowflakeitis, which is every business owner thinks, well, my industry is different. Well, my sector is different. Truth is, they all rhyme. They are all so similar. If you are a good operator, you'll learn how to dominate in almost any one of them.

Rachel Warren: This idea of bringing Wall Street capital systems down to main street industries, what are some of the specific operational frameworks that these private equity firms use that if you're a small business owner, you're thinking, I want to implement some of these immediately. What would that look like?

Codie Sanchez: I call them the top five. If you're going to run a profitable business like a private equity firm does, you're going to start with one thing, which is a CEO dashboard. If you don't have transparency into the main core numbers of your business on an almost immediate basis, it's like flying a plane without having a cockpit. We don't want to do that. Second, you're going to have a profit-and-loss statement that you analyze every single month. This sounds normal. You'd be shocked how many don't have it. It's not that hard to get this locked in. The third is you're going to have a growth strategy based on both your dashboard and your profit and loss statement. We believe in running 90-day sprints in businesses, so every business that we help is going to run on a 90-day sprint. I think humans like cycles, and we tend to work in these quarterly cycles, just like Wall Street.

Next, you're going to have a 13-week cash flow. Most businesses die because the owner gives up or because you run out of cash. The 13-week cash flow statement makes sure that we’re always tracking your cash, not just your profit and loss, because that might be a little behind. Then the last thing that I want all of our owners to have overall is, we call it our mission and vision dashboard, but basically, it's going to have what is the goal over the company overall? What are your quarterly goals? What is your one, three and five year goals? Then we're going to backtrack from that to everything that you run. Five things. That's really all you need to run a profitable business like a private equity firm.

Rachel Warren: You also write that private equity moved over $650 billion into small and mid-sized businesses last year, and I think it was 85% or so of those deals are going to companies with fewer than 500 employees. Talk us through that a little bit what those trends are looking like.

Codie Sanchez: Private equity has so much capital now; they're going to just continue going down market. There aren't enough big companies for them to buy with the amount of capital they have on hand. In this market right now, we're in a cycle where people have gotten slightly disenfranchised with venture capital. They want cash-flowing businesses, and so that is where capital is getting allocated. The problem that we're seeing from these private equity guys is they don't have access to that deal flow, which is one of the things that's nice about how we build is most companies in the U.S. if there's like 260 million working-age Americans, if you whittle it all the way down, something like less than 1% of business owners in that cohort have a business that is profitable, and less than 3% have a business that has any employees. Man, it's a small market.

The problem is, it's hyper-fragmented. They're everywhere. We know in finance, we love a fragmented market because that means you have a lot of arbitrage opportunities, but you got to find them. I think these guys are going to continue to go down market. They're going to continue to buy these smaller businesses. That's good and bad. But for a business owner, it's good because if your business is prepared for that, you can actually really benefit as being a platform company or an add on company and selling to private equity at good multiples. The problem, most business owners are not prepared to sell. So they get taken advantage of. They come with crazy workout agreements, intense milestones, you have to stick around in the business for three to five years. The private equity company doesn't run it as well as they did.

There's a lot of downside. I'd rather our owners come with a set data room, a profitable business, a business that looks really clean, and they can get a premium price for it and really good terms. Often when a business reaches maturity, the founder has to choose between the few options. I mean, maybe building for lifestyle, maybe continuing to scale the business, or sometimes just executing a clean sale of the company. What is the process there that an owner founder should be thinking through and as they are looking at their path forward, which tends to maximize their long-term compounding return of the business? I really actually think it's what do you want? There's no right or wrong answer. I have a friend, Dean Graziosi, who I've been friends with forever, that he always jokingly tells me. He's had so many friends of ours that have built big Silicon Valley-backed companies, and he always leans in and says, but I got the plane first. Because he ran a lifestyle business. He always optimized for cash flow, taking money out of the business, the business funding his lifestyle, and not waiting one day for a big exit.

Then I have my friend Amjad at Replit, who spent eight years basically making nothing until, finally, the company is now worth billions. He turned down a billion-dollar offer back when they had zero dollars in revenue. That worked for Amjad, and he's happy, and the other one works for Dean. Then I have friends in private equity that buy laundromats or car washes, and I've done this as well, purely to fix them up and flip them, which would be an exit business. I don't think any of those are right or wrong. By the way, there's billionaires that have done all of them. I don't think you should feel bad. The only problem is a lot of owners go, well, I want to scale lifestyle-exit business? You're like, well, you can't do that all at the same time. We believe you should pick one per year, and the whole team should know. You need to say this year, we are optimizing for profits in this business, and we're going to take a bunch of those profits, and we're going to stick them away. That's lifestyle. Or you need to say this year, it's market share. In my business, Contrarian thinking, it's not a profit year. We're launching this book. We launched two new tech tools. B Scout is still getting funded by us. It is a scale year intensely, and that's OK, because that's what we've anticipated.

Rachel Warren: We only have a few minutes left of our conversation, but I wonder, as you work with founders and small business owners, what are the key traits of quality leadership that you have identified through this work?

Codie Sanchez: If you want to be an incredible leader, one thing's true, which is you can't be a people pleaser. Especially in small businesses in the beginning, the people who you work with will be the people that are your friends. You're in the proverbial trenches together. You're going to have to realize after a while that you're not actually friends. You're there to lead them and to be a trusted source for them. That's first, you can't be a real leader and a people pleaser. Second, I believe your job as a leader is to sell a vision to them so big that they see their dream as bigger within your dream. If you can't do that, it'll be really hard to attract talent at good prices. Then maybe the third characteristic is you want to take really good care of your high performers and know what do they want? What is their path, and they should feel they have an open door to you. Most small business owners spend their time on their problem children. That is actually not what you want to do. You want to very quickly bring in those individuals. If they're not performing, let them go with love to the next place that they might perform and spend time on the winners in your business.

Rachel Warren: Ultimately, your book Own or Be Owned provides a very tactical roadmap to take back control of time and wealth. I wonder what are a few final takeaways for investors, small business owners who might be listening to this conversation, and they want to make that transition really become the architect of their own financial future.

Codie Sanchez: First of all, I think it has to be so damn hard and miserable. If you believe that business has to be misery, it turns out it will be. In fact, there will be moments where you will have your head in your hands in the dark in the middle of the night with no idea what to do next. But that should not be your base case for running a business every single day. My belief is, if you want a lot of money, you need to speak the language of money. If you want to make a lot of money in business, you need to speak the language of business. Owner beyond, the idea is, after you read it, you will have the tactical roadmap for how to build a business. This is not a feel-good inspirational book. This is a I actually want to change the way that I make money continuously, whether I'm an employee or an owner forever, and I want to be really dangerous at this game of business, and that is what I hope people take from it.

Rachel Warren: To our listeners and viewers, check out Codie's new book, Own or Be Owned, build a business so good it doesn't need you. Thank you so much, Codie. I'm so glad we got to speak today.

Codie Sanchez: Thanks for having me.

Rachel Warren: To see the full interview, go to our Motley Fool Conversations YouTube page. As always, people on the program may have interests in the stocks they talk about. The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool Hidden Gems Investing Ttam, I'm Rachel Warren. Thanks for listening. We'll see you next time.

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