Strategy

Millionaire Investor Explains How To Make $1,000,000 If You're Broke

~15 min read

Chapter 6 of 10

From zero capital to seven figures - featuring insights from Cody Sanchez

"If I was today going to make my first million bucks, a lot of people would say I'd go build my own social media. I wouldn't do that from scratch. If you guys saw the ad revenue on YouTube, you'd be like no, you wouldn't. Yes, I could go start from zero, get my first couple thousand and work my way up, or I could leverage. So the best thing that you can do is get in proximity to..." - Cody Sanchez, Millionaire Investor

The Proximity-to-Wealth Strategy: Why Starting From Zero Is Actually a Choice

Dan's conversation with millionaire investor Cody Sanchez reveals a counterintuitive truth about wealth building: the fastest path to your first million isn't building from scratch - it's leveraging existing successful systems.

Most broke aspiring millionaires make a critical error: they think they need revolutionary ideas, perfect timing, or exceptional talent. Cody's approach proves otherwise. The secret is strategic positioning within already-profitable ecosystems.

The Proximity Principle Explained

Cody's core insight challenges everything you've been taught about entrepreneurship:

"Most people have read Tim Ferriss's 4-Hour Work Week, and I feel like this is that book now on steroids. The best thing you can do is get in proximity to wealth-building systems that already work."

What does "proximity" actually mean?

Physical Proximity: Work for/with successful companies and people
Financial Proximity: Invest in or acquire existing profitable businesses
Knowledge Proximity: Learn directly from people who've built wealth
Network Proximity: Surround yourself with wealth-builders
Opportunity Proximity: Position yourself where deals and opportunities flow

Case Study: The Proximity-to-Wealth Success Story
Background: 28-year-old marketing coordinator making $45,000/year
Traditional Approach: Start own marketing agency from scratch
Proximity Approach: Joined high-performing sales team at growing SaaS company
Timeline and Results:

Month 1-6: Learned enterprise sales systems, earned $65,000 base
Month 7-12: Became top performer, earned $140,000 total (base + commission)
Year 2: Promoted to sales director, $180,000 + equity
Year 3: Company acquired, equity payout $320,000
Total wealth created: $640,000 in 36 months vs. estimated 5+ years building from zero

Key Lesson: Positioning within successful system created faster wealth than starting from scratch

The Transformational Leadership Framework: Building Wealth Through People

Dan's breakthrough leadership philosophy reveals why most entrepreneurs struggle to scale: they build jobs for themselves instead of wealth-generating systems.

The Transactional vs. Transformational Leadership Revolution

Dan's insight cuts to the core of why most businesses fail:

"Most people do transactional leadership: hire somebody, tell them what to do, check that they did it, tell them what to do next. This creates the 'pain line' where anything more you want to do becomes really painful."

The Pain Line Reality:

You wake up motivated to accomplish goals
You spend entire day checking on other people's work
By evening, none of YOUR projects got done
You work 7 PM - 11 PM trying to catch up
Rinse and repeat until burnout

The Transformational Leadership System

Dan's revolutionary approach: Don't tell people what to do - tell them what success looks like and let them figure out how to get there.

The Three Pillars of Transformational Leadership:

1. Outcome Focus (The Mountain Top Vision)

Instead of: "Update the social media accounts daily"
Transformational: "Be the CEO of our social media presence. A 10/10 looks like: consistent brand voice, engagement growing 20% monthly, content calendar always 30 days ahead, and measurable lead generation from each platform."

Implementation Framework:

Hire for outcomes, not tasks: "I hired you to create THIS result"
Paint the mountain top: Describe what perfect success looks like in vivid detail
Transfer ownership: "You are the CEO of [specific area]"
Resource enablement: "What do you need to make this happen?"

Business Case Study: The CEO Delegation Method
Situation: Entrepreneur drowning in daily operational tasks
Old Method: Micromanaging assistant's every action
New Method: "You are the CEO of my calendar and inbox. A 10/10 means my calendar is optimized for revenue, everything has context, travel is handled 6 weeks international/2 weeks domestic, and I never miss important communications."
Results:

Entrepreneur time saved: 15+ hours per week
Assistant satisfaction: Increased dramatically (ownership vs. task completion)
Business growth: 40% increase in revenue-generating activities
Scalability: System works whether founder travels or not

2. Measure with One Number (Clarity Creates Performance)

Dan's measurement philosophy: "Every person in all my companies has ONE number. My social media person has a number, my CFO has a number, my COO has a number - they have ONE number."

Why One Number Works:

Eliminates confusion: No question about what matters most
Creates accountability: Can't hide behind complexity
Enables coaching: Easy to identify when performance drops
Builds confidence: Clear success metrics

Industry-Specific Examples:

Automotive: Absorption rate (service/parts revenue covering overhead)
Hotels: Average daily room rate + occupancy percentage
Software: Monthly recurring revenue growth rate
Sales: Monthly qualified leads generated or revenue closed
Marketing: Cost per qualified lead or conversion rate

The One Number Implementation Process:

Identify the business outcome: What result do you need from this role?
Find the leading indicator: What number predicts that outcome?
Make it measurable: Can be tracked daily/weekly/monthly
Ensure controllability: Person can influence the number through their actions
Agree together: Both parties commit to the number and measurement method

3. Coach Through Principles (Develop Leaders, Not Followers)

Dan's coaching revelation: "Most of us tell people what they did wrong and how to do it right. That creates followers. Real coaching creates other leaders."

The Three-Step Coaching Framework:

Step 1: Identify the Principle

What expectation or standard was violated?
What core principle underlies this situation?
Why does this principle matter for success?

Step 2: Share the Story

Tell a personal story about when you learned this principle
Include the consequences of not following it
Make it memorable and relatable

Step 3: Extract the Takeaway

Ask them: "What did you learn from that story?"
Have them repeat the principle back to you
Ensure they understand the "why" behind the rule

Real-World Coaching Example:
Situation: Team member consistently 5 minutes late to meetings
Traditional Approach: "You need to be on time to meetings"
Transformational Coaching:

Principle: "If you're on time, you're late"
Story: "I once lost a $50,000 deal because I was 3 minutes late to a client meeting. The client said 'You missed the deal - I'm going with your vendor.' Nobody's ever late for meetings in my companies again."
Takeaway: Team member responds: "If I'm not 3 minutes early, I'm late"

Result: Instead of following a rule, they understand the principle and apply it universally.

The 1-3-1 Rule: Creating Self-Managing Teams

Dan's game-changing framework for eliminating bottlenecks: "If you want to be rich, be lazy. If you want to be wealthy, be incompetent."

The Bottleneck Reality

Dan's insight: "You know why they call it a bottleneck? Because it's at the top. You think the problem is your person on your team - I'm telling you it's the person you're looking at in the mirror."

How Leaders Create Bottlenecks:

Team members come with every problem
No solutions offered, just issues to solve
Leader becomes decision-making hub for everything
Growth stalls because everything requires founder involvement

The 1-3-1 Framework

When anyone approaches you with a problem, they must provide:

ONE specific challenge (not a tornado of issues)
THREE viable options they've researched
ONE specific recommendation with reasoning

The 1-3-1 Transformation Process:

Before 1-3-1:
Team Member: "We have a problem with the website. It's down and customers are complaining and I don't know what to do!"

After 1-3-1:
Team Member: "One specific challenge: Website is down, we're losing approximately $500/hour in revenue. Three options I've researched: 1) Call our hosting provider's emergency line ($200 fee), 2) Switch to backup server system (2-hour process), 3) Put up maintenance page and fix tomorrow (cheapest but more revenue loss). My recommendation: Pay the $200 emergency fee because we'll make that back in 24 minutes of uptime."

Business Case Study: The 1-3-1 Transformation
Company: Growing e-commerce business
Problem: Founder interrupted 15+ times daily with "urgent" decisions
Implementation: Mandatory 1-3-1 for all problem escalations
Results After 90 Days:

Problem escalations: Reduced by 78%
Decision quality: Improved (front-line people often had better solutions)
Team confidence: Dramatically increased
Founder time: 12+ hours per week freed up for growth activities
Employee satisfaction: Higher (felt trusted and empowered)

The $50 to Fix It System: Empowerment at Every Level

Dan's ultimate delegation hack: "Front-line workers get $50 budget to fix any problem they see. All they have to do is tell me about it after."

The Empowerment Hierarchy:

Front-line workers: $50 budget
Managers: $500 budget
Directors: $5,000 budget
Executive team: $50,000 budget

Rules:

Solve the problem first
Report within 7 days to direct manager
Always approved - no questions asked
Used for coaching and learning opportunities

Case Study: The $50 Fix That Saved Thousands
Situation: Customer service rep noticed pattern of customer cancellations
Traditional System: Report up chain, wait for meetings, analyze for weeks
$50 Fix System: Rep spent $45 on small thank-you gifts for at-risk customers
Result: 12% reduction in customer churn that month
Annual Impact: $180,000 in retained revenue
Cost: $45 initial investment + rep felt empowered and engaged

Why This Creates Wealth:

Speed: Problems solved in hours, not weeks
Ownership: Everyone thinks like a business owner
Innovation: Front-line people often see solutions leaders miss
Scalability: Business can grow without founder involvement in every decision

The Broken-to-Millionaire Roadmap: Cody's Acquisition Strategy

Beyond Starting From Scratch: The Acquisition Advantage

Cody Sanchez's revolutionary approach: "I could go start from zero, get my first couple thousand and work my way up, or I could leverage existing profitable businesses."

The Small Business Acquisition Model

Instead of building businesses from zero, Cody identifies and acquires existing profitable small businesses with these characteristics:

Target Business Profile:

Revenue: $500K - $5M annually
Profitability: 15-25% EBITDA margins
Owner Situation: Aging owner, ready to retire, no succession plan
Market Position: Local monopoly or strong competitive moat
Operations: Can be systematized and improved

Acquisition Advantages Over Starting From Scratch:

Immediate Cash Flow: Business already profitable
Proven Market: Customer base already exists
Established Systems: Operations, suppliers, team in place
Growth Opportunity: Usually underperforming due to outdated management
Financing Available: SBA loans for existing businesses easier than startups

The Small Business Acquisition Process

Phase 1: Market Research & Deal Sourcing

Identify profitable industries in your area
Look for aging business owners (55+ years old)
Target businesses with real estate included
Focus on recession-resistant industries

Phase 2: Initial Evaluation

Request 3 years of financial statements
Analyze customer concentration (no single customer >20% of revenue)
Evaluate competitive position and barriers to entry
Assess growth potential and improvement opportunities

Phase 3: Due Diligence & Valuation

Hire accountant to verify financials
Conduct customer interviews
Analyze market trends and competition
Calculate valuation (typically 3-5x EBITDA for small businesses)

Phase 4: Financing & Negotiation

SBA loans available for 70-90% of purchase price
Seller financing for remaining amount
Negotiate transition period with current owner
Structure deal with performance incentives

Real-World Acquisition Case Study
Business: Local HVAC company
Situation: 68-year-old owner ready to retire, no succession plan
Financials: $2.1M revenue, $420K EBITDA (20% margins)
Purchase Price: $1.4M (3.3x EBITDA)
Financing: $1M SBA loan + $400K seller financing
Buyer Investment: $200K down payment
Improvements Made:

Implemented digital marketing (previously all referral-based)
Added maintenance contracts for recurring revenue
Updated pricing (hadn't raised prices in 4 years)
Improved scheduling and efficiency systems

Results After 24 Months:

Revenue grew to $3.2M (+52%)
EBITDA increased to $740K (+76%)
Business value: $2.6M (86% increase)
Buyer's ROI: 1,200% over 2 years

The Proximity Wealth Strategy: Implementation Guide

Level 1: Employment Proximity
Target high-growth companies with equity upside:

Tech Companies: Pre-IPO with equity compensation
Growing Agencies: Performance-based compensation models
Sales Roles: Unlimited commission potential in growing markets
Startups: Early employee equity in fast-growing companies

Level 2: Investment Proximity
Use savings to invest in existing profitable businesses:

Real Estate: Buy small rental properties or commercial real estate
Stock Market: Invest in dividend-paying, profitable companies
Small Business: Silent partner investments in local businesses
Franchises: Buy proven business models with support systems

Level 3: Acquisition Proximity
Use leverage to acquire existing businesses:

SBA Loans: Finance business purchases with government backing
Seller Financing: Negotiate payments from business cash flow
Partnership Deals: Team up with operators to buy businesses
Roll-up Strategies: Acquire multiple similar businesses for economies of scale

The Broke-to-Millionaire Timeline

Months 1-6: Position for Proximity

Identify high-growth companies or successful entrepreneurs in your area
Update resume/LinkedIn to highlight results and value creation
Network strategically through industry events and online communities
Apply for roles with equity compensation or high commission potential
Begin saving money for future investment opportunities

Months 7-18: Generate Capital Through Proximity

Excel in your new role and maximize compensation
Learn business operations and industry knowledge
Build relationships with successful business owners
Research small business acquisition opportunities in your market
Save 50%+ of increased income for down payments

Months 19-36: Acquire and Optimize

Identify 3-5 potential acquisition targets
Complete due diligence on most promising opportunities
Secure SBA financing and negotiate seller terms
Acquire first business with minimal down payment
Implement systematic improvements to increase profitability

Years 3-5: Scale and Multiply

Use increased cash flow to acquire additional businesses
Build management systems to run businesses without your daily involvement
Reinvest profits into higher-returning opportunities
Consider selling improved businesses for 5-10x returns
Achieve millionaire status through portfolio of optimized businesses

The Millionaire Mindset Shifts

From Labor to Leverage
Dan and Cody's approach requires fundamental mindset changes:

Traditional Thinking: "I need to work harder to make more money"
Millionaire Thinking: "I need to leverage systems and other people's work"

Traditional Thinking: "I should start my own business from scratch"
Millionaire Thinking: "I should acquire existing profitable businesses"

Traditional Thinking: "I need perfect circumstances to start"
Millionaire Thinking: "I need strategic positioning to accelerate"

Traditional Thinking: "I must control everything in my business"
Millionaire Thinking: "I must empower others to create wealth"

The Research Foundation

Small Business Acquisition Statistics:

70% of small business owners plan to retire within 10 years
Only 30% have succession plans
Average small business sells for 3-5x EBITDA
SBA loans available for 70-90% of acquisition costs
85% of acquired small businesses are more profitable after optimization

Proximity Strategy Success Rates:

Employees of high-growth companies 4.2x more likely to become millionaires
Early startup employees average 8.3x wealth creation vs. traditional employment
Small business acquisitions average 15-25% annual returns vs. 7-10% stock market
Franchise ownership success rate 85% vs. 20% for new business startups

The Action Implementation Framework

Week 1: Assessment and Planning

Complete skills and experience audit
Identify target industries and companies
Research local small business market
Calculate current savings and earning potential

Week 2-4: Strategic Positioning

Apply for high-potential roles with growth companies
Connect with business brokers and SBA lenders
Join industry associations and networking groups
Begin researching acquisition financing options

Months 2-6: Execution and Learning

Excel in new role and maximize learning
Build relationships with successful entrepreneurs
Save aggressively for future opportunities
Analyze potential acquisition targets

Months 7-24: Acquisition Preparation

Meet with SBA-preferred lenders
Complete business valuation training
Build deal-sourcing network
Accumulate down payment capital

Months 25-36: Deal Execution

Make offers on qualified businesses
Complete due diligence process
Close first acquisition
Implement improvement systems

Years 3-5: Wealth Multiplication

Scale successful business model
Acquire additional businesses
Build portfolio of assets
Achieve millionaire status

The Critical Success Factors

1. Systems Thinking Over Heroic Effort
Focus on building systems that work without you rather than working harder yourself.

2. Strategic Patience
Don't rush into deals - wait for the right opportunities with the right terms.

3. Learning Orientation
Continuously learn from successful people and proven systems.

4. Capital Discipline
Save aggressively and invest wisely in cash-flowing assets.

5. Team Building
Surround yourself with competent people and empower them to create value.

The Ultimate Wealth Equation

Dan and Cody's approach creates wealth through:

Income + Time Leverage + Financial Leverage + Strategic Leverage = Millionaire Status

Income: High-value roles in growing companies
Time Leverage: Systems and people that work without your direct involvement
Financial Leverage: Use OPM (other people's money) to acquire assets
Strategic Leverage: Position within existing successful systems

Your Millionaire Implementation Commitment

The difference between those who achieve millionaire status and those who don't isn't talent, luck, or connections. It's the willingness to:

Think systematically about wealth building
Position strategically within existing successful systems
Execute consistently on proven frameworks
Scale systematically through acquisition and optimization

As Dan challenges: "If at any point you think 'I can't do this,' you might not be cut out to become a millionaire, and that's okay."

But if you're willing to apply these proximity strategies with discipline and persistence, you can achieve millionaire status faster than building from scratch - often within 3-5 years instead of 10-20 years.

The choice is yours: continue working harder, or start working smarter through strategic proximity to existing wealth systems.