Fax Machine Value-Add Test
Seek profitable businesses with obvious, inexpensive operating upgrades
- Difficulty
- Easy
- Time to result
- ~weeks to results
- Steps
- 4
- Confidence
- 95%
The fax machine is a visible proxy for an established company that has remained profitable despite limited technology, marketing, or systematisation. That neglect can signal readily accessible value-add: digitising scattered records, installing basic software, improving review collection, or using marketing channels the company has never tried. The buyer first verifies that the underlying business already works, then distinguishes cosmetic operational neglect from deeper structural weakness. After acquisition, records and workflows are systematised before growth experiments begin. The analogy is a dated house with hardwood hidden beneath bad carpet: the valuable base already exists, and improvement reveals rather than invents it. The test favours observable, inexpensive upgrades over projections that require the company to become an entirely different business.
Origin
Codie Sanchez says seeing a fax machine excites her because it often signals a profitable business that has underinvested in technology and marketing.
Core principles
- 01Neglect can preserve low-cost upside
- 02Current profitability matters before improvement
- 03Systematisation precedes optimisation
- 04Visible upgrades are safer than speculative reinvention
How to run it
- 1
Verify the working base
Confirm that customers, cash flow, and core service quality exist before crediting any upside.
Pro tip Value the business on current performance, not your improvement plan.
Watch out Operational neglect can coexist with structural decline.
- 2
Inventory visible neglect
Document paper records, obsolete tools, missing review systems, absent digital marketing, and manual workflows.
Pro tip Look for changes competitors already use successfully.
Watch out Do not confuse unfamiliar methods with broken methods.
- 3
Systematise the operation
Create reliable records and repeatable workflows before layering on new demand.
Pro tip Start with the information needed to measure future improvements.
Watch out Growth can magnify disorder if operations remain undocumented.
- 4
Apply measurable upgrades
Introduce low-cost technology or marketing changes one at a time and track the effect.
Pro tip Review generation is often a simple first experiment for local businesses.
Watch out Avoid expensive transformation programs unsupported by current economics.
In the wild
A profitable local service company keeps paper folders and has never asked customers for online reviews. After digitising records, the buyer installs a review-request workflow and measures changes in rankings and inbound enquiries.
→ The business adds a modern acquisition channel without changing its proven core service.
Common mistakes
Buying the upside projection
Potential improvements should not justify paying for profits the seller has never produced.
Marketing before systemising
Adding demand to a disorganised operation can worsen service and obscure results.
Is it for you?
Best for
Operators who can modernise established local businesses through systems, software, reviews, and basic marketing.
Not ideal for
Turnarounds where the underlying company is unprofitable or the apparent neglect reflects structural demand decline.
From the transcript
“I I always call it the fax machine test.”
“Every time I see a fax machine, I get all tingly because uh it basically means that they haven't spent much money on technology, probably…”
“They're kind of a pain when you first take them over because there's nothing systematized, right?”
From the episode
Codie Sanchez: 7 Boring Businesses You Can Buy Right Now To Replace Your Income
Codie Sanchez