Building a Business That Outlasts You (David Grau Sr.)

Summary

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Escaping the Drift with John Gafford

Episode: Building a Business That Outlasts You
Guest: David Grau Sr.
Date: February 17, 2026

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Episode Overview

This episode dives into the critical mindset shifts and actionable strategies required to build a small business that survives—and thrives—beyond its founder. John Gafford interviews David Grau Sr., author, consultant, and expert on business succession planning, who shares hard-earned lessons from helping business owners escape the “founder’s treadmill.” The conversation is candid, insightful, and loaded with specific advice for entrepreneurs wanting their companies to grow, become scalable, and eventually outlast them.

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Key Discussion Points & Insights

1. From Sole Proprietor to Consultant: David's Journey

• David's Background: Started as an English major, gravitated to law for the writing aspect, then pivoted into securities regulation, before running his own law and consulting practice.
  • Quote: “I was a sole proprietorship, which is kind of my dream come true. My dad and my grandfather, they were all sole proprietors in their life.” (03:35)
• Transition to Consulting: Developed a consulting business for financial advisors, driven by his love for teaching and helping other sole proprietors build lasting businesses.

2. The Founder’s Treadmill & Its Trap

• The Core Problem: Most small businesses revolve entirely around the founder, turning what should be a business into a glorified job.
  • Quote: “They make themselves the center of the business… You’re the smartest guy or the smartest lady in the room, and your whole day is made up of, ‘Hey boss, just one quick question.’” —David (06:13)
• Crisis Point: Around year 6–8, businesses hit a wall at ~$1M in revenue. The founder becomes the bottleneck, with no more hours or energy to give.
  • Quote: “You just don’t have any more hours in the day. All the people you’ve hired have been trained to come to you with every problem.” (07:42)
• Analogy: “If you want to see where you’re at [in your business], go out of town for three months. If your business is crumbled, you don’t own a business, you have a job.” —John (08:13)

3. Letting Go and Delegating Authority

• The Lie of Irreplaceability: Founders often convince themselves that nobody can do their role as well, but in reality, 80% effectiveness from someone else is likely more than enough.
  • Quote: “The extra 20% is just ego anyway. If they're doing it at my perceived 80% as good, they're probably 120% better than I was anyway.” —John (10:43)
• Personal Experience: David shares how a consultant’s intervention forced him to realize he was choking his own business’s growth by refusing to hire specialists for key roles.
  • Memorable Moment: “I was just glowing. I felt so good about it. And [the consultant] finally walked over and just kind of slammed the door and he said, would you just stop it? This isn’t a law practice. This is a business. And it can’t go any further than you if you’re going to keep doing that.” (11:14)
• The Transformation: As David delegated responsibilities (marketing, sales, finance, IT), the business grew faster and was stronger for it.
  • Quote: "I learned that as I did less and I made fewer decisions and I delegated more, the business actually got stronger and grew faster. I wouldn’t have believed it if I hadn’t seen it.” (14:15)

4. Building with the End in Mind: Succession and Longevity

• Vision-Driven Exit Planning: Entrepreneurs should design their business with an eye on the eventual exit or succession, not just daily operations.
  • Guiding Question: “How do you want your story to end? What’s the last day on the job look like for you?” —David (15:39)
• Internal Succession: Many owners would rather transition leadership gradually, mentoring key employees and allowing them to buy into the business.
  • Quote: “Let’s give those folks the opportunity, if they want it and if they’re good enough, to make an investment in the business, to buy into ownership… and let’s create an internal succession plan.” (16:44)
• Financial Argument: Staying and growing the business with a succession plan typically yields far greater wealth than a quick exit.
  • Quote: “The money internally by building it and staying far exceeds that lump sum check.” (18:42)

5. Investability: Making Your Business Attractive to Successors

• Why “You-Centric” Businesses Don’t Sell: If your business can’t function or grow without you, it’s not investable.
  • Quote: “Nobody invests in the treadmill model. It’s just you. If something happens to you, what happens to the business? It doesn’t last very long.” (20:47)
• Building Enterprise Value: Establish a clear ownership structure (S Corp, LLC), generate profits, appraise and sell shares, and lay the groundwork for longevity.

6. Talent: Recruiting, Retaining, and Inspiring

• Equity as an Incentive: To attract and keep elite talent, offer equity stakes—not just higher wages.
  • Advice: “Give them an opportunity to have more than just a paycheck… create an ownership track.” (27:25)
• A Purpose-Driven Approach: A well-articulated mission and vision persuades top talent to join and remain with your company; purpose matters, especially to younger generations.
  • Quote: “Sit down and write out your mission, vision, purpose statement... create a stewardship plan and share that with every person you interview.” (29:08)
• Getting Rid of Underperformers: Don’t fall into the trap of keeping C- and D-level players for convenience; make hard choices to protect your business’s future.

7. Culture and the Inflection Point: Bootstrapping to Real Business

• Culture as a Differentiator: Especially in commoditized industries, culture crafted by leadership is the true competitive advantage.
• Indicators of a “Real” Business:
  • The business thrives in your absence.
  • Growth is predictable and purposeful.
  • Stakeholder groups (employees, clients, suppliers, community) are all uplifted.
  • Quote: "When you start to own a real business... it starts to work for you. Take a vacation... watch what happens. The team you left behind tends to get better and stronger. That’s magical.” (33:21)

8. The Role of AI in Small Business

• Short-Term Impact: Professional services clients currently see AI as only a light operational aid; human-to-human interaction will remain crucial for years.
  • Quote: “Our small business clients want to sit down and talk to us face to face, eye to eye, small business owner to small business owner... we don’t see it [as transformative] in the next 10 to 20 years.” (37:44)

9. First Key Hires for Founders

• Bookkeeper First: The most overlooked but vital hire is bookkeeping/accounting.
  • Quote: “Your time is worth, you know, 500 to $1,000 an hour. Bookkeeping, you don’t need to get good at bookkeeping. Somebody else is good at bookkeeping.” (39:00)
• Then Marketing: Hire a competent marketing director to drive growth and stop relying solely on founder-led sales and marketing.

10. Scaling Correctly: Foundation Before Growth

• Foundational Elements: Most early-stage businesses need at least six months of focused work on organization, structure, and delegation before attempting aggressive scaling.
  • Quote: “If you’re too successful, you don’t have the staff, you don’t have the talent… you’re going to have to work twice as hard to make it all work, and that’s not scale.” (42:19)

11. Learning the Language of Business

• Continuous Learning: Most founders don’t know what they don’t know. It’s vital to educate themselves—via books, mastermind groups, or peer study—on leadership, delegation, and organizational design.
  • Books: John recommends "The Personal MBA" by Josh Kaufman. David prefers real-world learning and peer groups (study groups or masterminds).
  • Quote: “Create a two way conversation... you don’t have to completely reinvent the wheel here. You have to realize what you don’t know and then go figure out how to fill all those gaps.” (47:41)

12. Remote Work vs. In-Person Magic

• Balance Needed: Virtual assistants work well for menial and back-office functions, but there is unique value in in-person interaction—especially for growth, innovation, and organizational “magic.”
  • Quote: “The more people I have in the building, that’s where the magic happens.” —John (49:58)
  • David’s Take: Video meetings are here to stay, but most high-value clients and key staff want, and need, periodic in-person engagement. (51:00)

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Notable Quotes & Memorable Moments

• “You just don’t have any more hours in the day… all the people you’ve hired have been trained to come to you with every problem.” —David Grau Sr. (07:42)
• “If you want to see where you’re at… go out of town for three months. If your business is crumbled, you don’t own a business, you have a job.” —John Gafford (08:13)
• “[Consultant said] Would you just stop it? This isn’t a law practice. This is a business. And it can’t go any further than you if you’re going to keep doing that.” —David Grau Sr. (11:14)
• “You only grow like 7, 8% a year. Why don’t you hire a marketing department to take care of those kind of things for you?... when they follow that advice, the growth rates just about to double and they become predictable.” —David Grau Sr. (40:35)
• “The only thing in the world that compresses time is information. We don't have time machines yet.” —John Gafford (48:40)
• "When you start to own a real business … it starts to work for you. Take a vacation ... the team you left behind tends to get better and stronger. That’s magical.” —David Grau Sr. (33:21)

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Timestamps for Major Segments

| Timestamp | Segment & Topics Discussed | |-----------|---------------------------| | 02:57 | David’s journey: Law to consulting small businesses | | 06:13 | The biggest mistake: Making the founder the center | | 07:42 | Crisis point in founder-led businesses | | 09:05 | Real estate & solopreneur insights from John | | 11:14 | The moment of truth: “Stop it, this is a business!” | | 14:02 | After delegating: The impact of hiring real specialists | | 15:39 | Strategic exits: Building with the end in mind | | 18:42 | Math of internal succession vs. exit | | 20:47 | Building investable, equity-centric businesses | | 23:47 | Overcoming the “no one will buy my business” myth | | 27:25 | Recruiting and retaining A-player talent | | 29:08 | The importance of mission, vision, and purpose | | 33:21 | Identifying the shift to a “real business” | | 35:26 | The role of AI in professional services | | 39:00 | The first key hire: Bookkeeper | | 40:35 | Second key hire: Marketing director, challenge of letting go | | 42:19 | Laying the foundation before scaling operations | | 44:30 | Getting founders to “speak the language of business” | | 47:03 | Book and peer group recommendations | | 49:58 | Reconciling remote and in-person work for company culture | | 51:56 | Where to find David Grau Sr. and his resources |

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Final Takeaways

• You are likely your business’s biggest bottleneck.
• Growing a business that outlasts you requires a shift—delegate, build real structure, and plan succession early.
• Purpose, culture, and equity are powerful tools for attracting and retaining talent.
• Don’t wait until a crisis to scale, delegate, or devise a succession plan; start with the end in mind.
• Keep learning: Mastermind groups, books, and peer study compress the time it takes to level up.
• In a world of increasing automation, relationships and culture provide durable advantages.

For more: Visit David Grau Sr.’s website for blogs, his books, a newsletter, and videos.

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This episode delivers a compelling blueprint for entrepreneurs hoping to escape the founder’s trap and build companies that thrive and endure.

Transcript

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[Podcast Host John Gafford]

And now, Escaping the Drift, the show designed to get you from where you are to where you want to be. I'm John Gafford and I have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness. So stop drifting along, Escape the Drift and it's time to start right now. Back again. Back again for another episode of like it says in the Opening, the podcast that gets you from where you are to where you want to go. And today, beaming into the studio from Lexington, Kentucky, I have an awesome guest. If you are somebody that is a business builder, you're trying to build a business, you're thinking about building a business. This guy has got you cold. He is the founder and CEO of Grouse Esquire Law Group, a national healthcare law firm representing physicians and healthcare founders. That was his previous life and then he kind of fell in love with becoming a consultant for small business and teaching you how to build a business that is going to last or outlast you anyway. He has published many books including the Stewardship Advantage, Building with the end in mind and Acquiring your future through a succession plan. We are lucky to have him and can't wait to learn from him. Ladies and gentlemen, welcome to the program. This is David Grouse, senior. David, how are you?

[Guest David Grouse Sr.]

Pleasure. Thank you for having me. What a great way to end the week.

[Podcast Host John Gafford]

Yeah, a great way to end the week. So, yeah, I've got y' all hyped up now. So obviously you were early in life an attorney by trade. That's what you did. Tell me about the end of that career and pivoting into the new one.

[Guest David Grouse Sr.]

Well, so came out of college in the Midwest, and I was an English major. And from day one I wanted to write books, but, you know, we're not all Stephen King. And I realized I also needed to make a living. And so I chose a profession that I thought would give me a chance to do a lot of writing. And I went to law school. And so I ended up in the securities trade. I was a securities regulator right out of law school. I graduated past the bar and eventually opened up my own securities law practice. And not a lot of writing, certainly nothing creative in that line of work. So I got into law in. And I made a good living, started my own small business. And I was a sole proprietorship, which is kind of my dream come true. My dad and my grandfather, they were all sole proprietors in their life. So I had to do it. But lo and behold, I kind of stumbled into a consulting business where I worked with independent financial advisors. Think the advisors under Charles Schwab, Fidelity, TD Ameritrade, or Ameriprise. But I started working with them and really enjoyed the work. And obviously my securities law background parlayed into a really good meeting of the minds. And so what I did is I started a consulting business. When we opened it late 1990s, I thought of it as eharmony for financial advisors. We weren't going to be the company that matched them up using this newfangled thing called Internet. And, and, and that worked well enough, but I liked the consulting. I, I came to love teaching. And so during that career, I got up on stage a thousand times. I actually tracked them, and I got to teach what it was I did to the people in that audience. And most of the people I talked to, they were sole proprietors too. And if they weren't, they thought like sole proprietors. And so what I did is I learned how to help them think long term. So why build a business that dies with you? Why build a small business that statistically will last 10 years and then fade out of existence? Let's build it right, let's build it to last, and let's take care of everybody that that small business touches. And so Little by little over the last 30 years, I became an expert at building and rescuing small businesses. And it's what I love to do.

[Podcast Host John Gafford]

So when you walk into a. Let's say you walk into small business. And. And to me, I'm of the opinion that all businesses kind of run the same. The fundamentals are the same. And, yeah, you know, everything is kind of the same. Just the widgets change. Right. Just whatever's going out the door or product or service is the only thing really, that changes. But, you know, cost of goods and KPIs and all of those things kind of are the same no matter what you're running. So what is. If you had to say, what's the overwhelming number one thing that most people in small business? What's the biggest mistake they make?

[Guest David Grouse Sr.]

Well, and so. And this is. I'm working on my newest book right now to answer that question. The book is called the Founder's Treadmill. And so the. You know, the first thing that most, I think, small businesses stumble over is they make themselves the center of the business and. Right. I mean, it gives you total control. It. It feels wonderful. You're the smartest guy or the smartest lady in the room, and your whole day is made up of. Hey, boss, just one quick question. And you do that all week long.

[Podcast Host John Gafford]

I'm sorry to cut you off. I feel like I've gone from a podcast into a therapy session right now. You are. Yeah, keep going. This is gonna be. If you listen to this, I'm turning this into a therapy session right now. I'm stealing this man's time, which is very expensive. Go ahead.

[Guest David Grouse Sr.]

Literally, that's. That is where my work starts. And so I don't style myself as a coach. I'm a consultant and I'm a teacher, and I love that. But trying to get a sole proprietor who feels great about their work and loves going into that office every day to say yes, but there might actually have been a better way, because let's say that you're super successful, your business grows really fast. In about year six or seven or eight, you hit in the neighborhood of a million dollars gross. That's usually where you run into kind of a wall. You just don't have any more hours in the day. There isn't any more energy. And all the people you've hired have been trained to come to you with every problem, and all of a sudden you find out, hey, maybe I don't own a business. I think I own a job of a job.

[Podcast Host John Gafford]

Yeah.

[Guest David Grouse Sr.]

Overhead. I mean, that's that's, that's not a good place to end up, you know, seven or eight years down the road.

[Podcast Host John Gafford]

So one of my good friends, one of my good friends, Kent Clothey, always said, if you want to really see where you're at, go out of town. Go out of town for three months, come back, and if your business is completely crumbled, you don't own a business, you have a job.

[Guest David Grouse Sr.]

Yep. I mean, and ultimately, you know, while you're there, you know, you're the bottleneck. And nobody wants to admit that or say that because for a long time there was no small business without you. And what you did and how you did it. I mean, it's not like you opened it up and jumped on that treadmill and made a mistake. No, that's how you start a small business. The key is you have to learn when to get off and maybe understand why. You know, if we can get you to recognize the problem and learn the why, then how is easy. And so that's where I start.

[Podcast Host John Gafford]

Well, I've got, see with us, just to let you know, a little bit of background on me, if you don't know, but we own a very large luxury real estate brokerage in Las Vegas. We own a very large mortgage company, we own a large title company. And you know, for us, you know, we've like the real estate company itself has 585 agents that work here. And the issue that I've always seen it within, especially the real estate industry, is the brokerage business in itself is kind of a commodity. You know what I mean? It's, it's not, it's soup cans on a shelf. It's just this one might cost that much, this one might cost this much. But for the most part of it, for the, for the most, we all kind of do the same thing. So what makes one brokerage different from the other? And this is the problem I have in reconciling this is, is the culture that's created by the leadership within it. Which is why you have that like, man, I can't get out. I can't stop being that person that is the figurehead of the company. I can't stop being the day to day available to everybody. So you're on that trap side, that side of that coin. Right. But here's my flip side. I have come to realize in some of this that being a solopreneur, if you will, I have a partner. But being a solopreneur, you always say, I can't replace myself in this One position. Because nobody. The lie we tell ourselves is nobody will ever do it as good as me. Nobody will ever be me in that position. And what I've come to understand over years of struggling with exactly what we're talking about is if I can just get somebody that can do the job 80% as good as I can, that's a win. And here's why. Because the extra 20% is just ego anyway. It's not real. So if they're doing it at my perceived 80% as good, they're probably 120% better than I was anyway. They're probably better at it than I was.

[Guest David Grouse Sr.]

Yeah.

[Podcast Host John Gafford]

So how do I reconcile those two things?

[Guest David Grouse Sr.]

I remember, you know, in my second small business, I was sitting there one day and I. I brought in an outside consultant to, you know, kind of help me see around the next corner, because I was having. I was out of hours and I was out of energy. And so, you know, I had a law degree. And, you know, they don't teach you one minute of how to run a business in law school. And so I sat down with a consultant, and he followed me around and watched what I was doing for a long time. And finally, you know, I was super busy one day, and I was doing the. Hey, boss, just one quick question. We couldn't get through a paragraph of anything in our discussion without somebody walking in for me to solve the problem. And again, I was just glowing. I felt so good about it. And he finally walked over and just kind of slammed the door, and he said, would you just stop it? This isn't a law practice. This is a business. And it can't go any further than you if you're going to keep doing that. And I was kind of stunned. And I thought, wait a minute. I'm solving all the problems. Everybody needs me. And that was the point at which I realized I was on the founder's treadmill and I had to figure out a way to get off. But like any good small business owner and entrepreneur, I pushed back initially and I said, well, wait a minute. I mean, why should we go hire ahead of marketing? I'm passionate. I know this stuff called I get up on stage and I can sell it. I can talk to the audience. I can get them to call us and sign up. We don't need a head of marketing. I'm head of marketing, who's going to run the company. I'm like, I'm going to run the company as head of marketing and a CEO.

[Podcast Host John Gafford]

And he goes, and CEO and CFO.

[Guest David Grouse Sr.]

And cmo, you're going to run out of lifetime. And so what we did next, though, and I still remember this, and I tell this story now, 25 years later, we went out and we hired a head of marketing. First time I'd ever done that, right? And this lady came in and she had a degree in marketing. She had years of experience in the field.

[Progressive Insurance Announcer]

This episode is brought to you by Progressive Insurance. Do you ever find yourself playing the budgeting game? Well, with a name your price tool from Progressive, you can find options that fit your budget and potentially lower your bills. Try [e-mail] Progressive Casualty Insurance Company and affiliates. Price and coverage match, limited by state law, not available in all states. This episode is brought to you by Progressive Insurance. Do you ever find yourself playing the budgeting game? Well, with the name your price tool from Progressive, you can find options that fit your budget and potentially lower your bills. Try [e-mail], progressive Casualty Insurance Company and affiliates. Price and coverage match, limited by state law, not available in all states.

[Guest David Grouse Sr.]

Actually working for one of the broker dealers that we helped service, and she was great at it. She put together an annual marketing plan and she'd pair it up with a budget every week, every month. We knew what we were going to do. We knew what we wanted from the marketing plan. We knew how many clients, what kind of clients, who was going to service them. We had a growth rate tied to it. We could look a year ahead and say, we're going to need three more people to do the work. I mean, and it made all the sense in the world right after I saw it, and I realized, okay, so I probably wasn't the best head of marketing. And then we went out and brought in a head of sales. And then little by little, we brought in a cfo, we brought in a cio. And now all these pieces go into place. You sit back and you realize, oh, I'm not the best at all of those things. In fact, all the people we just hired last year in their particular skill set are better than me. So over the course of the years to come, I learned that as I did less and I made fewer decisions and I delegated more, the business actually got stronger and grew faster. I wouldn't have believed it if I hadn't seen it. Sure.

[Podcast Host John Gafford]

No, no, no. So. So what would you say to a guy like me that says that, like, well, the problem is we've got to be those people, because otherwise, you know, we. We are, you know, in this particular business, we are, you know, plumbing business. Nobody care. Nobody cares who shows up to fix the toilet. They just want it fixed.

[Guest David Grouse Sr.]

You know what I mean? Great question. Yeah. I wrote a book to answer that question, okay? It's called Building with the end In Mind. And so in this book, I talk about a story where I sit down with an entrepreneur like you and I say, so how do you want your story to end? What's the last day on the job look like for you? And we're not talking fiery, tragic end here. Do you want to retire?

[Podcast Host John Gafford]

The FBI in handcuffs leads you out? No, that's not what we're after.

[Guest David Grouse Sr.]

Nothing's a positive. But do you want to sell the business for $15 million? How would you like your story to end? And I learned to ask that question and then just listen. And very few people, relatively speaking, want to sell it, walk away, and then figure out what to do next. Some do, but most of them say, you know, what I'd really like to do is if I'm good at what I do and I like what I'm doing and I don't have to work 80 hours a week, I could do this forever. And I enjoy coming to work, I like having the corner office, I enjoy the income stream and I like being mentored to the next generation. So I'll just keep doing it. Terrific. But at some point you are going to have to retire and hang it up. What happens then? And most people say, well, I hadn't really thought about that. And so what building with the end in mind is all about is let's bring in the next generation of talent around you, help advance them. It might be your son or your daughter, but it's usually a son and a daughter and half a dozen key employees. And let's give those folks the opportunity if they want it and if they're good enough to make an investment in the business, to buy into ownership, 5%, 10%, they go get a bank loan. Let's take this business and create an internal succession plan and let's give the business the opportunity to continue on 30, 40 years in the future after you decide to hang it up. Now that's a business that I as a 30 year old would want to come to work for. Not only it's, you know, got a plan for longevity, but I have an opportunity to grow with it and become an equity owner in it.

[Podcast Host John Gafford]

And you know, it's amazing how many people don't do that because you look at like my friend Cody Sanchez has got, you know, her whole platform is acquiring businesses for on seller financing because so many businesses just don't have anybody internally at all that can purchase them or take them over. And now boomers are retiring like crazy and there's all these, you know, trades, just different kinds of businesses out there with no succession plan whatsoever and no thought to what happens.

[Guest David Grouse Sr.]

And my argument is compare the math to a full sale. I'm done to, I'm going to throttle back on the job. Learn to delegate and surround myself with people who are better than me. As my business grows at 20, 25% a year every year for the next 10 years, according to a professional marketing and sales plan, the money internally by building it and staying far exceeds that lump sum check. And what you do is you get paid over the course of the last 10, 15, 20 years of your career. Wages plus profits plus equity, equity income when you sell your stock plus stock appreciation, add all that up over the course of a decade or more. It's the right answer. Yeah.

[Podcast Host John Gafford]

Far better than an exit.

[Guest David Grouse Sr.]

The problem with an exit is all of a sudden you've got nothing to do. Most entrepreneurs aren't wired that way.

[Podcast Host John Gafford]

Well, no. Or what's even worse is you go from having a company to literally having a job for two and a half to three years, you have to sit in the seat and you're like, why did I do now I'm an employee of this company and why would I have done this to myself? I've had a couple of friends that has a pretty decent exits that involve them staying on as an employee. And you know, I like to, I like to think that one of the things that makes people great entrepreneurs is the fact that they're chronically unemployable. Yeah. And then you put them in that situation and I just, I don't know anybody. It's been like I'm super happy being an employee. They're just counting the days until they can step out based on their exit. And then, and then in most cases a lot of those guys just wait out there non compete and then go start again. The same kind of business is what I've seen over and over.

[Guest David Grouse Sr.]

So you know, the work that I do, you know, building with the end in mind is if you want to build a business, I'll call it equity centric, right. We have to set up an entity structure, S Corp or an llc. We have to give it shares of stock. Those shares of stock have to have a value. Well, in order to have a value you have to have profits. The business has to grow on the top line, be efficient enough to bring 10, 15, 20, 25% to the bottom line. That allows it to be appraised. That appraisal gives you a price per share. And now we can sell some of that stock. But before you can do that, you have to build it with that end in mind. And so that's not the treadmill model, right? Because nobody invests in the treadmill model. It's just you. And if something happens to you, you fall off that treadmill, death, disability, or you quit, you lose your licensure. What happens to the business? Well, it doesn't last very long. So that business is not investable. So what I help them do is. And it can take, you know, four or five years to get all this stuff set up and done right, but we help them build growing, valuable, profitable, investable business.

[Podcast Host John Gafford]

So what? So what if somebody comes to you when they're. Let's just say they're in a Red Sea business where there's tons of competition. And, you know, again, they say, I am the value here, and that's not investable. Do you advise them to pivot? Do you find Blue Ocean? What do you do there?

[Guest David Grouse Sr.]

Well, you know, and every situation is different. I agree with you that most small businesses and I tend to work in the professional services sector. You know, doctors, lawyers, dentists, architects, engineers, consultants, et cetera. And for that swath, they are mostly the same. But let me answer this, and here's kind of a funny story. You know, when I first started out in the financial services industry, so, you know, they don't call them stockbrokers anymore. They're money managers or RIAs, registered investment advisors. I would go out on the road and I'd get up on stage in front of, you know, an audience of, you know, 150, 200 of these people, and I would tell them the world is changing. You know, along with the Internet, we've created a marketplace. And every time we list a practice for sale, you know, you work for, you know, Charles Schwab. You're an independent contractor, a sole proprietor, and you've got 150 clients. You get 200 million in assets under management, and you gross, you know, 900,000 a year. And I tell them that practice you built has a value ascertainable. An appraiser could tell you that. But better yet, let the marketplace tell you that. And if you don't like the answer, don't sell it. If you do like the answer. Now you have something to consider.

[Podcast Host John Gafford]

Oh, I take. I take those meetings, all the. I love those meetings when people Want to sit down with us and tell us what our. You know, we want to buy your company. All right, cool. Yeah, let's have a meeting. Because it's just. For me, it's just a free valuation. It's a free.

[Guest David Grouse Sr.]

You know, for the first time, four or five years that I did this, you know, literally starting January 1st, year 2000, I. I would get off the stage in lockdown, and. And afterwards, these guys would come up to me, and they were all guys back then. They're all white guys. It's just. That was the industry 25 years ago. But they would walk up and say, there's no value in what I do. My clients wouldn't be here if it weren't for me. All they want to do is work with me so no one would buy it because they can't possibly replace me. They're literally arguing against their own best interest here. And I'm not telling you you should sell or you have to sell. This is like owning a house. When the real estate market is strong, it feels good to say, hey, I've got $900,000 in home equity. I'm not going to sell it, but it's nice to know I have it. And what I would say is, as a small business owner, isn't it good to know that when the day comes, however your story might end, you have real, ascertainable, realizable value? And they would just shake their heads and go, no way. I could never be replaced. And I said, well, if that's what you want to own, you can build that. I'm just telling you there's another way. It took, I mean, 10 years before we could crack the surface on that and convince these folks that they actually had value and just to let it happen. When the time came, and little by little, after we sold a couple thousand practices and 95 to 97% of the client relationships transferred, people would say, huh, I guess I am replaceable. That was the best thing that could have happened to them.

[Podcast Host John Gafford]

So, obviously, you're scaling. It's about scaling yourself out of the business is what you're trying to do. What is your. So, you know, one of the challenges that I think we've had over the years, and we've got some incredibly talented people right now, so I'm not taking anything away from the we are, but I'm finding talent harder and harder to come by. Great talent. Um, how do you. How do you. How do you consult people through that?

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[Guest David Grouse Sr.]

Moment you head home.

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[Guest David Grouse Sr.]

Well, you know, first of all, I always, I told young people in my office always hire people who are better than you, especially if you're an owner. I mean, you just have to practice that. Second, give them an opportunity to have more than just a paycheck and so equity, create an ownership track. I mean, you could still be a 51% owner or more. You can still be the CEO and you can be chairman of the board. You're not going to give up control. But if somebody in their 30s, maybe early 40s, sits down and makes a decision not only with their career but with their investment money and they say, I'm going to invest in the place I work and the work that I do and I'm going to stick with this for the rest of my career and I'm going to turn this into the single largest, most valuable asset. I own my 10% of this fast growing company. Now, while it may be hard to replace them, you have a reason. You have a better way to hold on to them. So bring the good talent in. Don't let them go. What's the best way to hang on to ownership?

[Podcast Host John Gafford]

I also, I also find that most people that are surrounded by bad, by, you know, C and D players, bad employees are that way from because they get complacent and they don't. It's like it's more headache to replace this person than it is to keep them. And then I've had A lot of my friends that have companies that'll make those complaints about the people that work for them and I'm like, just get rid of them.

[Guest David Grouse Sr.]

I can't do that.

[Podcast Host John Gafford]

Well, how do you know?

[Guest David Grouse Sr.]

Let me give you another answer to the question. Because, you know, I literally, you know, one of the books I wrote was for the 30 year olds and I said, listen, you could take your skills and go hang out your own shingle, but before you do that, that's a lot of work, there's a fair amount of risk, and frankly, you'll just jump on that treadmill and you're going to own a job with overhead. So rather than do that, investigate the possibility of investing and buying in to where you started working. But then we ran into another issue that came up and hopefully I'm solving it with another book I wrote called the Stewardship Advantage. And if my black and white books are the how the Stewardship Advantage is, why so what I counseled a business owner like you to do in the first chapter of the book. Before you do anything else, let's figure out why you're doing this. Sit down and write out your mission, vision, purpose statement. It doesn't have to be very long. I mean, mine is like a total of 60 words, all of that. But let's figure out what you're about besides making money. And let's use your goals. Maybe it's Patagonia. Their goal was to help make the world a better place by protecting the environment. Maybe your job is, or your preference at your work is take care of the local community. I came from outside Portland, Oregon. They wanted to help the homeless. But whatever it is, write it down and operationalize it. In other words, create a stewardship plan and then share that with every person you interview. Everybody that walks in the door and buys something from you, tell them who you are, show them what you stand for. And what we found is that over time, as word spreads, people in the community run into someone who says, hey, I know a business that believes in exactly the same thing you do. You should go over there and talk to them about working there. And now you give them one more reason to come and find you. One more reason to get excited about coming to work in the morning. Not just to make a good living. Now they go to work for you because you help them live a great life. And if it's not ownership, maybe it's purpose, maybe it's both.

[Podcast Host John Gafford]

Yeah, the purpose driven business model is something that we subscribe to very much. I mean, I read a Harvard study years ago where it said that 80% of people would rather do business with a company where they know where some of the money is coming. So having those built in charitable arms into your business and being purpose driven and having those things definitely makes people, you know, you're not just going to buy another sports car. This is actually going somewhere. That's good. So I totally agree with that. We preach that, you know, religiously within our real estate brokerage. I mean, our for sale signs actually say on them, purpose driven real estate. And then instead of having like those writers on the bottom that say, I'm, you know, pool or honey, stop the car, that nonsense, they actually say, like the charity that we're donating part of the commission to. So like right now, a good, good friend of mine, John Hopkins in the Zach Brown Band, has als. And so all of the, all of the donations, we make a portion of the commission that we sell to help his, his charity, which is Hop on a Cure. So to fight als. So I'm a, I'm a huge proponent of that. Huge believer in that. I think that's wonderful. And I think a lot of people, I think what happens is there's got to be a shift. When you first start out, you're just bootstrapping. You don't know if what you're doing is going to work. You're just, you're going a million miles an hour with your hair on fire. And. And then it starts to become a real business. Right. And then talk to me a little bit about what people should look for in that moment when it starts to become a real business and that shift in mindset that they need to make.

[Guest David Grouse Sr.]

Yeah, I mean, ultimately, you know, that's the joy I have in my consulting work is I help people find and start that real business because most of the time when they walk in, into my office, they own the job and they love it. They don't think they have anything that needs fixing. So when you start to own a real business, I like to say, rather than you working for it, it starts to work for you. Take a vacation, take two weeks off when the business is ready for that, and watch what happens when you own a real business. It doesn't miss a beat. And in fact, the team you left behind tends to get better and stronger. That's magical. Second you start to build something that the phraseology I like to use is, makes a real difference. We all like to, you know, we want to make a difference some way with our work and our world and our thoughts. But all of a sudden, you know, when you lay out your why and you start to focus on your stakeholder groups and you literally operationalize, helping all of your stakeholders, your partners, your employers, your suppliers, your community, the environment. When you help make them better, they make you better. And all of a sudden, you've got a business now that in that community where you live and work is respected, and with that respect, you're the leader. That feels even better than running on that treadmill. So when you get to that real business, you know, it's got to be growing. If it's growing, it's got to stand for something. And if it's growing and stands for something, you'll attract great people and great talent who will help you do whatever you want to do with that business. It's your story to write. You get to decide how the story ends. But it's wonderful to have options and choices, and that's what you get when you have a real business, in my experience.

[Podcast Host John Gafford]

Now, I'm curious about this, obviously, and I'm sure you get asked about it a lot. But, you know, with AI becoming so prominent, everything we do, especially with. With the professional services that you utilize. You know James Wang, the CEO of Nvidia, the other day, I saw a clip of him. They asked him, you know, who's the smartest person you've ever met? And his response was, well, the roundabout way was, well, it's kind of changing because, you know, if you'd asked me that question five years ago, it's, who's the most technically, you know, the most technically sound person at solving very complicated problems? You know, that level of just straight IQ is what we're looking for. But now if you're really, really smart, you're not that important anymore, because I have a whole computer full of machines that are exactly. Are probably smarter than you. So he says now it's this intersection of EQ and IQ where human relations are important. So now to me, the smartest people are the people that can bridge that gap, the breast. So in your industry, with a lot of these people that are doing professional services, is that a concern? Is that something you guys are talking about a lot?

[Guest David Grouse Sr.]

It's a question I ask every single group I consult with. You know, I'll say it this way, most of the small businesses I work with, and I think I mentioned this before we started, so I'll say it out loud now, I consider a small business. I mean, there's lots of definitions out there. Depends on what country you're in. And even what industry you're in. But. But I think of a small business as at least one person up to about 100. And so you can have a small business that's twice that size. But. But most of my clients, most of the people I consult with are somewhere between five people and about 25 people, owners and employees alike. And so at that size, AI is out there on the horizon for them. As far as being a game changer, I was working with a CPA firm a couple weeks ago that's literally working on plans for its third generation of ownership. And then as part of the spreadsheeting process, we'll even include generation four. Not many businesses get that far.

[Podcast Host John Gafford]

No.

[Guest David Grouse Sr.]

I asked them, you know, because, you know, I came from the law profession, they're in the accounting profession and do tax returns. I said, so will AI in. In your lifetime? And I'm speaking to the senior owners. They're all in their 60s, my age. They said, will AI change your business significantly? Faster tax returns, less time, more profits. And they said, no, we are not seeing it yet. It is making, you know, our meetings go faster. It can take notes, it can process some of the paperwork, and it keeps better records. But in terms of sitting down and doing tax planning, our small business clients want to sit down and talk to us face to face, eye to eye, small business owner to small business owner. And, you know, maybe 25, 30 years from now when, when the young folks in our office who grow up with AI sit down and talk with young folks who know nothing better or nothing different, that will be how they do it. But we don't see it in the next 10 to 20 years in our small professional service model. And I have heard that across the.

[Podcast Host John Gafford]

Board, okay, when somebody is. When you go to consult for somebody that first hire that you think they need to make, what's the first hire that most people don't have that they need to make right away?

[Guest David Grouse Sr.]

Bookkeeper.

[Podcast Host John Gafford]

Bookkeeper. You find most people are keeping their own books.

[Guest David Grouse Sr.]

They run that treadmill, right? And they're going to save every dollar they can. And so they do the marketing, they do the sales, they do the bookkeeping. They process the. It's like, no, your time is worth, you know, 500 to $1,000 an hour. If you don't think that way, start. So bookkeeping, you don't need to get good at bookkeeping. Somebody else is good at bookkeeping. Bring that person in, have them take care of the payroll, and literally give yourself back five to ten hours a week. It's not that hard. I say that funny because that's where I started. And that person then sat down still with my company 25 years later. Knows everything about, know the P. Ls, the balance sheets, where we came from, our growth rates, our taxes, our, you know, payroll taxes. If I've got a question, I don't go to my accountant. I go to my bookkeeper because they're experienced, they know it, and they charge a third of what the accountant does.

[Podcast Host John Gafford]

Yeah. Oh, yeah. Oh, for sure. No, no, no, for sure. We've got, we're blessed to have. Yeah, we're blessed to have some really good bookkeepers that help us. And they're full time with us because we just. In this business, you process so much money. You know, checks coming in, checks going out. It's, it's, it's millions and millions and millions of dollars in commissions. And it's, it's a lot. We cut probably 6,000 checks a year for commissions. It's, it's a lot.

[Guest David Grouse Sr.]

But again, you know, I'm talking, you know, a 20, 25 person, you know, practice. But sure, that's busy enough. And the second person I would hire would be a marketing director. You know, almost every small business owner I run into, the CPAs, the engineers, the architects, the financial advisors, the independent insurance agents. I'm the rainmaker. I bring the money in. That's my job. Nobody's ever going to do that better than I can. And, you know, I talked to him and I said, well, listen, I mean, I'm looking at your college background, your majors and all this stuff, I see all the designations and credentials you carry. I don't see a single one of them there. That's about marketing. Yeah, but that's how the industry works. It's like. Well, yeah, but you only grow like 7, 8% a year. And instead of doing the tax returns or managing the money or giving clients great advice, you're taking them out to dinner, you're taking them out to lunch. Why don't you hire a marketing department to take care of those kind of things for you? And you and your team do what you're trained to do. But, but, you know, and when they follow that advice, the growth rates just about to double and they become predictable.

[Podcast Host John Gafford]

Well, let's, let's, let's talk about that. So as you grow, obviously you're scaling operations, you're scaling locations, you're scaling this. When you sit down with people, obviously the hiring of certain staff to replace yourself so you don't become the bottleneck is important. But do you also do a scaling plan where you're saying, here's this benchmark, and then when this happens, we're executing this, and when this happens, we're executing that?

[Guest David Grouse Sr.]

Yes. But again, let's go back to the start. Many of the clients, when I first start working with them, especially if they're four, five, six people, they start to make a pretty good living, but they're still acting and maybe function as a sole proprietorship. So before we get to scale, we really need to spend probably about a year or at least six months getting all the foundational elements in place to later support that scale. Because right now, if you built that business and you're. You're too successful, you don't have the staff, you don't have the talent in here to make it happen, you're going to have to work twice as hard to make it all work. And that's not scale. We can't keep doing that. But at the same time, you don't have enough foundational pieces in place to attract and retain the talent. You're growing, not profitably. And so, you know, we're kind of stuck on this treadmill, and we can only turn it up so fast as to what you can bear, We've got to get those things fixed. And the good news is, they're not that hard. If you recognize the problem and you recognize the opportunities that are out there, let's get the foundational aspects in place. And that's what I do as a technician. I help them get the pieces built so that this business will still be standing 30 years later. Labor the outcome. We gotta, you know, get you off the treadmill first.

[Podcast Host John Gafford]

I do some consulting for equity on small businesses, people that just don't know it. And what I always find is when somebody calls me in, the first hurdle that I have with them is they don't speak the language of business. I mean, most people came in and, you know, hey, I just started this and it's worked out, and, you know, here we are, and it's going well. So what. I'm curious what your answer is for this. What? Are there any books that you advise people like, okay, we need to get where we're speaking the same language. Go read this. And then. And then, then we'll talk. Is there any. Is there one particular book like that that you. You advise?

[Guest David Grouse Sr.]

You know, I write books more than I read them.

[Podcast Host John Gafford]

Yeah.

[Guest David Grouse Sr.]

You know, you go on Amazon, for instance, you know, and they're, I think, going on 21 million books for sale. And roughly half of them, I got.

[Podcast Host John Gafford]

One of them, you've got six of them.

[Guest David Grouse Sr.]

Roughly half of those are nonfiction. And so, you know, there are a ton of books that are out there and available if that's how you learn. I find it harder and harder to get people to sit down and buy books and actually read more than the first half of it, if I'm lucky. So I took each one of the books I wrote and I literally wrote them that way. I put all the best stuff in the front third to the front half so I could, you know, at least get it in front of people. But I am absolutely sure that there are some great books out there. But I think the problem becomes.

[Podcast Host John Gafford]

Most.

[Guest David Grouse Sr.]

Entrepreneurs aren't sure what question to ask. They're not sure what problem to solve. And so what I try to help them understand is I am going to take you from the organizational model where you're the hub of the wheel and everything runs through you and I'm going to take you out of that role off the treadmill and we're going to promote you to CEO. And as CEO, you need to learn how to run a business, a small business. You need to learn how to delegate. You don't need to learn how to hire. You need to learn how to hire somebody who can go find people to solve the problems that you need solved. So let's figure out what the non negotiables are. Let's figure out all the jobs you currently do that we are going to take off of your plate in the next three years. Now, we're not going to go hire somebody who's got a good work ethic that promises to show up every day. No, we're going to hire somebody that can take over payroll and the bookkeeping, get that out of the way. Then we're going to hire somebody who can make it rain consistently day after day, year after year, while you're on a four week vacation in Maui. Then we're going to go hire sales and then we're going to go hire a COO and then a CFO to help manage this place. So you're the person has to organize and orchestrate that whole group. Those are the skills I want you to go learn. And if you get them off of a book on Amazon, super. If you want to watch the book.

[Podcast Host John Gafford]

I recommend if everybody's wondering what it was, it's the personal mba. That's the book I tell everybody to read. Because what I love about that book, that particular book, and again, I get nothing for saying this I think it's a very useful tool for this. But if you read it through the lens of your business as you go through and just take notes of things that you could do to impact your business. I actually go back to it probably every, I don't know, maybe call it a year and a half, two years, and I'll just read through it, you know, and I'll be like, yeah, that's where I get my, my hit list of places in our businesses that probably need some attention. That's where I get my hit list.

[Guest David Grouse Sr.]

That's cool. And I'll add another one. Not necessarily a book, but something that's very practical is join a study group. And I always tell that, you know, the younger owners don't, don't try to be the smartest or the loudest or the richest person in that study group. Go in there and learn and listen. Talk to those folks as to what they do and how they do it and what worked and what didn't work. Then ask follow up questions. And so unlike a video where you just have to sit and listen or a book where you can read it at your leisure, create a two way conversation with people in your community who have been there. What did you read to get this done? How did you figure it out? Who did you talk to? Who's your lawyer? Who's your cpa? Who did you hire as a bookkeeper? You don't have to completely reinvent the wheel here. Here you have to realize what you don't know and then go figure out how to fill all those gaps. And however best you learn, that's what's right for you.

[Podcast Host John Gafford]

Yeah, that's why I talk about it all the time. I love the mastermind groups that I'm in because they just compress time because there's somebody in that room that's at a high level. You know, if you're, if you're the highest level guy person in your mastermind group, you're in the wrong group. But you can walk in and there should be people there you can lean on for that information and it compresses time for you. The only thing in the world that compresses time is information. We don't have time machines yet.

[Guest David Grouse Sr.]

So if you have good information, you've got a very large business. So you know, not everybody gets there and not everybody wants to get there. You know, my, my, my typical, you know, 10 person, you know, CPA firm or architectural firm or engineering firm doesn't want an IPO. They don't want to run 100 person firm. It's just not what they know and it's not who they, you know, who they are. But they would like to double in size, maybe twice over in their career and not twice as many people, twice as the profits. And so my job is to help them get to that point in time, you know, from age 45 to 65, and then have great decisions to make. Sell it internal, perpetuate it, sell it to a third party. I try to give them those options and, and along the way, they get to keep their life.

[Podcast Host John Gafford]

One, one last question because I'm curious about, I'm curious your opinion on this, because this is, this is also kind of a razor's edge that I walk, right? So I, I'm a huge proponent of virtual assistants that are, that are global. You can get such great employees in different parts of the country and we hire a bunch of them to do, you know, the menial stuff, right? The stuff that can be done anywhere, that's fine. But, but you know, we, we have leaned into some of that in the past to do more. Some sales stuff that would come out, some, some customer front facing some tasks. And I always look back at like what Peter Thiel said when he said the magic is in the hallways of, of companies. So, you know, I'm always finding myself reconciling that of. I, you know, I like having this remote workforce because of the cost savings and because of the quality of work is incredible. But I also am torn to like, the more people I have in the building. That's where the magic happens. So where, where do you reconcile with that?

[Guest David Grouse Sr.]

You know, working from home prior to the pandemic, I could never, I would never have believed it. So it works. It happens again. One of the questions I ask everybody, group I consult with, how do you meet with your clients? Where are your key employees at? And while Zoom has, I think, assumed a permanent place in the architecture of a small business, most of the professional service clients that I work with, people come back to the office. And at least half of the clients I would, and I would say the larger half in terms of value and worth and, and you know, what they, what they pay for their services, want to sit down face to face at least once a year.

[Podcast Host John Gafford]

Yeah, no, I agree, I agree. Okay, well, if they want to find you, how do they find more about you? DAVID sr. How do they find you?

[Guest David Grouse Sr.]

Well, simplest place, I have an author's website and, you know, it's where my best stuff is at. Www.DavidGrau sr.4senior.com and my books are there. Free blog. You can subscribe to my newsletter. I have a YouTube channel with about 84, 85 videos if you like to learn that way. Most of this stuff doesn't cost anything. It's there for you to pick up and learn. You can read, you can listen, you can talk to me. There's a free consulting channel on there as well. And then if you need more specific information. I'm all about the specifics. That's. That's my work as a technician. You can hire me on a flat fee as a consultant and I'll help you get off that treadmill and build a rocket ship that'll take you to the moon.

[Podcast Host John Gafford]

Well, I appreciate you. I so much, sir. Thank you so much for your time. And listen, if you listen to this today with us, if you're here at the end, just remember, it doesn't matter if you're running a plumbing business, a real estate business, a mortgage business, a convenience store, whatever it might be that you're running. There's a really good chance that your biggest problem is you. It's easy to fix. We'll see you next time.

[Guest David Grouse Sr.]

We'll see.

[Podcast Host John Gafford]

Yes, it is. We'll see you next time. What's up everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escaping the drift.com you you can join our mailing list. But do me a favor, if you wouldn't mind, throw up that five star review, give us a share. Do something, man. We're here for you. Hopefully you'll be here for us. But anyway, in the meantime, we will see you at the next episode.

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