WAYNE BROWN: Hello, I’m your host, Wayne Brown, and welcome to the ET project. We’re delighted to be delivering this podcast for executive talent all over the world, whom we’re affectionately referring to as Team ET. Today we’re chatting with Mr. David Grau Sr. David helps owners build small businesses that are stronger, more profitable, more valuable, and less founder-dependent. His work combines business mechanics with long-term ownership planning so companies can serve all their stakeholders well and endure for decades. David is an award-winning author, former attorney, and long-time advocate for small business owners. For more than 30 years, he has worked with founders and owners on the real-world issues that determine whether a business becomes a durable asset or remains dependent on the person at the center of it. He has spent much of his career helping owners think through succession planning, enterprise value, continuity, leadership transition, and long-term business perpetuation. Over time, that work convinced David of something simple but important, too many good businesses are built around one hard-working founder and never fully become businesses that can thrive without them. This realization drives his writing, and today he is primarily writing for small business owners who want to build more than a job for themselves, instead for founders who want to create businesses that are durable, profitable, valuable, and transferable. Businesses with strong systems, stronger teams, and long-term options. David has recently released his sixth non-fiction book titled ‘The Founder’s Treadmill,’ and you’ll hear us speaking about it during the discussion. Team, as always, I love the opportunity to dig in with authors and explore the insights and personal wisdom that they’ve packed between the covers, and this time is no exception. And there is truly something for everybody in the conversation ahead.

INTRO: Welcome to the ET project, a podcast for those executive talents determined to release their true potential and create an impact. Join our veteran coach and mentor, Wayne Brown, as we unpack an exciting future together.

WAYNE BROWN: Hello team, welcome to this week’s conversation. Now, for the largest percentage of us listening in today, this is going to be about you, the small business owner, or perhaps you’re an entrepreneur, whatever role that you’re playing, have a listen, this is a great conversation. What if you really didn’t own your business, you were just keeping it warm for the next generation? That’s the mindset shift at the heart of true succession planning. It’s the difference between building a practice that ends when you do and cultivating a legacy that endures way beyond you. And few people understand this better than today’s guest. Please help me to welcome David Grau, founder of FP Transitions, now David, you’ve retired but you were the founder, so we’ll come back to that, as well as author of multiple books around this topic. I’m really looking forward to this conversation. Welcome to the ET project David, great to have you here.

DAVID GRAU SR.: Thank you, my pleasure to be here.

WAYNE BROWN: David, you spent decades working in, your company was called FP Transitions I believe, and you were working with thousands of financial advisors over in that period. And I’m wondering, was there a single biggest misconception that those advisors held in relation to the future of their business? 

DAVID GRAU SR.: I think the most concise answer would have to do with the business that they’re building, the structure. A lot of small business owners legitimately start out all by themselves, sole proprietors, and boy, it’s pretty much just them against the world. But in my world, that of the independent professional, financial professional, people who work under a custodian like Schwab or TD Ameritrade or Fidelity, underneath a major broker or dealer on the independent side, they’re never alone, they’ve got all sorts of folks around them, they’re highly regulated, being alone just isn’t an issue. But what they do though, is they create these, what I call forces of one. So, there might be an S Corp or an LLC, but everything revolves around them. And so, they bring in their clients, they bring in their assets under management, but they forget to build a business. And they work hard, absolutely, and they take risks like anybody else, but 25, 30 years later, they get to be in their 50s, 60s, and they find out that they don’t own a business, they own a job with overhead.

[00:05:00]

WAYNE BROWN: Right.

DAVID GRAU SR.: And it’s never too late to fix things like that, but it’s so much easier to fix if you can get a good headstart on it when you’re still in your 30s or maybe early 40s. And that’s really what I write my books about, don’t be a force of one, you can be in total control, but at the same time, build something that can outlast you, build something that your son, your daughter, your key employees could invest in and be a part of and however the story ends, you have good choices when that time comes. 

WAYNE BROWN: Right, such an important message to our listeners. And we spoke about just before we hit record, if we set things up right with the right intention at the very beginning, it makes it so much easier. But as you said, it could always be fixed, but it just takes more effort. You also mentioned, David, you’re a prolific book writer, I’ve come to learn, and you have a new book coming out next month, I believe, ‘The Founder’s Treadmill,’ do you want to share a little bit about what it is about?

DAVID GRAU SR.: This is my sixth nonfiction book. My audience are small business owners, I know them, I love them, it’s what I like to do, serving as a mechanic on these small businesses, that’s my dream come true. But I’ve spent all my time helping people figure out how their story might end. And so, do they want to create an internal succession plan? Do they want to sell it for maximum value to a third party? However it might end, I mean, it’s your business and it’s your choice, but you want to give yourself good options. And then I sat down and I realized, you know, after five books about how it all ends, I forgot the most important part, and that’s how it begins. And so, I went back and I wrote the book that I probably should have started with about 20 years ago called ‘The Founder’s Treadmill.’ And when I tell my friends about it, they all kind of laugh and some of them wince and they go, ah, I know exactly what that means. So, I was going to say it out loud just in case somebody doesn’t. Most small business owners, probably 99% of us, because I tell my own story in this book, they don’t start with a lot of private equity in their back pocket, they don’t have no pile of gold underneath their desk. They have an idea, they have a passion, a skill, maybe it was a hobby, but they want to turn it into a business. And so, virtually speaking, they get on their treadmill and they start to run. They don’t have a lot of staff. And so, as quickly as possible, they need to make a living. And so, who is the head of customer service? You are. Who is in charge of sales and marketing? You are. Anything goes wrong, you fix it. You need a new desk, you buy it, it breaks, you put it back together. Everything falls on top of the founder and the founder runs on that treadmill proudly, happily, with dedication and devotion, and it works. I mean, for the first couple of years there isn’t really any problem you can’t solve with passion and hard work, it doesn’t work great, you run a little faster. And that’s just the problem, what The Founder’s Treadmill explores is that all of a sudden, you’re two or three years in, you’ve had some success, you’re making a living, clients are looking for you and then you adopt The Founder’s Treadmill as your operational system. And you may hire two or three, four or five employees to help you, they don’t add capacity, they just circle your universe and route everything back through you. And then 20 years later, you’re in the same place. 

WAYNE BROWN: So, I guess that’s the risk of waiting until you feel ready, I mean, I can put myself in that boat as well. When you first start out, you are everything, as you have said, you’re the brand, you are the face of the business and everything revolves around you. Where does succession planning come into that discussion? 

DAVID GRAU SR.: Yeah, thank you, a great question. So, succession and just to define the term so I can answer it, a succession is when a founding owner gradually transfers ownership and leadership and even revenue production, if you will, to the next generation.

[00:10:00] 

DAVID GRAU SR.: You see, it’s not one person, it’s a successor team and that transition, it doesn’t happen all at once, like a sale to a third party might, a succession, you go from a hundred percent owner down to 90% to 70% to 60% and at each slice, you sell a little bit of equity to someone inside your business who works for it and buys it, maybe even gets a bank loan. So, in order for that to happen, your business has to get to the point where it has been around for 20 years or so, and it has to be profitable, it has to have a growth rate that is predictable and sustainable. And last but not least, everything cannot run through the founder because, you know, our next generation, let’s call them a 30-something year old, they don’t want to invest in the founder, they want to invest in a business. So, to answer your question, to be ready for succession, you first have to build a business, you can’t be a force of one and have a succession plan. You might sell that to a third party, but you’ve got to have something there that’s investable.

WAYNE BROWN: Succession planning, we’re talking about being on the treadmill. There’s three words that the first time we spoke, that really stuck with me, resonated with me, stewardship, guardianship and ambassadorship. Now, they’re all slightly differently defined, if you like, but that they all play critical roles as well in this whole picture, would be my take. Let’s work through them just so we’re clear on the definition, maybe to start with stewardship, what is it you mean when we talk about stewardship?

DAVID GRAU SR.: Yeah. And terms are not my specialty, but stewardship is. So, stewardship, and I wrote a book about this and I define it, this would be kind of the last step in the process, you’re not founder-dependent anymore, you’ve built a real business, you’ve got a good team around you. You could spend a month overseas if you want, you come back, the business is as strong as you left it or almost. And so, stewardship says, let’s look at the business. And you said this really clearly at the beginning, Wayne, stewardship says, as an owner, as a founder, I’m not the commander, I’m not the captain, I’m a custodian. And if I look at the business that I’m building and everyone I touch, my partners, my employees, my suppliers, the community, the environment, I look at all of those people I touch as it’s my time and my turn to take care of everyone I touch and to make their lives at least a little bit better through the work that I do and the business that I run, that’s stewardship. And so, you don’t have to treat everybody equally and I might have a priority, but my job is to take care of these folks and by helping them, they help me and I firmly believe that. The challenge is you have to build a business that’s strong enough to take care of these folks and of course your own family, so that’s stewardship. And that’s a strong multi-owner, multi-generational business, that’s where succession planning comes in because how do you be a good steward to your son, your daughter, three of your key employees? Teach them what it’s like to be an owner, teach them how to make that investment, not just to show up on time, not to do a good job and take care of the customer, but to make the investment, to come into that shareholders’ meeting 10 minutes early and be ready and to help the next generation beyond them do the same. That to me is what stewardship is, leaving everybody a little better than you found them and leaving a business that continues on once you’re done with it. 

WAYNE BROWN: I’ve often wondered, how do you identify characteristics in a business owner or a leader that portrays stewardship? Like if I’m looking at somebody, if I’m listening to you, I get a clear picture, but if I’m meeting somebody for the first time, how would I sense that they’re a steward of their organization?

DAVID GRAU SR.: Yeah, I think the best way to answer that is, before anybody can follow you on your mission, you have to be pretty clear on what it is. 

 [00:15:00] 

DAVID GRAU SR.: And so, in my stewardship book, chapter one, I sit down and I say, okay, what’s your mission, vision and purpose statement? Have you ever put that in words on paper? And I give people a couple dozen examples, because if you don’t know it and you can’t say it, if it’s stuck in your brain, but it has never made it to a piece of paper, it’s almost impossible for anyone to follow it. Once you figure that out, then share it. When you sit down and you’re hiring a 27-year-old, they’re in their second job out of college and they want to come to work for you, explain to them who you are, what you’re about, where you want to take this small business, which can be incredibly powerful as a tool for changing them in the world we’re in. And in fact, I don’t know what else will, to be honest with you, there’s half a billion small business owners out there, that’s a force to be reckoned with. But if you sit down and the first time you interview that 27-year-old, you share what you’re all about and maybe that future employee says, that’s not what I’m really after, I want to make as much money as I can. Okay, not a good fit. But if they say, okay, I love what you just said, and I want to be a part of this and you may not be able to pay me as much as the fortune 500 company around the corner, if I could be a part of that, then I could not only make a good living, I could make a good life. That’s the answer you’re looking for, but you got to lead first, you got to know where you’re going. That’s such a simple thing, but it’s not so easy when you’re a busy small business owner running on that treadmill.

WAYNE BROWN: When you’re caught in the middle of it, it’s not so easy to see that forest, right? You can see plenty of trees, but not the forest itself. So, if I paraphrase it then and say, stewardship is really you as the current caretaker of a business that is meant to outlast you, would that be accurate enough as a summary?

DAVID GRAU SR.: I love that, that’s perfect.

WAYNE BROWN: Right. Guardian and ambassador, my own take on it is I think of The Guardians of the Galaxy, the movie series from Disney. They’re there to protect essentially, they look after the culture of the team, the relationships, they’re trying to protect things. The ambassador, well, they’re the one that is out there promoting, they present the business to the world, sort of thing. So, that would be the three distinctions I would make and that is; stewardship, guardianship and ambassadorship. But I think collectively they form this really powerful approach or mindset and then you add the succession planning, which then sort of brings it all together and makes it really a force to reckon with, which is essentially what you said. Equity management, talk a little bit about equity management.

DAVID GRAU SR.: I love that. Thank you for sharing that, that’s right.

WAYNE BROWN: Yeah, thank you. If we moved on to looking at one of the cornerstones, I guess, of running a business, but also succession planning, probably talk about equity management, how do you define that and what is it we’re talking about there?

DAVID GRAU SR.: Well, so, and it can, in the whole span of the books that I’ve written, I start with the founder on the treadmill, who more than likely is a sole proprietorship, if they’re not, they think like a sole proprietor. So, the first thing I have to do is get them to stop looking at the clients that walk through the door as the source of value. So, that’s part of the business, it’s a key part of the business, they’re one of your stakeholders. But to build a business that has equity in it, so you have to set up the foundations. And one of the stories I tell, you know, this is like you get to the point in life where you build your dream home. So, what’s the first thing you put in it? Well, not the furniture, you put in the foundations, the concrete footings and the stem walls, and then you pour those or your contractor does, and they cover them all with dirt, you build the house on top of it. And by the time you put the beautiful piece of furniture on the second floor, you forget all about the foundations. But if those aren’t there, you’re not putting that furniture on that second floor, it won’t last. So, the foundations to build equity starts with an entity structure, a C Corp and S Corp and LLC, but you create something with stock or equity in it that is investible. 

[00:20:00]

DAVID GRAU SR.: Second, the business has to grow, it literally just has to grow. And so just to make this simple, you got to grow that top line. If you grow at 10% a year and you think, well, that’s not so fast, maybe grow 10% a year for 20 years, you’ll double in size, twice, that matters and consistency counts. And then you also have to grow the bottom line, and so, I teach people how to create profitability in a small business. And that’s just not normal and natural because in a small business, especially with sole proprietorship thinking, it is just the founder on the treadmill, you pay all the bills, keep the business running and you take everything else home. So, what’s profits? Well, it’s part of what went home. What about your wages? Well, that’s part of what went home too, but they’re different. And in fact, depending on your entity, they’re tax-different, one is a reward for investment, the other is a wage for the work you do. But you got to bring all of these little things together and those are literally the entity structure, the top line sustainable growth rate, the bottom-line profitability, those are three of the 15 fixes or upgrades that I put in my founder’s treadmill book. They said, how do you go from sole prop having a business that has equity in it that somebody would want to invest in? And to make that fun, just to finish up the story, you got a 32-year-old who has worked for you for five years and now they want to go get a bank loan for $700,000 to buy a 20% slice of equity in your business, it’s a minority ownership, you’re not going to make any final decisions, you’re still going to be mostly an employee, that’s equity management. You get to that point where somebody wants to be an owner in what you started and built, that’s powerful, that’s learning how to manage equity. And that’s what I do as a writer is I try to get the sole proprietor thinker on the treadmill to the point where we get them up to building a real business and to being a custodian of that business. 

WAYNE BROWN: I love that whole concept. I can imagine and even myself listening to you then, there’s a degree of fear there, for me, I’ve worked so hard and I’ve built all this up and now I’ve got to get off that treadmill. And in your example, you’re talking about actually giving away part of that equity, obviously for a return, but you’re still giving away kind of that thing that you built up. How do you actually work with your client and help them overcome that fear?

DAVID GRAU SR.: And you’re just perfectly right on spot there because it is scary. And the first thought is, I don’t want to retire yet. No, we’re not talking about retiring. It takes about seven or eight years to pay off the promissory note to that bank, to buy a 20% slice of equity in a three-million-dollar business, and then they’ll do it again and they’ll probably do it again. It’s equivalent to a 20-year mortgage, you’re not going to retire right away. Second, it’s very difficult sometimes for folks to go from I’m in control of everything and I like it that way, I like being the smartest person in the room, I like 10 times a day, people walking at my door saying, “boss, just, just one quick question, we can’t move forward if you don’t tell us what to do.” Getting off the treadmill is probably one of the scariest parts of the process, it’s not selling equity 30 years into your business, it’s not being the center of your business three years in. And so, that’s the first thing I have to do, is help people learn that a founder-centered business, it’s necessary to start, it’s actually even fun, it’s rewarding. Nothing makes you feel better than being the smartest person in the room, right? But it has to end sooner than later. And when it ends, it’s not that it’s all gone and you don’t have any control, you’re owning a hundred percent of the equity, but now you’re setting up a real business and instead of hiring someone to help you, you start hiring capacity that makes a difference, that can actually solve problems and has authority. When a customer isn’t happy to say, “Bob, let’s talk about this, we’re going to get this problem solved for you right now. And when I’m all done, I’ll run it past the boss, but trust me, he trusts me, I’m going to take care of you.” Getting people to that point, that’s the scariest part of the process for a lot of founders.

[00:25:00]

WAYNE BROWN: Right. And it comes to the heart of one of the key differences that I took away from your book, ‘Succession Planning,’ the difference or the distinction between succession planning and making a sale. So, when we talk about giving some of the equity, you can look at it as, okay, I’m selling a portion of my business, but actually you’re talking about, this isn’t really succession planning, this is about transitioning, having an exit strategy for me and I’m able to transition out of this business because I’ve brought the right people in and that we’ve had that succession planning place. Is that fair?

DAVID GRAU SR.: And that’s an important distinction and it’s key. The most recent book on succession planning I wrote was titled ‘Build With the End in Mind’ and most people who read it, they’re closer to our age than a 30-year-old, but the idea was, if I could get these people right after they got off that treadmill, to start to think, how does my story end? What I learned in doing this for about 30 years with professional financial advisors, when I asked them that question. So, you’re not close to retirement, let’s think 10 years over the horizon, how does your story end? It’s your story, there’s no wrong answer. What’s the answer? And I asked a thousand people that question. And Wayne, I expected most of them to say, I want to sell my business for maximum value and go retire, nine out of 10 said the opposite. They said, well, I like what I do, I make a very good living, I don’t think my husband or my wife wants me at home. Like, I said, my wife told me, she said, I married you for breakfast, I married you for dinner, but I did not marry you for lunch. So, go back to work. And so, these folks, they want to be part of something. And they enjoy mentoring the next generation, they like working at least with their favorite clients, they don’t want to leave. 

WAYNE BROWN: Yeah. 

DAVID GRAU SR.: What they want to do is maybe not work 50 hours a week. They don’t want to worry about payroll every two weeks. And so, what they want to do is throttle back a little bit, but still enjoy the corner office, the car the company pays for and all the little things and a little bit of control. So, that’s succession planning, so, if you want to give up control gradually rather than sell to a third party, let’s mentor your team, let’s build capacity, not just help. And when you turn age 50 or 55 or maybe 60 as the founder, let’s part a little bit of that equity, let’s get an appraisal, let’s figure out what it’s worth, so it’s not just your opinion and let’s sit down and sell a 10% slice. And to your earlier question, that’s scary for a lot of people. And I always tell people, listen, if you own 900,000 shares and junior owns 100,000 shares, you’re in total control, you’re the CEO, you’re chairman of the board, you’re not going to lose a single vote. Don’t worry about it, but don’t give it away, sell it for fair market value. And then the next day, what happens? You all come back to work and you keep doing the same thing you did the day before. Except, a year or two later, sell another 10% to another upcoming key employee, or maybe now your son or daughter who has graduated from college and joined the business, let them buy in, don’t give it away, stock and equity isn’t a birthday present, let them buy in and invest in it. One last point, people often ask me, they say, David, how do I get my son or my daughter or my number one employee to think like an owner? And my answer is, I don’t think you can think like an owner, that’s not a state of mind, it’s either is or it isn’t, maybe have them write a check once a month, that’s the opportunity, it comes with obligations.

WAYNE BROWN: You just touched on an interesting thing that I was wondering that myself was, what happens when the founder has that right intention? They know that they need to pass some of the equity, but they don’t have the internal candidate. How do they take succession planning? Does that mean succession planning is off the table? And how do they then go out to the market to find that replacement?

[00:30:00] 

DAVID GRAU SR.: Certainly, one possibility, depending on how big the business gets and how late we are into the process is that succession planning may not work, succession planning is not a quick process. At its best possible speed, we’re talking seven to 10 years. Optimally 20 would be better, and 20 is a perfect succession plan, seven to 10, we could make it work. But there are so many opportunities out there and at least the industry I came from, there are a lot of good young people out there coming out of college and at age 23, you’re not ready to buy into a small business, you’re just not, at least I wasn’t. But seven to 10 years later, when you get, 30, 32, 33 years old, my experience is that most of these good, talented young folks would rather buy into an existing business than hang out their own shingle and start from scratch. And largely it’s kind of a state of mind for the founder to make sure that it’s not a false promise, you know what you’re doing. Read my book, ‘Building With the End in Mind,’ so you can be sure that’s what you want. And then go sit down, go to a national conference, run an ad on the paper if you have to, talk to your peers, get involved in the study groups with 10, 15 people in them and talk to them about what you want, what you need and spread the word a little bit. I’m going to give up on the succession plan, there’s an awful lot of good young talent that want to buy in, you just got to find each other. 

WAYNE BROWN: And I think that’s particularly important in the world we’re in at this very moment with such large number of people being laid off from corporate roles, et cetera. There will be so many people who are looking at what that future holds for them and probably looking to buy into a business. So, I could imagine if you are the founder, there is probably a lot of opportunity out there outside of your own team, if they’re not the right people. 

DAVID GRAU SR.: And on that point, if I may, I wrote two succession planning books, it’s kind of a series, I call them the black book and the white book. So, the black book is building with the end in mind. And I wrote that for people in their fifties and sixties, maybe even seventies, and I said, okay, so you’re the founder, here’s what you need to know and to think about if you’re going to build with the end in mind and you truly accept that you’re a custodian and this business must be passed on to someone else, here’s the 50 lessons you need to know. But to compliment that I wrote, literally, it’s a white book called ‘Acquiring Your Future.’ And I wrote this for the 30-year-olds out there and not just financial advisors, CPAs, lawyers, dentists, doctors, architects, engineers, and I said, you’re educated, you’re motivated, if you’re reading this book, you’re educated and you’re motivated. And now you’re thinking about either hanging out your own shingle or buying into an existing business, let’s talk about those opportunities, do you buy it or do you build it? Well, there’s no wrong answer. Let’s talk about buying it real seriously because rather than start from zero and on your own founder’s treadmill, so to speak, what if you stepped on top of 30 years’ worth of experience and good will and reputation and the community. And I actually run the numbers for them and kind of help them think that, I’m trying to take it on myself to help the next generation find people in their 50s, 60s and 70s and say, you may never have thought about this, sir, ma’am, but what if I worked for you for a couple of years as an apprentice and then had an opportunity to buy in, would you consider that? Sometimes that’s where the conversation has to start, don’t be afraid to ask. 

WAYNE BROWN: It’s a similar premise to what we often talk about as becoming the intern and starting with the company to get a good understanding of the business before you actually make that leap of faith, so to speak. I’m wondering, how do you go about the whole succession plan? Are you literally pointing or identifying somebody in the team or identifying somebody as like, this is the person I want to be the successor, or are you applying more of a mentoring approach to a group of people hoping that the successor comes out of that? Is there one way that you would recommend?

[00:35:00] 

DAVID GRAU SR.: It’s a tough question because it seems like it’s always different. I work with businesses anywhere from four or five people to 40 or 50 people, but we’re not talking an ESOP here, it generally is not across the board ownership. In most cases, we’re talking a successor team of anywhere from two to maybe five or six people, so that’s a pretty limited group. So why is it so limited? Well, one, the buy-in process is expensive, might as well just say that because you’re going to figure it out, right? If you’ve got a $4 million-valued architectural firm in San Francisco, that’s probably small for San Francisco, but you’ve got somebody who wants to buy a 20% slice of that. Well, okay, let’s just say it’s five million, so a 20% slice is a million dollars. Okay, you can get a loan for that, but you’re going to buy that stock in an equity-based business with after-tax dollars. So now I have city, county, state, and federal taxes, so instead of a million, that’s about a million three, if you’re lucky. And you’re going to borrow that money, either on an SBA loan or in my fact pattern, probably a conventional bank loan with current interest rates over, let’s say it takes seven to eight years to pay it off, that would be optimum, so now, you know, I’m an English major, so I’ll do the math in the back of my head, now you’re about 1.7, 1.8 million, and that was just for one slice of the equity, you’re not even in control yet. So, what you have to do is you want that same person to buy another round of equity, and it would be great if 10, 15, 20 years later, instead of two founders, you ended up with four next generation people on the successor team, who all own 20% to 30% each, but to do that, they’ve got to get multiple bank loans, they have to go into debt like it’s a mortgage. They’re going to buy the equity with after-tax money, which is expensive, and they’re not going to have total control, maybe ever, like you and I would have in a small business as 51% owners. I don’t think you can get 20 people in a room to all go, “yes, sign me up.” You might get three or four to say, tell me more, let me go study and read something about this, but I think that’s as good as it gets in a small business.

WAYNE BROWN: Yeah. And of course, that’s on the premise that the founder actually has that mindset that they want to do that so I’m guessing that very much narrows the scope and the field. 

DAVID GRAU SR.: Well said.

WAYNE BROWN: We’ll say that we’ve got a listener out there at the moment nodding along to yeah, look, I want to be this legacy steward, but they haven’t done anything about it. What’s the single most important first step that they need to take this week to move in that direction? 

DAVID GRAU SR.: You got to learn what you don’t know. And one of the things I’ve realized as I’ve gotten older, is that as I go into new territory and I want to learn something new, like AI even, I often don’t even know what questions to ask, so it’s very difficult to figure out, okay, I’m missing this, I’m missing that, what about this? You got to figure out what you don’t know. And depending on how you learn, I’m old school, I like to pick up a book, and I’ve got two current modern books, one for the 15, 16, 17-year-olds, one for the 30-year-olds, whatever fits your age group, learn. And I know it’s hard to read a book, but sit down and get halfway through it and then let’s just talk. I don’t have any workshops to sell anybody, I don’t have anything else other than my knowledge, but I love doing this and succession planning is so powerful. I mean, it’ll change your life and change the lives of everyone you touch. If you give it a chance, where do you start? Learn more. Don’t dismiss it, don’t take everything you heard, just go learn more on your own. Spend a weekend reading one of my books and let’s just talk, it’s a free 30-minute conversation and if I don’t think it’ll work, I’ll tell you.

WAYNE BROWN: Where do you see that future? Not for yourself, you’ve now retired, semi-retired.

[00:40:00] 

DAVID GRAU SR.: I’m not very good at retirement, Wayne.

WAYNE BROWN: What do see for let’s say 10, 20 years, if we get the crystal ball out in the future, how does business look in general? I mean, we’re going through quite a tumultuous period at the moment, but how do you see the future looking for businesses in this direction?

DAVID GRAU SR.: I don’t know much about Fortune 500 businesses, I worked for one for a couple of years after college and I didn’t like it. I’ve been a small business owner all my life, my dad was a small business owner, my grandparents and aunts and uncles were small business owners. And when I did the research on my last book, I looked at a lot of sources and I came up with the figure of half a billion small business owners out there nestled in every community on every street corner from Manhattan to Valentine, Nebraska. And these are dedicated, hardworking people, they show up every single day. Work ethic issues, not with this group, this group does whatever it takes, they’ll run on that treadmill, full tilt, full speed, if that’s what it takes. And I just think that this group, this is why I like to end the story talking about being good stewards to all of your stakeholders, everyone you touch, it’s not about being nice, it’s not about good intentions, it’s about doing the right thing when nobody is looking, but it’s also putting that in writing and documenting it and building it into your business. Going back to your earlier question, weighing on equity management, part of managing the equity in your business is to build a business that attracts great next generation talent, and then it mentors them and teaches them and rewards them. You don’t have to overpay, but you do have to support, help them take the steps that you wish someone had helped you take. I think the small business owners and the people in the communities that they touch, that’s the way we hold the world together and that’s the way we help each other because half a billion people just can’t be denied. 

WAYNE BROWN: When you see a founder who has successfully transitioned their business, they have become that legacy steward and they’re watching that next generation take over, what does that moment look like for them?

DAVID GRAU SR.: Let me answer it this way, I’m working with a group of accountants in the Midwest and they are literally on their third generation of ownership and I’m helping to install that third generation. And the third generation, and these are 30, 31, 32-year-olds, are now thinking about the fourth generation. When you watch a small business like that reside in one community and serve literally, the parents, the children, the grandchildren, and plan for having the great grandchildren as their clients one day, that’s literally just magical. There are so many small businesses out there, if you look at the Bureau of Labor Statistics, at least here in the United States, two thirds of all small businesses don’t last 10 years, they’re gone. And that’s to me, that’s the treadmill problem, you just can’t run any further and it just wears you out and burns you out. But if you can learn how to build that equity and get off that treadmill and take care of all those around you and treat that business as a custodian and just do the right things when nobody is looking. The idea that a small business that starts as one or two people could be around 50 or 60 years later making the world a better place, I think that’s just incredible, that’s what gets me up in the morning, it makes me write books. 

WAYNE BROWN: Well, we certainly have a large audience to fit the bill and I’m sure there’s huge interest in the conversation, it has been really intriguing for me as well. Thank you, David, for sharing your insights and sharing such experience. Where can people connect with you?

DAVID GRAU SR.: I have a website, David Grau Sr. davidgrausenior.com. Come visit me, I’m a force of one, I’m too old now and kind of retired, so I’m not going to build a succession plan, I’m just going to help people as long as I can. This is what my passion is and it’s what I love to do. And nothing makes my day better than to get just a quick question from somebody on the other side of the world, other side of the country who says, “Hey, I read your book and I got stuck on chapter12. Could you tell me how this would work in my situation?” I love that kind of stuff, so, come visit me.

[00:45:00]

WAYNE BROWN: And where can they get the book? Or the books? On Amazon or?

DAVID GRAU SR.: Yeah, and all my books are on the website, ‘The Founder’s Treadmill,’ we’ll put up on the website in about three more weeks, it’s in final editing right now, it’s always a fun time. But ‘The Founder’s Treadmill’ is going to be a shorter book, I call it a field guide, about 130 pages-long, that’s a good weekend read. You want to change your life and build an equity-centric business, something that can outlast you, but you can’t figure out how to stop working Saturday and Sunday, start with ‘The Founder’s Treadmill,’ I’ll help you.

WAYNE BROWN: Perfect. Well, David, I enjoyed the conversation, thanks for being a guest on the ET project.

DAVID GRAU SR.: Thank you, Wayne. Thanks for having me.

OUTRO: Thank you for joining us on the ET project, a show for executive talent development, until next time, check out our site for free videos, eBooks, webinars, and blogs at ‘coaching4companies.com.’

[END OF TRANSCRIPT]