Growth Ceiling: A Buyer Cannot Buy a Job (David Hori)

Simone Henry: So you've spent years building this company. You've read the books, paid for the coaching, joined the mastermind. Your calendar is full every single day. And if a buyer walked in tomorrow and asked one question, what happens to this business if you step away for 90 days? You would not like your own answer. Today, we look at your business through the eyes of the person who might one day write the check for it.

Nate Grossman: Okay, David Hori is the principal and at top line operators. He has more than 25 years of operating experience, including three startups he helped scale through exits. One of them, Carmera, was bought by Toyota, believe it or not. Most recently, he integrated 1,100 employees after an acquisition and kept 98% of them. today he buys profitable local businesses and keeps their teams and culture in place. He also advisors owners who are stuck between growing growing the business and selling it. So he sees your company from the side of the table that most founders never sit on, unfortunately. David, welcome.

David Hori: Nate, Simone, thank you so much for having me.

Nate Grossman: Excellent. Yes.

Simone Henry: Welcome.

Nate Grossman: So you you've been you've been inside three acquisitions at least, and now you're you're the one doing the evaluating. So when you look at an owner owner-led business for the first time, what is the pattern that you keep seeing?

David Hori: There are four things that really stand out to me as a potential buyer that impact ultimately what I can offer a business owner for their business. It comes down to the level of owner dependence that exists within the business. It comes down to the financial repeatability. And then the degree that systems and processes are documented would be the third thing. And the fourth comes down to concentration risks.

Nate Grossman: Okay. All right. I think we'll probably get into some more of those later on.

David Hori: Indeed.

Nate Grossman: so I think that, you know, we talk a lot on this on this program about the three pillars, right? the visibility of the business being found by the right people in the right places, because you're showing up in the right places, saying the right things, attracting them to you. the business is viable, right? it can stand on its own two legs with those systems and processes, just like you mentioned. amongst other things, of course. And a business you want a business that is valuable, right? And so I think what we're talking about here, you know, the value of the business, that's that value layer in in the the growth system that we talk about. so you know, basically, is this business worth more than the buyer's time in it? and unfortunately most founders answer that question wrong because They answer it from the inside rather than from the outside, right? we talked about this on a previous program, how the blood, sweat, and tears unfortunately don't get priced in, you know, like

David Hori: Indeed.

Nate Grossman: yeah. so most founders that that we have talked to think that their business is worth what they put into it, right? Hours, money, blood, sweat, and tears, and and and all the years. so how does a buyer actually think about that?

David Hori: So the buyer, to your point, isn't paying for the past. I'm paying for the present value of your cash flow and the ability for me to continue that predictably into the future, the future value of that cash flow. And, you know, a lot of I think business owners, brokers, internet logic out there talks about like, well, what's my business worth in terms of multiples? I actually don't care about multiples at all. I'll give you a twelve X multiple, assuming that the cash flow supports that and there's predictability. it it really comes down to the level of risk that exists within a business that drives value.

Nate Grossman: Interesting. The level of risk that drives value. Okay. so presumably the lower the risk, the higher the value. Okay.

David Hori: Indeed, yeah. And and risk is a balancing act, right? So when I'm talking about, you know, negotiations on valuation with business owners, there's really only two things at play. And a lot of I think business owners don't know this. terms and price. So If you're saying that you want a cash offer, that's going to impact price. And if you're saying that you don't care necessarily about cash, you want, you know, the highest dollar value, then now we the the the the terms tip in the opposite direction. And it's all about balancing those two things around risk. Does that make sense?

Nate Grossman: Yeah, yeah. So can you can you kind of walk us through a business that you have looked at? You don't need to name them necessarily, but where the owner was sure that it was ready and in fact it was not.

David Hori: Yeah, absolutely. This actually happens more often than not, where somebody thinks that they're ready to sell and they're actually bringing to me a job, not a business. And I unfortunately

Nate Grossman: Yeah.

David Hori: I can't buy a job. I you know, when if if the business is relying on you to get things done or your connections to close the deal, or you know, your the vendors are loyal to your business because of your personal relationship, that diminishes the value. And so a real clear example of that, actually be they became a a a client of mine. So we looked at the business and said, okay, here's what your business is worth. according to my analysis, here's also how much the money, the money the bank is willing to lend on the business given your cash flow, given all these risk factors. And he thought, wow, that's not really enough for me to retire on, which is a kind of a common way that many business owners think to retire, right? Is this the sell the business

Nate Grossman: Yeah. Yeah. Yeah.

David Hori: is the retirement plan. And so the natural

Nate Grossman: Mm-hmm.

David Hori: question then became well, would you like to work together maybe on increasing the value of your business? And he actually got to become a client of mine. But there were a few things that were getting in the way, you know, selling the wrong product to the wrong customer, the level of

Nate Grossman: Mm.

David Hori: involvement that he had in the business, he was Ultimately, he has a great team, which is a great starting point. And many owners, never get to hiring a team, but he was actually the router for the relationships, the knowledge, the decisions, right? And that's a sneaky one that many owners don't realize. They're they're the almost like the administrative glue that holds everything together, even though you've hired sales, you've hired delivery, you've hired customer support, all those kinds of things.

Nate Grossman: Mm. Nothing nothing works without them, regardless. N d you know, depending on the the

Simone Henry: Okay.

Nate Grossman: the degree of touch, but he's apparently, you know, got a hand in just about everything in that case.

David Hori: Yeah, and there's just a lot of context and decisions flow through him as well.

Nate Grossman: Yeah.

David Hori: work can get done without him. like, but if if everything has to go through him to check check on it or to have his blessing, it's kind of the same bottleneck.

Nate Grossman: Mm-hmm. Yep, yep.

Simone Henry: I found it interesting too that not only that, but also product market fit wasn't wasn't there. Like how long had he been running this business and selling the wrong thing to the wrong people?

David Hori: Yeah, a decades, literal decades. And the problem with with what he was trying to sell too was that he could only sell a finite number of them before the business capacity capped out. And pivoting from one ICP or, you know, ideal customer profile to another now has uncapped potential. There's recurring revenue potential now. And it's the best kinds of customers every owner likes, which they have money and they pay on time, right? So it just has so many different. opportunities to to increase the value. And and incidentally, since working with me in the last three months, it's attracted a trade buyer. And you know, there's all kinds of different kinds of buyers out there. We can we can unpack that in a little bit. But a trade buyer is is the one that can bring the most cash to bear usually because it's a competitor. It's somebody directly in the space already who can make and create a lot of value from your customers, your processes, whatever that is from day one.

Nate Grossman: Buying up the competition, huh? Is that the deal?

David Hori: Exactly. Exactly. Yes. Great way to grow. You know you can you can slowly add one or two customers incrementally, or you can just go buy hundreds of them by buying your competitor. Absolutely.

Nate Grossman: Yeah, yeah. Work worked for Amazon and Facebook, right? I guess so.

David Hori: Yeah, so many companies. Growth by acquisition.

Simone Henry: Yeah.

Nate Grossman: Yeah.

Simone Henry: Huh.

Nate Grossman: all right, very good.

Simone Henry: Very well. So when a founder when that founder is the bottleneck in their business, where does that show up in their day to day? Inside a team or or just themselves? Like what are the signs that that owner can spot on a regular day?

David Hori: Yeah. So there's so many different places we can look. I like to look at their calendar. What's what's what's on their calendar? What kind of meetings only can happen successfully if the owner shows up? I look in their inbox, right? I'll even notice in a seller call, right? I'm I'm sitting down with a business owner looking to buy their business. How many times they're interrupted by the phone ringing or they have to answer something real quick because a team member's stuck. I literally just in the last couple of months had a business owner that had to like walk out of his office and go like help his team hook up a trailer in the middle of our call. And he's like carrying his phone and still trying to talk to me, right? Like those are some of the signs that you might be the bottleneck. I call it the owner's ceiling too, you know, like you've reached the level that you can take the business to with the the playbook that you have, with the skill set that you have, with the people you have. And yeah, the there's all different kinds of places you can look for those clues.

Nate Grossman: Yeah.

Simone Henry: Pretty wild. Them going to hook up a trailer in the middle of the call when you're trying to and they're trying to sell the business to you. You're

Nate Grossman: Yeah.

Simone Henry: like, yeah, clearly this business cannot function without you.

David Hori: Totally. Hundred percent.

Nate Grossman: Right, right.

David Hori: Hundred percent.

Nate Grossman: Tons of red flags there. that's the the the optimistic way of looking at it, I guess.

Simone Henry: Yeah. Yeah.

David Hori: Tons of opportunity to improve. Indeed.

Nate Grossman: all right, so let's get into a little bit more about the framework or your approach here. So you you measure how dependent a business is on its owner, like we we've been talking about there, and You've put you put that factor at the top of your list. So walk us through how you assess it, where do you start from there?

David Hori: Yeah, absolutely. So I run what I call a durability diagnostic. And really, it's a session that I run one-on-one with a business owner that looks at their business, maybe for the first time, where they're they're actually sitting down and objectively looking at the current state of their business and identifying strengths, but also places where there's cracks in their foundation. And again, I'm looking at removing risk. And one of the biggest risks I see is that owner dependence. Because many business owners I talk to, they're Well, I don't I don't need to talk to you. I don't ever plan to sell. I don't want to sell. This is going to be a family business, or I'm going to do this until I I die. Right. those are all valid and you should still build your business to sell because what does that mean? It means that it's going to be easier to run, it's going to be more resilient to things like economic change and you know, the market pressure and things like that. And ultimately, all options are on the table. You can sell. You can go get a bank loan, if you want to grow, all those things, it's going to be easier to transition to your family member someday. All of those things are in play. And the biggest mistake I see is business owners waiting to think about selling their business until they're forced to have to think about it. Whether it's health or the deterioration of a partnership or, you know, any number of factors where they're being forced to sell, that's a huge, huge pit to try to overcome.

Nate Grossman: Yeah. so so your your intake that you that you filled out prior to the our conversation here said that it said something that's that kind of stuck out to me. so these owners have collected far more strategies than they have implemented. The collected far more strategies than they've actually implemented. How do you find the one uncomfortable thing a founder has been working

David Hori: So the results of that durability diagnostic yield one specific focus area. And we like to say find it, face it, fix it. And what business owners

Nate Grossman: Yeah.

David Hori: are generally really good at recognizing opportunity everywhere. There's an opportunity for a new partnership, a new customer, and they're like trying to go after all of it. And I approach a business like an archaeologist, where we we square off a piece of plot. And that becomes the area we know this is the most important area that's actually going to move you towards whatever goal you have. If it's more revenue, less owner dependence, more time, you know, whatever that goal is, there's going to be a single thing that we need to focus on. And then it's just about brushing back dirt and getting curious and digging in on that one area and not allowing them to shift focus to other opportunities or areas. And so again, I approach it much like an archaeologist. And often the business owner has the answer. It's just that they're distracted. They allow themselves to get pulled into urgent things that don't actually move them towards the strategic things. Right. And so I I sit with owners every day that maybe have invested in coaches, in masterminds, in you know, like webinars, and they have, you know, a graveyard full of screenshots on strategies or, you know, books with that are highlighted and got bookmarks in it, and they're just not implementing it.

Nate Grossman: That that sounds like a punk band. I like that.

Simone Henry: That's that, what is it? Yeah, it's like you you get addicted to learning.

David Hori: Ha ha ha ha. Mm-hmm. Yeah. And it feels great. It feels great

Nate Grossman: Yeah.

David Hori: to learn and you can see exactly how that fits into your business. And then suddenly the next webinar shows up and you're already on to the next thing before you've implemented a single thing from the last one.

Nate Grossman: Yeah, and it feel because i I think oftentimes from personal experience too, it c it c it can feel like, you're doing something productive because you're finding about out about what is supposedly the latest, greatest thing to do for the bus you know, your business and all that.

Simone Henry: Feel that way about this one.

Nate Grossman: But, you know, at the risk of ignoring everything else that you need to get done, right? I guess that's the the trade off. The opportunity cost involved. All right. so can we make this a little concrete for our listeners out there? do a little scenario here. Let's say that it's a service business, they're doing two to three million in revenue, they have a team of twelve, and the founder is the one who is still closing most of the deals. What does your process look like for that owner in the first ninety days?

David Hori: It really again depends on you can dig a lot deeper on that specific scenario to figure out what's actually going to move you into a a place of less risk. So I'll I'll just share two client examples. One client had that same scenario. And what we found was that she had a lead problem. The problem was that every single lead or opportunity that came into her funnel was precious and she had to close on it. That's why she was involved in the sales. and so the the the way to To de-risk the business was to drown her team with as many leads as possible so that their success was inevitable and they could afford the wobbles that happen when you're learning, when you're because nobody's gonna sell as good as you at first. Right. And so you have to give them that space where it's okay for you to drop a couple and it doesn't have a negative outcome on the business. So so that's one. The second one was looking at, okay. You rely a lot on your relationships and your credibility to close these customers. so where there are opportunities that there isn't a direct connection to to you, business owner, and you're relying on your credibility, that's the perfect deal to hand off to your to your number two guy. And that allows them to start getting reps in the sales process and allows you to observe and give them, you know, insights and feedback and and and For them to benefit from your benefit from your experience without being involved in every single sale. And so there's just kind of two different examples. They're just from clients that I'm working I've worked with in the last couple of months, where you it's worth it to dig deeper past the surface kind of symptom so that you understand what actually helps move your business forward.

Nate Grossman: And you're you're doing the the durability diagnostic with everyone, correct? That's that's always the first step.

David Hori: Yes, that's that's that's how I get the lay of the land, exactly.

Nate Grossman: Okay.

Simone Henry: I like that. I like what you said, drown

Nate Grossman: Very good.

Simone Henry: drown business in leads and make the make success

Nate Grossman: Yeah.

Simone Henry: inevitable. That's a quotable. That's a quotable right there.

Nate Grossman: I could hear a lot of business owners out there liking the sound of that, I'm sure. Drowning in Leeds,

Simone Henry: huh.

Nate Grossman: yes.

David Hori: Well, and so many business owners throttle it back artificially. I'm working with one right now who's afraid to turn on more marketing because he's reached the limit of what he can hold on to and grasp and handle

Nate Grossman: Yeah, yeah, yeah.

David Hori: and and things are starting to slip through his cracks, the cracks of his hands. Right. And so if you empower your team or you just say, like, this is the exact thing I want, so that my team can start having some more at bats, it totally flips the situation on its head.

Simone Henry: That's awesome.

Nate Grossman: Hm, okay.

Simone Henry: I like that. Hm.

Nate Grossman: So so first ninety days durability diagnostic and then digging right into the low hanging fruit essentially. Is that what I'm hearing? Yeah.

David Hori: Indeed. Yeah, there is going to be some low-hanging fruit. The value though. So I have a client who within the first, you know, the first 30 days was kind of gathering context. And then month two and three of our engagement, he these are granted, the slowest months of the year for him revenue-wise. He exceeded his revenue target by 25,000. And then the third month by 65,000. And I was really excited to to talk to him, try to get like a testimonial from him. And so I sat down. I was like, hey, if you were to sit down with a friend of yours and talk about the work that we're doing together, what kind of things are you gonna talk about? And I sat back and I was like ready for him to talk about revenue and like all these great things. And he's like, Focus and accountability. I was like, Yeah, yeah, yeah. cool, cool, cool. What else? That's it. Focus and accountability.

Nate Grossman: Yeah.

Simone Henry: Hmm.

David Hori: And I was like, What? What about all this extra money? What about recurring revenue? He's like, Yeah, like that that that's awesome. But like I've been top dog in my business for so long, and nobody keeps me focused on the most important thing. And I know I better make progress before every next session because you're going to ask me about it. And that's

Nate Grossman: Mm-hmm.

David Hori: what's moving the business forward. It's like it's not that you didn't know what the most important thing was, it's that focus and accountability for those 90 days. And you can achieve some really powerful momentum by focusing on the most important thing for 90 days or beyond.

Simone Henry: So he's focused on the the thing that drives the revenue.

Nate Grossman: All right. So that leads into the neck my next question.

David Hori: Yes, exactly. Exactly.

Nate Grossman: Yeah, exactly. That

Simone Henry: Mm.

Nate Grossman: that leads into my next question here. What once you found that one thing, what does staying on it actually look like week to week? and then what stops owners from drifting back into the that that busy work and looking for new strategies, right?

David Hori: That's such a great question. So

Nate Grossman: Ha ha

David Hori: what keeps them from falling back is ultimately transitioning it off of your plate and making yourself redundant. And that takes time. So you know, we have we set up regular sessions and it's really driven by the business owner. I have one client that moves at just the speed of light. He's the only one that can keep up with a weekly cadence with me. We talk about it one week, it's implemented and done the next week. Most business owners are going to fall into more of a monthly cadence where you give them something to focus on. We may have a midweek or a mid midpoint check-in. but you know, just to make sure, again, there's not drift, there's not distraction entering the the queue. but they're gonna need a couple of weeks to execute on what we're working on and to show meaningful progress. Then it's about, okay, how do we make this automatic without your involvement? And it's gonna be probably start with getting things out of your brain into onto paper or into a digital format. It's going to involve again empowering a team member to start leaning in on certain areas, finding that list of things that only you can do and handing them off. It could be a a hiring of somebody. there's it's there's no one size fits all, and it's very

Nate Grossman: Mm-hmm.

David Hori: tailored to your specific business. I'll tell you though, the one that like stumps the most business owners. Is often it starts with hiring an admin assistant. They're like, they're so much more willing to invest in technology or commit to a new process overhaul. But when I tell you you need an admin assistant, they're like, whoa, whoa, whoa. I don't know if we're out of size. I don't know if I can afford it. I don't know if I can keep them busy, all those excuses.

Nate Grossman: Mm-hmm.

David Hori: If you do not hire an admin, and every founder I've worked with got this wrong that ultimately exited, they hired an admin way too late. And again, they became The admin glue that held every function together. They hired sales, they hired, delivery, all that stuff. But they were that that router of information and decisions and all the little administrative tasks that that connected them. And that's what an ad hiring an admin frees you up from and enables you to start elevating your focus to more strategic, impactful things.

Nate Grossman: Mm. what about instead of hiring a human, we hire an an AI admin assistant?

David Hori: great questions. And that's something that I'm experimenting with actively

Nate Grossman: Sorry.

David Hori: right now with clients. so I'm in this unique position where I have a client that has a well-established business that has a full office team. And we're looking at ways that AI enhances what they're already doing. And obviously he's already made the commitment and choice to hire two full-time people in his office. Now he just opened up recently a satellite location that The business doesn't quite support yet a full-time office person to help them. And so to date he's he's relied on the the main headquarters office team, but we're looking at should there be a virtual assistant or could we use I AI entirely right now at this stage? And so we're starting with AI and seeing if there's, you know, anything to be gained through that. and then also looking at virtual assistants as an alternative. I mean, again, it's very tailored to every business need.

Nate Grossman: Mm-hmm. Okay.

Simone Henry: So what about other other systems, automations, that kind of thing? How does that how does that play into into relieving the founder from the day to day?

David Hori: Yeah, great question. So you know, I'll I'll just be self-referential. I have an assistant who's amazing. And at first, the assistant was there to take over my calendar, my inbox management, those kinds of administrative things. and and he's very good at that. And then immediately he had to shift into what parts of that can he hand over to AI and be automated so that he's freed up to do other things like Me on podcasts, editing social media clips, those kinds of things, right? And so it constantly shifts and we're constantly looking at what gives us leverage in each of our individual positions. I'm using AI to increase leverage in my role. He's looking for AI to leverage in his role, and so on and so forth. And every person that we hire is hired with the expectation that you're going to use AI to enhance what we're doing. And so it's those office people, right? Creating SOPs now with AI and s drafting them with AI instead of sitting out there and and and writing it all out manually. it's taking meeting notes and turning those into follow on emails automatically is what I call it. and so

Nate Grossman: Mm-hmm.

David Hori: there's so many different ways to to implement AI to create those systems and processes to enhance those people.

Simone Henry: answer. It's about not necessarily replacing people, but enhancing what they do and kinda letting letting the the tool do the thing that the tool does well and with human oversight and basically giving them leverage so that they can do more, essentially. Right?

David Hori: Absolutely. And that's something that is is really important to help your team see is that they there's there's many, business owners aren't aren't immune to this, right? what if I get replaced by AI? What if my team doesn't need me anymore? Just think about what you're freed up to do beyond that. There is a role. Your context, your experience within the business is valuable. I want to deploy it elsewhere that makes the best use of your expertise. And it's probably not rebooking a calendar invite that that shifted last second. Right. it's probably not that. There's something else that my admin assistant can do that he's uniquely positioned to deliver.

Nate Grossman: You you've said, David, that you you spent years doing everything yourself, you you were in that position as well before you asked for help. So what made you want to change?

David Hori: there is a moment in my life where I was building, and this was in the second startup, we were a construction GC. And we our plan was to grow through geographic expansion. And my role was to enable that with hiring, systems, and process. And from the time that I was hired to when I left, we launched, I think, in four different states and six different MSAs. So it was a tremendously busy time. And in startups too, you're not profitable. So you're spending money and you watched the bank account slowly decline. And you know, can calculate when you the day to the date, what when you run out of money. And that was a constant pressure cooker for you know staying ahead of things. And in that, I my my daughter was expected to arrive. And I had this amazing plan to hand over things to my team so that they could run without me. And my daughter came early. She had a different time schedule than what than mine. And so all that you know, optimism and and anticipation of the things that I was going to do to set up my team was gone in an instant. And there was like a few frantic hours when I was at the hospital where I like tried to be available and and you know, do some things and then there were some health complications with around. I was just, I just had to unplug and be gone. And

Nate Grossman: Mm.

David Hori: that instant, I expected my team to struggle, to founder, to, to really appreciate how much context and expertise I brought to the table. And the the the crazy thing was, they weren't just fine. They accelerated. I had been the bottleneck un unknowingly. Here I am preaching to founders and enabling founders to remove bottlenecks. And I was the bottleneck on my own team. And so then I thought, okay, there has to be a way for me to do this in my own role. And where, where are my bottlenecks? Where am I throttling back productivity and the team's throughput? And that was really the impetus is realizing like ultimately like I didn't matter that much. I wasn't that critical to the business. And it took, you know, a major life event for me to get that clear.

Nate Grossman: that's a good story. I like that.

Simone Henry: That's really amazing.

Nate Grossman: your your daughter helped helped you see the the light here in that case. Yeah.

David Hori: Indeed. I'm a slow learner, so it took some big life event for me to see the light finally.

Simone Henry: Mm-hmm. Ha ha ha.

Nate Grossman: Okay, so what would you say needs to be true in the rest of the business for the work that you do with with business owners and and getting them ready for that that buying engagement I guess. to actually stick. So where like in other words, where does your work end in the next begin?

David Hori: Sure. where does my work end? There's really no clear-cut answer. I want to be there as long as I'm adding value. And there's people that are going to graduate and need you know, the expertise of somebody that's worked on larger businesses, you know, that that have engaged with companies that are doing more than $10 million in revenue, right? Like I I really thrive in that one to $10 million revenue range, kind of that that 10 to 200 employees. so you may need a different resource, totally fine. you may need to scale back the number of touch points that I have. ultimately, you know, my my client Jeff, you know, may sell the business and not need me anymore, right? And and I'm advising him through the through the selling process. so there's not a clear-cut answer, but again, it's really tailored to each business and what are their needs and what are their goals. And then once we The whole the whole goal though for me is to get you to a point where I am not needed and you're able to carry things forward, whether because we hired the right team, we put in place the systems and processes, we enabled you to see that you can actually let go of things and things run better without your control. And that's that's the ultimate goal for every engagement.

Nate Grossman: Nice. So when let's get into the multiplier effect. When when you have an owner that fixes that dependency problem, you know, where they're the bottleneck and they they they see the light and you know it's fixed. What else starts working for them that maybe they didn't expect?

David Hori: Hmm. Yeah. So when a business owner stops being that router or the hub for context, decisions, all of that, there are so many compounding benefits. you know, speed, the the ability to to have decisions made outside of your awareness, the level of innovation. That can exist when not all the best ideas have to come from you. And you're you're leveraging the expertise of, you know, potentially dozens of other people across your business to problem solve. You don't have to have all the answers. You don't have to be, you know, shelter them from bad news to keep them focused. You're including them in an eyes wide open approach to your business and leveraging their expertise. There are so many benefits. And ultimately that leads to the things that all owners want more revenue, better profitability, and the retention of your best employees. They're they're showing up and being involved in the decision making and the solutions. And that's super empowering and motivating to the kinds of people that you want to retain.

Nate Grossman: Yeah. this this is a a recurring I I've heard this a lot on this program. So there's gotta be some truth to this, for all you listeners out there. okay, so you ha you integrated an eleven hundred employees after an acquisition and kept ninety eight percent of them, which is kinda miraculous actually. So what did the business do before that deal that made that possible?

David Hori: So the retention happened before the deal closed. And I can refer to our own acquisition by Toyota as well. the level of transparency and intentionality makes all the difference post acquisition. And, you know, our company was acquired at the same time a division of of Lyft, you know, you know, Uber Lyft, Lyft

Nate Grossman: Yeah, yeah.

David Hori: Toyota also acquired a division of Lyft at the same time as our company. One hemorrhaged employees, people were super unhappy, left in droves, and we were able to bring all but one employee into the fold post-acquisition. And with the 1100 person carve out acquisition, we had a plan to map and match benefits. 100%. We had a plan to welcome them with a message from the leadership, a welcome video that showed who you're working with, why we're excited, the growth that this acquisition enables so that people aren't immediately. hearing the news for the first time and thinking, do I need to go update my LinkedIn profile? Right. we had culture ambassadors. Who's excited about our business already? Let's match them up one to many with with the incoming employees so that not only are they connected with a positive you know, ambassador that's going to represent our company well, but they also already know how things work, who's who in the zoo and can help you navigate this new environment where you're going from unfamiliar, fearful to now I'm connected and have resources that's a real human being.

Nate Grossman: Hm. Nice. So you really paved the yellow bick road for them basically. Like you're you're making making it as easy as possible t for them to stick around, giving them reasons to stick around, I guess. And yeah, I love that. That's

David Hori: Well, and just thinking about things from their perspective. Again, it doesn't happen by accident.

Simone Henry: makes me think about in in our framework we have we have this it's an external step in our framework that it's called surprise, delight and wow. But that also when you turn some of that ins internal and you're you're looking at not just the numbers but also looking at people and trying to make sure that their experience is a good experience, then you're you're increasing that visibility as far as the new company, new culture, new everything, and just making that experience a bit better for them. Everything, it just works out so much better. who is it? I don't know who wrote this book, but it was a book called Leaders at Last, and they talked about how you know, the employees, that internal team should be like top of mind, should be very, very important. Because they are the ones that take care of your customers. And then your customers take care of the numbers and the numbers take care of your shareholders. So take care of your employees. Because if you don't, everything is all messed up. It it trickles down.

Nate Grossman: Yeah. Yeah.

David Hori: Hundred percent. Couldn't agree more.

Nate Grossman: Yeah. Yeah. and speaking of AI situation, there's something I read recently about Ford Motor Company laying off their engineers on the quality assurance line, thinking that AI could handle that and we're found out quickly that that's not true that that was not the case. So they had to hire them back, right? But of course these employees were not coming back unless you gave them more money, right? So it's a it's an expensive proposition as well for for the company to lose employees and then

Simone Henry: And now these employees have

Nate Grossman: You know a little little

Simone Henry: a little bit more insight into how you feel about them.

Nate Grossman: Yeah. Yeah. what does that say to an owner who may be thinking of selling their business in five years?

David Hori: Well, first off, I love that your question assumes that they're going to give them five years because so many business owners are like, I want to sell in three months, right? And so these

Simone Henry: Yeah.

David Hori: things take time. And you you definitely do not want to sell your business when you're in a time crunch. So I love that, Nate. You're setting up everybody for success from the question from the first question.

Nate Grossman: Yeah. All right. Yeah.

David Hori: my advice though would be to increase transparency wherever you can with your team. We've we've hit on a couple of these things at a high level, but if you aren't traditionally running your business in a super transparent manner, start to take baby steps that allow you to include your team in awareness around the problems that the business is facing. That it's no secret that I'm not going to be around forever. And someday I want you to be set up for success. That's a different conversation than like, well, burned out, tired, and you guys will figure it out. You'll all land on your feet, right? Like, by the way, I sold the company, right? Like, very different

Nate Grossman: Right.

David Hori: conversations and expected outcomes. So start today. And again, it can be as easy as just acknowledging like, hey, I'm not going to be around forever. I want to make sure that you guys don't feel like the the rugs pulled out from under you. And that's why we're going to start documenting some systems. And I'm going to take a step back and, you know, we're going to look at long-term potential partners that can help carry things forward to ensure your success and and the longevity of the business. those kinds of things are really powerful conversations to have and to start implementing.

Nate Grossman: has to starts with that mind shift right there, right? The flip of the switch. All right. okay, so what so even even we I think we talked touched on this earlier, but even for those listeners out there, the founders who have net who do not plan to sell, right? They don't plan to sell, why does building the business a buyer would want change what it's like to own a business for the for them now, right?

David Hori: Yeah, absolutely. Even if you don't plan to sell, you should build your company to be sellable. And what that does is it removes a lot of the stress and pressure from a business owner. You carry so much on your shoulders, you know, trying to make enough sales to cover payroll and trying to keep the customers happy and all the vendor escalations that come to you. And by spreading that out and empowering your team to resolve that and have playbooks to play. and initiate when those things happen. It's not gonna fix, you know, that those don't happen anymore, but they're gonna be able to engage within the a context and a defined play area where they're gonna be most productive and solve it in a way that's going to help advance the best interest of the business. So that's one benefit. It's gonna be easier and funner to run ultimately, but then again. There's other benefits, tied to are you investable? If you wanted to, if you had this million dollar opportunity and all you needed to do is go and get a bank loan to capitalize on it, they're going to want to know, the level of risk. That's all the bank's going to look at is the level of risk in your business and how much of this business relies on you, how much of the business depends on one giant customer. Those kinds of things. And so again, by building it to Be sellable, you're also making it investable, bankable, all those other things. And then ultimately that creates resilience. So again, if there's a market downturn or the price of goods skyrockets, you're better able to weather things because again, you're not the one problem solving and spinning up, you know, a new source of materials. your team is engaged on that. And so there's really stacking wins to building a business that's sellable. Even if that's not the outcome you're planning.

Nate Grossman: Resilience and durability, I'm assuming those are used interchangeably. Yeah.

David Hori: Indeed. Yeah, absolutely. The durability diagnostic bil gives you a read on how resilient your business ultimately is going to be.

Simone Henry: There's something to be said for the for the founder or the CEO that surrounds themselves with people who are smarter than them. And,

David Hori: Hmm.

Simone Henry: where they don't assume that they know everything.

David Hori: Yes. And having been in that situation, it's terrifying. It's terrifying to be the CEO, owner, manager that is faced with like when I actually the first time I was put in a position to hire somebody that was smarter than me, I literally I thought about sabotaging it because I was so afraid, like it's gonna be obvious to everybody that she's a million times better than me. And they're gonna question, why do we even have David? And I still hired her.

Nate Grossman: Ha ha.

David Hori: And again, that was the first time in my life that it became real where I was like, I wasn't thinking about all the things that freed me up to do. and where my impact could be elevated. I was so focused on being relevant in this smaller area. And I'm so thankful that I hired her and made that recommendation, but it was terrifying.

Simone Henry: It's a psychological shift that you have to have, huh?

David Hori: Truly.

Simone Henry: So that's where having a good coach comes in or being putting on your coach hat when you're working with founders and having them to help them make that make that shift in their minds as well.

David Hori: Absolutely. one of the first clients I had for the durability diagnostic, that was the outcome that she'd never said out loud was like, I'm afraid by putting these things in place that the team's not going to need me anymore. And it was also through that work that she realized so many other opportunities that she could impact the business in a way once she let go of that fear and could name it and start involving other people in the sales process and removing herself from. that place of where everything was depending on her.

Nate Grossman: Yeah.

Simone Henry: So if a founder wants to test their own dependency score for this quarter, we're in quarter four, 2026, which one handoff or system would you look at first?

David Hori: I start with owner dependence. And there's a really easy exercise that I'll share with your audience. just I appreciate you guys having me on here that you can do in 10 minutes, right? It's sitting down and just making a list of all the things that only you can do. And that can be e literally come in like down to like, I'm the only one with the password to our email accounts or you know, whatever that is. Make a list of it and then. Pick two or three and identify a person or a tool, a system that you can transition that off your plate. And that's immediately going to start creating breathing room. It's going to build that muscle of empowering others and remove that heavy weight, just a tiny ounce of that weight that you've been carrying around for years and enable you to breathe a little bit better.

Simone Henry: Like that you said that it it's growing a muscle. and that's so true, isn't

Nate Grossman: Yeah.

Simone Henry: it? These things get better as you practice them. Just like you know, just like being in the gym and working out. The muscle gets stronger and gets stronger and I guess what, more elastic or whatever with with the workouts, with more practice. The more you do it, the better it gets.

Nate Grossman: Yeah.

David Hori: Absolutely. It's a hundred percent and I don't care how good of a business owner, CEO, executive you are, I've never seen anybody flip the switch and be awesome at it overnight. It's built over reps and over time.

Simone Henry: But in the reps.

Nate Grossman: let's get into the rapid clarity round here. Just do some ask some questions. The first thing that comes to your mind, well little snippets for the audience out there.

Simone Henry: Okay, so what is one question every founder should ask themselves about owner dependency this month?

David Hori: If you were abducted by aliens and it took you ninety days to get back to civilization, you didn't have access to cell phone, Wi Fi, anything, what would break first in your company? That's a great question to ask yourself.

Simone Henry: that's a good question to ask. Okay. What is the first thing a buyer checks that most owners never think to prepare?

David Hori: I'm gonna have to go with your ability to respond to outbound leads. This is a this is a surprising one. So often when I'm looking to buy a business, I'll test the website, the process, I'll buy the product for myself and just experience everything for myself. And that's one that I think many business owners would never think to check or fix.

Simone Henry: Okay, and if a founder has never thought about exit readiness, what is the first single step?

David Hori: step is gaining clarity. So so many business owners go into this that you become an expert at running your business, not selling it. And you think that there's only one outcome, 100% sale. But you have to know that there are multiple different kinds of buyers, there's multiple different kinds of exits. There's all kinds of you know, can sell a percent of your company, you can bring on a partner. Like there are options. And so starting with clarity of what do I want to achieve in the sale of my business? Is it retirement? Is it less stress? Is it you know, whatever that is? start with clarity. And I have a weekly webinar for people that are business owners that are execurious. Happens every Thursday. I'm happy to link you guys to that, but that's exactly what it's there for is to start with clarity.

Simone Henry: Pigs of curious. I've never heard that term before.

Nate Grossman: Yeah.

Simone Henry: What is one tool, report, or habit that tells you fast whether a business can run without its owner?

David Hori: Yeah, if you just look at the last 30 days on your calendar and count the number of meetings or engagements that required you to be present in, I think that's a great barometer for the level of dependence that a business has on a

Nate Grossman: Easy peasy. Everybody's got one of those. All right. Very good. So just to wrap up here, I think what David has shown us today is that value of the business is not necessarily what you put into the business. It's what the business can do without you. So and the dependency a buyer measures is the same dependency that keeps a founder stuck in the day to day long before any sales on. table.

Simone Henry: And if what David shared resonated, go to toplineops.com. We'll put the link in the show notes. And you can also find David on LinkedIn at his mine is like this too. LinkedIn, I am David Hori. H-O-R-I. That is his handle. And if this conversation made you realize you are not sure where your biggest growth constraint actually is, this is what we dig into every week. Subscribe to the newsletter at thegrowthceiling.com.. Each week, one real growth constraint and how to spot it in your own business, whether it is owner dependency or something else entirely. And of course, subscribe to The Growth Ceiling wherever you listen. And if this episode helped you see something differently, send it to one founder or two. Who need to hear it? Thanks for watching and listening.

Nate Grossman: Thanks, David.

Simone Henry: And thanks David for being here.

David Hori: Thank you guys.