Episode 38: Hands-Free Success: How To Exit Without Exiting With Jason Duncan

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Hands-Free Success: How To Exit Without Exiting With Jason Duncan

What is up, money masters? I have a guest I cannot wait to share with you because he has a unique approach to those of us who are in business. I know most of you are, and you’re always thinking about what’s to come from my business. Am I going to sell it? Am I going to leave it as a legacy business? How do I work in my business and still feel like I am retired from my business? We have Jason Duncan. Jason. How are you, man?

Wade, I am doing good. Thank you.

From Pulpit To Powerhouse: Jason Duncan’s Business Origins

I’m glad to have you here. Jason is in Nashville and has a really interesting background in business. Jason, would you share with us just a little bit of how you became who you are in business?

I started my career in high school and college working in pastoral ministry. I spent thirteen years doing that. Got tired of it. I couldn’t do it anymore. I went back to school, got a master’s in education, taught school for four years, thought I would be teaching school forever, but budget cuts coming out of the great recession had me looking for other employment opportunities.

I made a decision to start a business, and out of sheer desperation, need to pay the bills, started a business, and it worked. It worked really well. I know my story is not typical, but with our first full year in business, we were profitable. Second full year in business, we did over a million dollars in revenue, and it just took off. It just went really well. In 2020, exited the daily operations of that business.

 

 

Wrote a book about my experience of exiting the business without selling it. That book is called Exit Without Exiting. As I did that, more people started asking me, “How did you do it?” That’s when I started my coaching company and my mastermind called The Exiter Club, where I show entrepreneurs how to do what I did and ultimately how to take your business to market for maximum value.

The Exit Without Exiting Strategy: Redefining Business Freedom

Everyone I know listening to this who’s a business owner is going to be reeling with, “Wait, you exited without exiting?” Could you tell us a little bit more about what that actually means?

Let me tell you a story. When I did, but I did. I transitioned the daily operational control of the business over to four key people on my team. I started off by telling them, “Look, here’s what I’m going to do. I’m going to meet with you guys once a week, and we’re going to make sure everything’s going good. You’re going to bring any issues to me, and then I’m not going to be in the office anymore.” Once a week, and then it went to once a month, and then once a quarter, and then eventually didn’t meet with them at all.

They were running everything. At least that was the plan. That was how we were positioning this. As I did that, people who knew me, they said, “Did you sell your businesses?” Like, “No.” “You’re never at the office. You’re never there. What’s going on? Did you exit?” I was like, “Yeah, I did, but I didn’t exit.” That’s exit without exiting means. I still own the business, still make the money from the business. This was still ultimately responsible for the business, but I had nothing to do with the daily operations whatsoever. I was an owner-investor. I owned it, but as an investor, not an operator or even a manager.

That makes a lot of sense, then. A lot of the clients I’ve had over the years have been in the professional space, like doctors, attorneys. I think that’s probably a form and concept to them. For those of you reading, if you happen to own a franchise or if you happen to own a retail operation, it’s easier to do that type of thing. Being an owner, sometimes called an absentee owner. Sometimes, from the very beginning planned that way, but if you’re in a business and you love to do what you do, and maybe you like to work in the business, and they’re looking to get out. Jason, what would be maybe one of the first steps that people could take to start moving in that direction?

Breaking The Hero Syndrome: Building A Business That Runs Without You

I think the first thing you have to do is not tactical at all. This is all mindset. You have to know that you cannot be the hero of your business because if you’re the hero of your business, you will always be shackled to the business and the business will be shackled to you, which means that if something happens to you and you’re not present anymore, the business cannot survive. You may think I’m the hero because I know things better than everybody else, and I can do better than your best.

That might be true, but the reality is you’re being selfish by doing that. Let’s say you have 5 employees, 10 employees, 50, whatever the number is. If those employees, paychecks, and livelihoods are dependent upon you, and if you’re not there, they cannot get paid. That’s selfish. You’re setting them up in a dangerous position. If you’ve got 30 employees, that’s 30 families whose livelihoods and college and tuition and weddings and medical care all depend upon the business paying them.

If the business cannot survive without you, then that’s not good. I think the first step, no matter whether you’re a professional as a doctor or lawyer, dentist, whatever you have, chiropractor whatever you are, you have to understand the mindset that you cannot be the hero of the business. Once you get that mindset, at least you don’t have to fully embrace it, but you got to accept it. We can start working on tactical stuff.

 

I totally love that because the thinking around what it is that we do, I know I have been stuck in that personally. Probably to some extent, still am because I love working with my clients, but I don’t have a lot of employees at this stage in my business. I just love to have a lifestyle business. The people I work with and have worked with, I know, have a handful of employees, maybe up to 40 or 50 employees in some cases. That shift to recognize you don’t have to be in effect cannot be the hero. That’s probably going to be different for a lot of our readers. How did that shift for you?

I think everybody is going to have a different take on this. Here’s how it happened for me. In 2016, I hired a business coach for the very first time. Before that time, I didn’t know business coaches existed. I didn’t know that was a thing. I hired a business coach, and he helped me start seeing things very differently. We worked with him for about not quite three years, almost three years, and about, I don’t know, two-thirds of the way through our engagement. I remember he and I were having a conversation, more off-the-cuff conversation than down-to-business.

He asked the question, “Jason, what would you do if you weren’t running this business? If you had everything you knew now and you knew everything you knew now, would you have started this business or would you have done something different?” I said, “Man, I would never have started this business. There was nothing about this business that I liked or enjoyed. I love the people. I love what I do in terms of working with people, but this business in lighting and electrical, that’s not my thing. I did it out of opportunity, and the opportunity paid me well.”

That particular year, I think it was in 2018,  for the first time, we had a seven-figure EBITDA. We were killing it. Life was good. I said to my coach, his name is BJ. Said, “BJ, why don’t I just sell the business? I like my employees and I like doing that part of it, but the rest of it, I don’t care anything about this industry.”

He said, “We can do that, but you cannot.” I said, “What do you mean I cannot? We made a million dollars this year. That’s a lot of money. Surely we could sell this business for a good chunk of money.” He said, “No, because the reason you want out is the same reason no one else wants in.” What he meant was that I didn’t want to be the bottleneck of the business.

I didn’t want to be a constraint on the business. I was, I had good teams, and we were making good money, but everything still ran through me, even though I wasn’t the number one salesman anymore. I wasn’t the number one administrator anymore. I wasn’t the number one finance guy like I used to be. All those people still had to come to me and ask me questions, and they still relied on me to make it happen. He said, “Nobody will want to buy that business because nobody wants a job.”

It struck me as, “How do I get out of this thing?” That was when the exit without exiting started. I started to try to figure out how do I figure out how to get myself extricated or disentangled from the business so that it can run without me, thereby making the business more valuable and giving me my life back. I discovered I don’t have to sell it at all. I can maintain ownership. Once it’s paying me and I’m not working in it, why would you sell it?

Powerful. It sounds like it was more a function of empowering team members and you letting go of things that you just, for some reason, felt he needed to control us. Am I getting that right?

Yeah. The first tactical step, now I’ve built a whole platform methodology around this called the XOS, which stands for Exiter Operating System. There are seven stages to this. Stage one is basic delegation. From a tactical standpoint, entrepreneurs are historically bad at delegation. They have to understand basic delegation so that they stop doing everything.

 

That’s stage one. Stage two is assembling your support squad. You’re right on track way. This is about getting the right people in place. Your support squad is going to be making sure you’ve got your administrative stuff tied down. You’ve got the basic running of the business handled without you having to be in the mix, like the basic stuff. The third stage is when you put together your A team. Your A team is going to be your most critical part moving forward because your A team is the team of people that you’re going to rely on to make the decisions when you’re not present, but make them as if they were you making those decisions.

That is critical. The first three stages of this XOS methodology that I used to exit without exiting, and then all my clients and hundreds of other people have used it has start with delegation. You got to learn to delegate, and there are specific ways to do that. You assemble your support squad, and then you get your A Team prepared. We can start talking about the higher-level stages.

Mastering The Art Of Delegation: Avoiding Confiscation & Abdication

How often do you view people having trouble with delegation, and what are some of the key things that can be done to make that more effective?

Most people, and when I say most, I’m talking like 99% of people, are very bad at delegation. Even people who say they’re pretty good at it. They’re bad at it because we confuse delegation with just assigning a task to someone, because just telling somebody to do something isn’t delegation. That is dictation at best. It’s not telling, it’s not delegation. What a lot of people do, I found, is they practice something called confiscation.

What they do is they give a task to someone, say, “I need you to do this, Bob.” Bob goes, does it, but you’re always looking over his shoulder and like, “Don’t do it that way, Bob. Don’t do this.” “You know what? Just give it to me.” That’s the hero syndrome creeping back in is that I can do it better than Bob. We say we’re good at delegating because we gave Bob a task, but we confiscated it. We didn’t delegate it. We confiscated.

On the other side, if you look at this like a pendulum. Delegation is the middle to one side is confiscation, even though it rhymes with delegation, but it’s not the same. The other side is abdication. It’s another word that rhymes with delegation, but it’s not abdication. Not a word we use a lot, but this is what abdication looks like. You give a task to Bob, and then you never check in. You don’t even know if it ever got done. That is abdication. That is giving up your responsibility or authority over that task. That was the sin that I committed.

Ultimately, if I look back at all the mistakes I’ve made as an entrepreneur, that’s the biggest one is that I trusted people too much without verifying and checking in. Now I’m in the process of I wrote the book Exit Without Exiting. I’m in the process of reconsidering how do I retell this story, but now with the pain of the mistakes that I made that happened after the book was published and written? How do I show people there is a way not to abdicate? There’s a way not to confiscate, but there’s a beautiful middle way to delegate the right way.

Can you tell us more about that? What does that actually look like?

Three critical questions have to be answered when you’re delegating. If you sit Bob down and you say, “Bob, I’m going to delegate this task to you.” Bob needs to know why this task is important. If Bob just thinks you’re unloading crap, you don’t want to do, he’s not going to have any ownership or buy in on that. The understanding of why. I remember one time sitting down with an assistant that I’d hired years ago, and I spent 3 or 4 hours explaining to her and her training email.

We’re sitting at the desk, elbow to elbow, and I’m showing her email and how to do newsletters and how to handle email. I’m three hours into this, and it’s been brutal. She was taking notes, and she’s a smart lady. She was going to get this all figured out, but I stopped for a minute and I looked at her and I said, “Let me take a minute and explain why this is important.” As I started explaining the why, because the technical part she got, but when I started explaining the why, she was like, “Oh.”

It was in that moment of understanding why and how this fits into the whole puzzle of the business. It made her a better operator of that particular task. Understanding why that’s a critical question. Number one, not just what they’re doing, but why they’re doing. The second question is, how do they do it? Now, a lot of entrepreneurs would confuse this by saying, “I’m going to micromanage and tell them exactly how to do it the way I would do it.” Sometimes that’s necessary.

If we’re talking about very technical stuff, maybe you’re in the medical field, like there are certain ways you have to do things, and you cannot do it, whatever the hell you want. You’ve got to do it a certain way. What I mean by how is to let that person know what tools and resources are available to accomplish it, and then let them figure out their specific spin on it. What I found over the years of delegating and answering this question, how is that I find that a lot of times, probably more often than not, certainly more than 50%.

Is it the person I delegated the task to will do it differently than I did? Usually better, like a more clever way to do it than I did, because I had the constraint of understanding what I’m trying to do. I wasn’t thinking about anything else. They came at it with a clear blank canvas, and they figured out a better way to do it. The how question needs to be answered, what tools, what resources are available, and then let them figure out the details.

The third critical question is one, a lot of people miss, and this is when, like, when is this due? I tell a story in my book about an entrepreneur named Cheryl, and she had delegated the task to let’s call him Bob, and her company. She said, “Here’s why and here’s how,” but she didn’t give him the when. What ended up happening about six months, Bob was completing the task, doing exactly what he was supposed to do.

When Cheryl was looking at her revenue numbers, she realized that something was really off. Tens of thousands of dollars off in the P&L. She went to Bob and said, “Look, I thought you were doing this task.” He said, “Yeah, boss. I’m doing it every Wednesday.” Let’s say every Wednesday. I don’t know when he did it. I cannot remember the details.

She says, “No, this has to be done on Mondays because if you don’t do it on Mondays, our vendors don’t get the report and we’re going to be behind.” It ended up costing her tens of thousands of dollars. Bob did it. He just did it late. People need to understand when you delegate. You got to answer the why. You got to answer the how. You got to answer the when.

That makes so much sense. It seems intuitive, but why are we missing it so much? I’m just like, are we busy? Are we just too much Cheryl syndrome and don’t want to give it up? What do you think?

I have a theory about this, and it relates to my former profession as a teacher, because all of us have experienced going through school, and we all think that we know what’s best in school and for school. We just have this, “I know what’s best.” There’s this mental block. We think we could be the teacher in the classroom. There’s a reason they require teachers to have a degree. There are things you have to learn about pedagogy and how the brain works and how neuroscience works, and what skills you need to have to work in a classroom full of 32 screaming kids.

No Yokel who just went through twelve years of school can show up and do that. There are certain things you have to learn. I think the same mentality ends up infiltrating us as entrepreneurs because we know how to do something. We just assume they know how to do something. “Bob, do this thing.” We just assume they know how to do it. They don’t.

They don’t know what we know. They don’t think like we think. Listen, I think if you took a brain scan of an entrepreneur, I don’t know if this to be true, but I would bet money on it. A brain scan of an entrepreneur and a brain scan of an employee. They’re going to look very different. Not one’s better than the other. Please don’t hear that. I’m not saying one’s better than the other, but they’re going to look different.

An entrepreneur thinks very differently than an employee. An employee thinks differently than an entrepreneur. Guess what? We need them both. I’m an entrepreneur. I need employees. If we were all entrepreneurs, nobody would get anything done. If we’re all employees, there would be nothing cool. We’ve got to have a balance of these two things together.

That makes a lot of sense, too. We covered the first three, I think, aspects of your XOS. Can you tell us what the rest of the components are?

Building A Passive Profit Engine: Systems And Automation For Scale

Stage four is when you start working on systems and automation. The reason it’s stage four, not stage one, is because a lot of entrepreneurs can attest to the fact that they put together great systems, but they didn’t have the people to execute it. It was just a system that ended up relying on them to do. Systems come after you get your people in place. Now, it’s not totally true to think that the systems, you don’t even think about it until you get to stage four, but stage four is when you double down on it.

Now you’re going to be putting systems in place as you learn to delegate and you hire your assembly or your support squad, and your hire your A team and you get them trained. Systems and SOPs, and automation need to be implemented as early as you can. By the time you get your A team put in place, now it’s time to double down on your SOPs, double down on your technology.. I have an interesting, timely example of this particular thing. I have a small team.

I’m a business coach and I run a mastermind called The Exiter Club. I’ve got three people who work for me who live here in the Nashville area. I’ve got three virtual assistants who live in the Philippines. I’ve got a small team of six people, all full-time, that worked for me, and we meet once a month all day. This Monday was our day. I’ve got my support squad put together. I’ve got an A team of people that are on, like I got five other coaches in my program, and they’re part of my A team, and my assistant, Renee, she’s part of my A team.

I’ve got an eighteen put together. Monday, it became clear to me as like, “We’re in this business. We’re at a place where I need to start doubling down on systems and automation,” which is stage four. It became aware to me as “In this business, I’m really in stage four. I need to start doubling down. I want to talk about looking at project management software. What do we need to put in place to automate some of this stuff?”

That’s stage four. When you get that firmly in place, stage five shows up, and this is where it gets cool. I know you’re a finance guy. You’re on this one. Stage five. This is when you start building a passive profits machine. This is when you start thinking about everything through the lens of finances. You’ve got your delegation plan in place. You’ve got your assembly. You’ve assembled your support squad. You’ve got your eighteen systems, and automation is working.

Now, how do I make this work? We maximize profit, and nobody has to push buttons or be present to make it happen. Is there a recurring revenue model? Is there something that we can do that will make more money? The reason that stage five and not stages 1, 2, or 3 is that you don’t have enough things in place. You’re still too involved in the weeds to even consider how to get to a recurring revenue model. That’s stage five.

I’ll briefly talk about stages 6 and 7 because that’s the payoff. We’d probably talk a little bit more about it if you have questions. The stage six is exit without exiting. Once you get all that done, now you have the option. You can exit, you can not be involved at all, and you can be the owner investor. You have the choice to move to stage 7 or stay in stage 6. Stay seven is when you sell your company for as much money as possible.

That’s the full exit. A lot of entrepreneurs don’t want to do it. I have a client who came into The Exiter club, had his business listed for sale when he came to me. He said, “I know that you’re a guy that can help me get this done quicker at our higher valuation. Can you help me?” He joined, and he’s not been with us for quite a year. His decision when he was at our workshop in April he said, “I don’t think I want to sell it.”

I said, “Really? Why? What happened?” He goes, “Now I’ve got this idea that I can be in stage six and I could be anywhere in the world and run this business and continue to get paid. Why would I want to sell it?’ Some people are to want to move to stage seven. One of our other clients he has his business listed with our investment bank partner, and they’re actually trying to sell it. It’s just up to you how you want to go. That’s stages 6 and 7.

That’s so makes me excited because I just got off the phone with one of my clients I’ve had for a couple of years, and in the construction industry. That is a tough place to be. He’s like the subcontractors, the contractors, the communication is really difficult. “Man, I want to get out of this thing. How do I just sell?” “I don’t know if you’re ready to sell. Like the business depends so much on you. I don’t know if you’ll get much out of it.” “What do we got to do?” I’m like, “I’m going to interview a guy later today and I might need to make an introduction.”

Yes. I’ll be happy to talk to him. What’s interesting, because you said he’s in destruction, as we have, think we have 5 or 6 general contractors who are part of the excellent club. We have people in the wedding business. Have people in the marketing business. We have general contractors. We have people that do all kinds of businesses, chiropractors, you name it. We’ve got people that are from all different places, lawyers, but general contractors have been drawn to The Exiter Club lately.

What are the things they’re saying to you?

It’s hard to run. The contracts and the paperwork, and getting paid. I used to be in the general contracting space. That was the business I had. I had an electrical contracting business. I understand the lingo. I cannot remember because I haven’t done it for so long, and I blocked it from my brain. I hated it so much, but there are certain documents that are like federally governed contract documents that you have to sign between you and the customer that determine how much can be paid on what schedule and how much retainage can be held back.

All that’s just mind-numbing because in the normal world, Wade, I come to you and I buy your widget. I give you a hundred bucks. You give me the widget. We’re done. That’s how this works. If I’m paying you for a service, I pay you your monthly or quarterly, or annual service fee. You provide those services and that’s it. In the construction world, that’s not how that works.

There are so many moving parts and changes. They just get frustrated. Some people complain early on when they come in, they complain about people, how hard to find good people, but really, that’s a mental thing. It isn’t about them. It’s about you. The good people are there. It’s bad bosses. That’s the problem. We show them how to fix that mindset.

It isn’t about them. It’s about you. The good people are there. It’s bad bosses that’s the problem.

Take Action Now: 30-Day Delegation Challenge

Very cool. As we wrap up, readers who are ready to reclaim their time, scale their business themselves, maybe want to work toward this model you’re talking about. What would you say the most important decision is that they can make this very weak to help them move forward?

I think the decision you can make this week is that you need to make a top ten list of things that you’re doing on a regular basis that someone else could do. I’m not saying they would, just could. What are the top ten things you’re doing that someone else could do, and pick one thing and delegate that for 30 days? If you will do that, your life will change. Now you have to stay committed to it. There are certain things you’ve got to do that. I’ve got a free resource.

I’d be happy to give. There’s a delegation cheat sheet that I can give everybody if you want to put that in your show notes, but there are certain things you can do. The main thing to answer your question, Wade, is to delegate one thing. Just take one task this week and give it to somebody else, and do it the right way. Answer the why, answer the when, or answer the how, and the when and see what happens, and only do it for 30 days. You don’t have to do it permanently. Just do it for 30 days and see what happens. I promise your life will change.

Jason, you have a podcast yourself. Can you tell us a little bit about what you do on your podcast?

Yes, I have two podcasts. When I met, the first podcast had been going for a while, but the second one had just been released. My original podcast is called The Root of All Success. It is an interview podcast. Mostly, I do some solo episodes where I do what you’re doing. I bring people in here who are successful. They’re mostly entrepreneurs. I talk about their stories of success, what they classify as success. If you want to tap into how hundreds of different entrepreneurs have achieved success and how they define it, then the root of all success is a good show.

Now, the other show that I started is called Chisel & Compass. I’ve got a co-host, and we don’t interview anybody. It’s just the two of us talking. It’s a conversation that looks at the intersection of faith, business, and mindset. We geek out on mindset. How does mindset affect everything? What does that do for us in business? Because we both follow Jesus, we talk a lot about the biblical principles that support and undergird all of what we do in business and through our mindset.

Chisel & Compass. I’m thinking about what those represent. A chisel would have to be either wood or stone, and a compass, not like a directional compass, Northeast, Southwest. Are you talking about the scribe that you can make circles with?

No, the Chisel & Compass name is about chiseling away everything that is not what you need in your life. When a sculptor looks at a piece of marble and wants to create something amazing, they take the chisel to carve away what shouldn’t be there. That’s what chisel and compass mean. On the compass side is what’s your true North. What are you trying to go for, because just chasing success or chasing money isn’t what it is. Chisel & Compass is this idea of we’re going to get down to the brass tags of everything.

Love it. That sounds like a great podcast. I’ll have to look it up myself.

I’ve enjoyed the conversations. It gives us an outlet to talk about things. He’s a good friend of mine. We talk about this stuff all the time offline, saying, “Man, we should do this on microphones and let the world listen to it.”

Jason, if anyone wants to connect with you and see if your program would be a fit for them, how do they do that?

The best way to do that is go to TheRealJasonDuncan.com/Mastermind. On that landing page, it’ll tell you everything you need to know about The Exiter Club, which is the name of the mastermind. There are videos on there. There are testimonials on there. There’s all the information about what you get as a member. There’s an opportunity for you to apply because we don’t take everybody. It only takes certain kinds of entrepreneurs, and you got to be doing well to get in. We’re not working with startups. We’re not working with people that only been in business for a year and are doing a couple hundred grand in revenue. You got to be doing at least $300,000 in net or three million in top-line revenue for us to consider you.

Got it. Very cool. Jason, thanks so much for being on with me today. Readers, I love you guys so deeply that I’m bringing on incredible people like Jason to give you insights and support this one thing about delegation. I know every business owner. In fact, I think every human needs to learn how to do this to have an effective life. Thanks for those points, Jason. Guys, we’ll see you in the next episode. Take care.

 

Episode Resources

• • Jason Duncan
  • Exit Without Exiting
  • The Exiter Club
  • The Root of All Success
  • Chisel & Compass