Today's Guest

Robert Gauvreau is the founder of Gauvreau & Associates Chartered Public Accounting Firm and the author of The Wealthy Entrepreneur. He helps businesses build a vision and a roadmap to realizing financial results. He has built his Toronto-based firm from start-up in 2008 to nearly 100 employees. Clients are exclusively entrepreneurs and professionals and services include tax planning, bookkeeping, financial reporting, legal services, and business coaching – the foundation of any successful business. Robert is often cited in business journals on topics related to money, finances, and entrepreneurship. If you dream of improving cash flow and delivering the financial results you’ve always expected, tune in to hear Robert's strategy and the framework he uses to help clients achieve their business goals. 

Resources Shared

• The Wealthy Entrepreneur by Robert Gauvreau
• Gauvreau Accounting Tax Law Advisory
• Thryv

Episode Transcript

(Please excuse grammatical errors due to transcription)

Gordon Henry:

Hey, hey, this is Gordon Henry at Winning on Main Street. This week we're bringing you a tremendous guest, Robert Gauvreau. Robert who goes by Bob is a financial chartered public accountant or FCPA, and he's the author of the Wealthy Entrepreneur in which provides a simple framework for turning your small business into a profitable cash flowing entity. He works exclusively with entrepreneurs and professionals to help them make more money, gain financial clarity in their businesses. His firm, the Overall Accounting Tax Law advisor is one of Canada's fastest growing small businesses, is recognized by Globe [inaudible 00:01:35], McLeans, the Financial Times. They provide tax, bookkeeping, and accounting services. So welcome to the show, Bob.

Robert Gauvreau:

Thank you. Great to be here.

Gordon Henry:

Thank you for joining us. And I always like to let listeners sort of think about what should they get out of this episode, and I think every entrepreneur has a dream to pursue their passion and turn their business into a strong sustainable entity. But many small businesses lack the plan or the know-how or the discipline. And I hope you can provide the roadmap to show them how they can achieve these goals. So let's get into it. Why don't you just tell us a little bit about your background, how you launched this firm that's become quite successful and how you help small businesses?

Robert Gauvreau:

For sure. So it's funny, people usually ask me, so what made you decide to be an accountant? And that goes all the way back to university where I remember graduating with a class of about 2000 people and realizing, oh man, all my competition is actually in the same program. We're all looking like penguins coming out here with our black and white on. And how do I differentiate myself? And one of the areas that always came natural and easy to me was accounting. So I started working and articling with a multinational firm, which was an amazing experience. What happens sometimes in those firms is when you have a specific skillset, you get forced into a corner and you get pigeonholed into learning one specific expertise. And that specific area wasn't exciting for me. So in 2008, I launched my own firm, which was I referred to as taking my own entrepreneurial leap of faith and kicked it off.

It was just me and two employees and we've grown. We essentially created this firm based on working with entrepreneurs, adding value, being proactive and truthfully helping build the biggest part of our global economy, which is that small business market. And we've evolved and grown. We've actually now got 93 individuals on our team. We service the entire North American market just based on time zone and we have expertise for Canadian and US taxes. So excited to be working with the small business market, have certainly realized our own challenges along the way, but thrilled to be able to help businesses move to the next level.

Gordon Henry:

Yeah, terrific. So 93 people working in this firm, that's not a small firm, so that's very impressive. Congratulations. And what are some of the main services you provide when people come to you with problems, what are they looking for you to do for them?

Robert Gauvreau:

One of the areas that we've focused a lot on and we've created this concept that's called Profit Simple. And the idea of this is foundational in small business that we need to know what the score is in our business. And I'd liken this to going to a sports game. I'm actually heading to an NHL playoff game tonight, which is amazing. But if we were to show up late at that game and the crowd's cheering and there's no score, there's no time, we have absolutely no clue if the team we're cheering for is winning and what the coach's strategy should be to win the game. And the same is in our business.

And that's really a foundational piece, is we need to have the information of where we stand. It needs to be accurate so that we can rely on it and we need to understand how to interpret it so that we can make informed decisions. And I think basically in our business we offer bookkeeping, financial reporting, tax planning, we have legal services, we have business coaching. All of that is built around having that foundational piece in place because if we don't know what the score is, how do we know what strategy to put in place? So we need to start there.

Gordon Henry:

Right. I love that analogy of the sports because we can all sort of relate to it. And I agree that small businesses are very often really good at what they do, whether it's re-roofing your house or fixing your car or providing legal advice. But many particularly small businesses aren't as good at managing kind of the back office piece of how do I keep track and make the most of what I'm generating so that I end up profitable and being able to stay in business and have cash flow, all the things everybody wants. So you wrote a book on this subject, The Wealthy Entrepreneur, and there's probably a lot to unpack there and we don't have tremendous amounts of time. I know there were six main tips, napkin goal setting, growing profits, minimizing costs, staying accountable, maximizing cash flow, and growing your wealth. Can you sort of summarize, if I was going to read the book, what would be the things you'd want me to take away from it as an entrepreneur?

Robert Gauvreau:

Well, the first part, and I think this is where a lot of small businesses, I don't want to say go wrong, but are almost misled. It's like what are we trying to accomplish? And I think of jumping in my car, I'm just outside Toronto, so if I'm heading to New York or to Miami, I'm not just jumping in the car and heading in the direction of the sun and hoping for the best. What I want to know is what's my destination? Where am I starting from and what's the quickest route to get there? And that is in our business, that is, I feel the number one piece that business owners do not focus on because we're so busy. We're so busy just trying to, we've already sold something, we're trying to deliver it, we're dealing with, oh, we didn't deliver it fast enough. We're returning phone calls.

We're not returning those fast enough, we're trying to hire employees, they're leaving. We've got so many challenges, but we're not stepping back and going, what is the outcome we're trying to accomplish? And what are the key attributes of how I go from where I am to how I accomplish that goal? And that's the foundation of where the book starts, where I think a lot of small businesses are missing the boat. We need to be very, very clear on what that outcome is. As soon as we are clear on that outcome, Jim Rowan, I don't know if you know Jim Rowan, but great business guru. He says "Success and specifically success in business is all a numbers game." And it's true. We can actually calculate out if you want to accomplish this goal, here's the benchmarks you need to achieve along your journey. And so I would say, again, small business owners, you have to know what that destination is, otherwise you're driving around aimlessly trying to find the ocean and we don't want to be in that spot.

After that, having a structure that's right for your business, understanding how to optimize your tax efficiency through that structure, how to protect yourself, so important. And one of the most inefficient ways to operate our business is in one where we have more tax exposure than we should. I had the opportunity to work with Tony Robbins for a few years and I used to be at his Business Mastery events. I was one of his global accounting advisor partners, and Tony and I and the other partners essentially gave a free tax review for everybody. And as we went through that process, we realized 92% of business owners that were attending there, but a great sample size, 92% of business owners were paying more tax than they legally had to. And what are you getting out of overpaying on your taxes? Absolutely nothing. So it's such an opportunity to make sure your structure is right, make sure you're tax efficient because that money is preventing you from reinvesting in your growth.

And then last I would say as a bit of a synopsis is once we've realized how we can create tax efficiency, grow our business, make it more financially successful, which is all in the book, all the components, then we have to have a plan on how we accumulate wealth. And I don't know if any of the listeners have read Profit Simple or Profit First, Profit First, great book, don't necessarily agree with everything in it, but a great book talking about the psychology of spending. And the psychology of spending, meaning you have money in your bank account. If you leave it there, you will spend it. So part of creating wealth in your life, in your business is getting that money out of that account and into something that's earning for you.

And we want to do that on autopilot because if you guys are anything like me, if it's waiting on you to do, it it won't happen. We've got to either have somebody else doing it for us or we can automate it. And one of the last pieces, again, once you create, you know where you're going, you create the profits, you're starting to get there, you've got to have the plan for how you get this money out of your business account into an investment account and start earning wealth.

Gordon Henry:

Right. So you add the cape when you make a sale basically, and that money is coming into your bank account, a portion of those funds are being allocated and hopefully automatically deducted into kind of an investment account or someplace else where you're not going to use it to just pay the next bill. Right.

Robert Gauvreau:

I would even take it a step further and say, when we're starting to build out our roadmap to say this is where we're going, this can be a budget. And budgeting is such an undervalued tool in small business to say these are our benchmarks and if we create a budget, we know how much the company is supposed to be making, we know how many sales we have to meet this week in order to get there. We know how much money we need to take out of the company for our personal spending requirements. This should be the bottom line or available cash in our business. Let's set that up automatically to go out. Because here's two things that'll happen. One that cash will get out of your account and you won't spend it. And two, if all of a sudden you're running short and you've got this automatic amount coming out, what do we do as entrepreneurs?

Well, we solve problems and we find a way to make it work. So all of a sudden there goes our boosting to our bottom line and we're back to hitting our targets. It puts a little pressure on us, but we're used to it. Right. Every day is full of pressure for us as small business owners and every way. So let's set it up automatically. It happens. It doesn't necessarily have to be per sale. I think that even involves too much work and too much thought. Let's set it up, that this is what it's supposed to be based on our goals and our objectives. We're going to set it up that way. And if we have to adjust our goals, that's fine, but let's continue to believe in ourself that we can actually accomplish them.

Gordon Henry:

Yeah. So we always hear when that subject of small businesses not succeeding comes up, it's always about cashflow. You hear that businesses go out of business because of lack of cash flow. So is this the same thing or is that a different problem? It seems to me when I hear about cash flow, it's more of an issue of speeding up what's coming in and maybe slowing down what's going out.

Robert Gauvreau:

Which is completely true. And the essence of cash flow is accelerating in and decelerating out. Budgeting and managing the expectation and the roadmap will for sure help us have a good understanding of where we're heading. We also need to measure and reflect that and compare it to what's actually happening. Because if we're not hitting those expectations, we're not following the road. We missed a road, we turned right when we should have turned left. Well how do we get back on the road? And you're right, the greatest, and I think it's mid 80% failure rate on those businesses that failed, it's because they run out of cash, not because they don't have a great business or a great product or a great idea, but that they run out of money. And I'll tell you that when we meet with our clients on an annual basis, some people we meet frequently with, some we meet annually.

And one of the greatest questions I normally get is, well, Bob, you're telling me I made a $100,000 this year, but I don't have any of that. Where did it go? That's our cash flow problem, is we're not paying attention to it. We need to be looking at it more frequently. And I can tell you a lot of the times our cash flow is either going in the owner's personal pocket, we're draining our business, it's repaying loans that we didn't know needed to happen. We're putting deposits up front, we potentially are doing jobs for people and not getting paid until after the fact. So there's a bunch of different factors. We need to understand what it is that's impacting our cash so that we can correct it.

Gordon Henry:

Yep. You mentioned the small business that why do they sometimes fail or go out of business? I heard a story the other day about a woman whose business I was familiar with, and it was a very nice little business that helped pets cleaning and I think kennel type services. And the woman got sick, had a health problem, and as a result of that, basically they went out of business. And it was sad because they had done well for a number of years. So when you hear a story like that, you sort of like, okay, any of us could get sick, right, or have a health issue or maybe that of a family member. How do you set up the business so it doesn't rely just on you, where if something happens to you, the owner, the business is over. How do you get past that?

Robert Gauvreau:

Great question. I actually did a presentation on this yesterday and you didn't know that. So you've really queued me up at a key time. But it's true. When we start our business and the majority of businesses have five or less employees. Right. And the majority of businesses will never sell, there's no exit strategy because me as one, as an advisor, but two as a potential acquirer, I'm not acquiring a business where it requires my time. That's not helping me make money. It's not an investment that I can make because I don't have any more time to give. And part of the idea and the whole, and it's a very unfortunate situation when you hear those things because the individual business owner wasn't able to get to the spot where it wasn't dependent on them. And I talked about this at a presentation yesterday because it's probably one of the greatest risks you have in your business is that it is relying solely on you.

And the question I usually start with is, if you unexpectedly were absent from your business for 30 days, what would happen? And I think it's a really great reflection point for everybody to actually think about that and say, well, what would happen? For me right now in my business it would be okay. I'd hope they'd miss me, but I could leave for 30 days. I just want to be here because I'm passionate about it. But part of that transition has been building a team. And one of the pieces that I talk about a lot in this is that whole visionary versus implementer role. If we're the implementer, we can get a lot done in a short period of time, but if we're not building the team, we're capped on where we can actually build this company. So we need to build systems and I've got a quick tip for everybody too, but building systems and standard operating procedures around training people.

And a good friend of mine, Dan Martell, just wrote a book, Buy Back Your Time, a fantastic book. And he actually gave me the opportunity to present his buyback ladder yesterday and I was training people on it. But one thing that he talks about is a very simple way to create a standard operating procedure is to do it yourself and record yourself doing it, do it on camera and then give it to the person who wants to learn this or you want them to be able to create a standard operating procedure and say, this is how I would do it. Now create the standard operating procedure as part of your training and have that available for the next person. And he said, what happens is you get that person to continuously update it, hold them accountable to it, and next time if that person doesn't work out, you've already got the standard operating procedure, the training, and it's up-to-date on that person.

Now if we want to get to the point where our business isn't dependent on us, our clients aren't calling us, our employees aren't necessarily relying on us, our major supplier contracts aren't related to us, that's building a business that's got value and we need to continue to work towards transitioning in. And I would say now hopefully this is okay, I'm elaborating a lot, but one of the areas that is going to be the most successful in this is empowering our team to take that ownership and responsibility from us so that they can deliver.

We support, we mentor, we coach them in order to get there. One, they're empowered. So if they feel empowered, they're excited, we're pushing them to their potential, they're accomplishing things and have opportunities they wouldn't have. When that happens, our client experience is better. When our client experience is better, we get more referrals, we continue to refer, we grow our team, and that's how we build a business. So I'm with you, it's a huge risk. Cash flow is the biggest one, but when issues come up for owners, if it's dependent on us, we don't have a business anymore. And that's a huge risk. We need to work on that.

Gordon Henry:

Yeah, I love your example around the standard operating procedures and even doing yourself, videoing yourself to train someone what you would do so that eventually they can take it over and the business doesn't depend on you. I think that's a brilliant tip because it's so actionable and it's very clear. I'm wondering you as an accountant or a tax advisor, I don't know how you like to be referred, but typically somebody, okay, April 15th's coming up, time to do the taxes. Sounds like you pay a bigger role. Do businesses invite you in? And what are the bigger roles that you play in the client's business beyond just do my taxes?

Robert Gauvreau:

And part of that is that we've built a team to do the taxes, right, because that expertise is transferrable. So you're right. That's an area that yes, I jump in and support because I'm a team player and I feel like that's part of how I'm a leader, is I jump in and help my team when they're maybe struggling with hitting deadlines. But you're right, my role now is more that of a business advisor and a business coach. So we have a small business community, we call it a million dollar year program, and we help businesses go from whether they're at a $100,000 or they're at a million dollars, let's help you evolve, grow your business to hit the next million dollars. And I do a lot of coaching because I think there's a lack of financial knowledge and awareness in the small business community.

And I'm on a mission to empower every business owner to have that knowledge and that confidence so that they can take risks and change the world. And that's what gets me excited these days. Yes. Is doing taxes part of it? For sure, because I want to make sure you're not being inefficient and wasteful in your tax standpoint. I've got a law firm in-house because I want to make sure that you're protected and your business structure is right. Financial reporting, I want you to get access to financing, but I'm not doing any of those things anymore. My team does them. I'm going to help guide you to the next level and get the right experts in play where they need to be.

Gordon Henry:

Yeah, terrific. Bob, we're going to take a quick break. Don't go anywhere. We'll come back and I want to ask you a little bit more about what businesses are getting from your book. What has been the reaction to the book and how is it helping businesses implement some of the things you recommend? Don't go anywhere.

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Gordon Henry:

And we're back with Bob Gauvreau and we're talking about how small businesses can benefit from many of the guidance, areas that people like Bob can provide. So you wrote this book and I'm interested in, and you speak publicly a lot, the businesses that are your clients, what have they been able to do as a result? What's the impact you've seen? Can you tell us a success story? So somebody listening may say, well, I could really benefit like that.

Robert Gauvreau:

Right. So I would say, and maybe I'll start right with a controversial comment that I make in my book because I think it leads into everything. And a lot of you who are listening right now, just give me five seconds to explain myself before you jump at me. But profit is the number one objective in creating a business. And the reason it is the number one objective is that if we do not create a sustainable, profitable business, we have nothing to create in the future. And a lot of people will say, well no, Bob, impact is number one for me. And you go, great, I completely agree with you, it is my number one passion. But if you don't focus on profit first, you lose out on the opportunity to be impactful. And I would almost push that to the next level and say, if you don't focus on profit first, you're minimizing your impact and you're being selfish because you're reducing the impact you have on the world.

And that's ultimately the framework for what it is we're trying to accomplish is listen, we know the impact you small business owners are going to have on the world. We believe in you and I have committed my entire life to supporting you. I want you to make that impact. But if you don't focus on profit as an initial goal, you need that profit to reinvest in your business, to reinvest in your people, to reinvest in not being dependent on you, to create those systems so that you're creating more profits to reinvest, to help more people. Because if we're not focusing on profit as our number one objective, our impact will not be where we really feel like it should be. So for me, my goal is, and the results that people that work with us, especially inside our million dollar year program, is they come in, they become profitable, they reinvest, they maximize their impact and they're fulfilling their life's mission. And ultimately we're here to empower entrepreneurs to realize that global impact. And that's what again gets me really excited every day.

Gordon Henry:

Yeah, no, that's terrific. And success I think for small businesses is defined in different ways. For some people it may be, Hey, I'm creating jobs for lots of people whose families then can be supported, or I'm freeing up time so I can go see my kids' soccer game or football game in the afternoon. People define success different ways. But it all stems as you're saying, from having a stable business that's profitable so then you can sort of live the life you want to lead. Right?

Robert Gauvreau:

Agreed. And I think profit isn't the definition of success by any stretch of the imagination, but freedom might be. If I feel like I've hit a certain level of success, it's because I've hit a certain level of freedom. That's success for me, which was created based on being profitable. I can't find freedom without creating profit because profit allows us to build the team around us and to reinvest in our business to get the freedom. Same with impact. If impact is the number one definition of success, is the most people that I've been able to support, great. But profit has to be number one so that you can get the profit to reinvest, build the team. Listen, when I started this, I had two people. It was me and one bookkeeper and we were able to, I think the first year I worked with 350 individuals and did their personal taxes.

I did 40 business financial reporting. That was it. If I didn't eventually make money and hire my next staff person, it was all the time that I could spend. That was it. Like I was capped on how much I could actually impact the world. But now with 94 people, I'm going to be able to go out and every individual can impact the lives of, I'm going to say hundreds of people a year. I've multiplied that. So impact for me is my number one objective of success, but I have to focus on profit first because if I don't focus on making money, I can't pay my team, I can't pay my team, they'll leave me. If they leave me, I don't have a team to maximize my impact.

And I could go through every element of the business that's like great profit is not necessarily, and it could be the number one thing you're trying to achieve. If that's the case, fine. I'd really look at your purpose because I don't know that it's sustainable if profit is your purpose in life. Find something that's more meaningful and profit will come with it if you implement the right systems and the right tools. So anyway, I could talk about that all day because I'm pretty passionate about it, but we have to focus on making a profit otherwise there's nothing that's going to give us freedom and make the impact that we really want.

Gordon Henry:

Well that's a great way to conclude and I really applaud you. I was thinking how much impact you probably are having. With 94 employees, you must have a lot of clients and you must be helping a lot of people. So hats off to you and congratulations. Where can people find you who may be interested in having an initial conversation, learning more about what you can do for them? And do you by the way offer some kind of introductory where people can call and get a 15-minute sort of meet you before they sign up?

Robert Gauvreau:

Yeah, meet me again, can't build a business based on owner dependence, but the individuals that I've created and trained and molded into being the best experts in world-class, 100%, our team is available. Our website is Gauvreau, which is G-A-U-V-R-E-A-U-CPA.ca, and we also have our coaching program, which is milliondollaryear.ca as well. That is really, those are the two areas. From a tax efficiency standpoint or any sort of the compliance, that's the Gauvreau side of our brand. The coaching side, if you're looking to invest in yourself to maximize that impact and help you with your profit, that's our milliondollaryear.ca program. Both of those would involve and allow you to meet with our team and see how we can support you.

Gordon Henry:

Terrific. Well Bob, thanks so much for coming on the show. I love what you're doing, how you're sporting small business, and obviously again, great success that you guys have achieved. So great to have you here and hope it all continues to go well.

Robert Gauvreau:

Thank you so much. My pleasure for being here.

Gordon Henry:

And I want to thank our producer, Tim Alleman and our coordinators Diette Barnett and Daniel Huddleston. They do a great job. And if you enjoyed this podcast, please tell your colleagues, friends and family to subscribe and please leave us five star review. We'd really appreciate it. Helps us in the rankings. Small business runs better on Thryv. Get a free demo at thryv.com. Until next time, make it a great week.

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