EntreLeadership - Are You The Reason Your Business Is Stuck?

Episode Date: July 17, 2023

Today, we’ll hear about: •       What it looks like to transition from treadmill operator to pathfinder •       Why it’s always worth investing in company culture •       How to expand a business when family owns the property being rented •       How to set boundaries for yourself on when to pull the plug on a business that isn’t profitable Links mentioned in this episode: •       The EntreLeadership Podcast •       EntreLeadership Elite •       Have a question for The EntreLeadership Podcast? Leave a voicemail at 844.944.1070 or submit your question for a chance to be on the show with Dave Ramsey: https://www.entreleadership.com/ask Start growing in business and leadership with the EntreLeadership Newsletter. Sign up to receive tactical tools, advice and resources in your inbox every week: https://bit.ly/3IRWnsL   Support our sponsors: •       NetSuite •       BELAY •       Payority •       Staples Learn more about EntreLeadership Events: •       EntreLeadership Summit •       EntreLeadership Master Series Learn more about EntreLeadership Coaching: •       Elite •       Advisory Groups •       Executive Coaching •       Workshops Listen to all the Ramsey Network podcasts anytime, anywhere in our Ramsey Network app: https://apple.co/3eN8jNq Learn more about your ad choices: https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy: https://www.ramseysolutions.com/company/policies/privacy-policy Learn more about your ad choices. Visit megaphone.fm/adchoices

From the headquarters of Ramsey Solutions, this is the Entree Leadership Podcast, where I take calls from leaders like you about what it takes to win at any stage of business and leadership. I'm Dave Ramsey, your host, with over 30 years of experience leading in the trenches right alongside you. Thanks for calling in. If you want to be a caller on the show, just call us at 844-944-1070, or give us a little hint about your question and we'll set you up as a caller on the show by going to Entreeleadership.com slash ask. If you notice there is a black cloud over the show today,

and everyone's wearing black with a tear in their eye, it's because it is producer Tim Hull's last show that he is producing. Tim has been producing the show for several years, long before I came along and messed it up. He used to produce an actual show with real guests and hosts and all that kind of stuff, and he's bored stiff now with me just take. calls and all kidding aside he's done a wonderful job and is making a move to another state with a

family situation and so we're we're grieving the loss of our producer and we will persevere and continue to take your questions but tim well done it's been an honor working with you and walking with you and thanks for helping me make the transition into doing this show for the first time since this show started many years ago I'm now the host taking your calls again 844 944-1070. Tori is in Atlanta to kick off this particular episode. Hi, Tori, how are you? Hi, Dave.

Thank you for taking my call. Sure. What's up? I'm a court reporter and a business owner of a court reporting and transcription agency. I have eight contractors, and I'm the only employee so far. I would like to share a brag and a question, please. Okay. My brag is in 2022, I increased my business income by 35 percent, and I'm on track to do it again and more this year.

You're up 35 percent. Congratulations. How did you do that? I'm listening to Entree leadership and delegating and hiring great contractors, and I'm on track to do it again and more this year. Wow, very cool. All right. How can I help? Due to the nature of our licensing and certifications, I'm worried I'm going to be stuck as a treadmill operator. How do I get off the treadmill? You're already not a treadmill operator. You've already delegated the large portion of your business to contractors, haven't you? I have one service, which is the transcription service, is all contractor.

And then the court reporter is me, and then I have three students in school. For court reporting? Yes. And what happens when they come out of school? Are they employees or contractors? They're going to be contractors. Okay. So your business model is to run an agency for contractors.

That is your business. Your business is not court reporting. Okay. Your business is to employ and be an agency, a booking agency, for court reporters and for transcribers. And you are to keep them busy. That is your job. And you also happen to be a player coach, practitioner. but a treadmill operator is if you stop working, all of the income stops.

And in your case, that's not the case because you get income from these other people, don't you? I do, but I've been calling myself a tread finder. Well, you might be. You might have some steps to, you might have a couple things you need to clean up to completely leveling up. But basically, you've got to have a good management of your time. The big deal is to not be a, the treadmill operator. it basically owns their own job. And so, you know, when all of the revenue, it rests on your shoulders, you're 100% treadmill

operator. And so the idea is to offload the revenue production. And you don't have to offload 100% of it to move up to Pathfinder. But I think you might be a Pathfinder, depending on some of the other symptoms and what's going on. So I think you're fine. The difference is that it's a little weird for you. And you kind of stop and think about it, that these are not employees. They're all contractors.

But if your goal was you were going to open a painting contracting business, and my goal is to have seven different crews, and I do the marketing, and I keep all those crews busy, but they don't work for me. They're contractors. And I just get a cut for setting up the jobs, which is what you're getting now, I assume, right? Yes.

Yes. And so, you know, you're an agency in that sense, in the truest sense. Like, I've got a friend that does that with freelance programmers, writing code. Okay? And so, you know, he's a code guy by practice, but he has about 25 or 30 people that all work contract, and he sets up their contracts, and he makes a margin on it. And so he runs an agency. That's his business as he's an agency.

Now, is there, you know, is there administrative tasks or whatever for this company that you own that you need to bring in an assistant or you need to bring in, you know, a bookkeeper or you need to bring in something else. That's fine. And the guy that I'm talking about also is a player coach like you. He can write code at a very high level, though. He doesn't take anything except very high strategic platform type stuff, big dollar stuff, in other words. And then he's got a whole bunch of, you know, dev one, dev two, dev threes out there that he just farms out. And they all typically work from home. And he's typically just their, they're freelancers. But he keeps some busy because he has the reputation of only having high quality production folks in his

stable, and that's the same thing you do. So I think that's officially Pathfinder, as long as you've got the other things under control, where now if 2% of your income is coming from the contractors and 98% from you, well, no, you're a treadmill. But if you're making enough of a spread on them that you don't have to work much, you just do some to keep your skills sharp and to add to your income, then, That would put you at Pathfinder. So, yeah, that's the direction I would go.

Congratulations, story. Very, very, very well done. I love it. Cool stuff. Hey, you're listening to the Entree Leadership Podcast. Welcome back to the Entree Leadership Podcast. I'm Dave Ramsey, your host. I appreciate you being with us.

Well, for those of us that run small businesses, we're get or done people. We're get up, leave the cave, kill something, and drag it home people. So we have traditionally stood back and made fun of with good reason Some of the stupid butt stuff that goes on in corporate America And particularly this movement that says you know you have Ping pong tables and pool tables and ski ball I laughingly called it skittle ball one day on the air And they've all made fun of me ever since

But you know just like you we have to have a game room inside the company And we play cornhole inside the company and we play cornhole inside the company and, you know, we all get free lattes on if you ring a bell or whatever kind of crap. I mean, it's like you're living in some kind of a zoo or something instead of actually a company. And we've all kind of made fun of that, although I do it all now. And the guys on how money works have really taken corporate America to task about this. Because if you do all of that stuff and you don't create a corporate culture, of performance and excellence, and you don't create a corporate culture of accountability,

and you don't, for behaviors, and you don't, and you paper over all this half-but work that's not getting done with a cornhole tournament, then, and you call that corporate culture, then you become a laughing stock, and Google has kind of falling into that. So the guys on how money works, the YouTube channel, say corporate America has become obsessed with company culture, but those Friday afternoon drinks and team building days are papering over a terrible, which is making your workplace miserable and stalling your career. Company culture is one of the biggest trends in corporate management. According to a survey of job seekers and hiring managers conducted by Robert Haft, a workforce analytics firm, 91% of managers said that

candidates fit with the organizational culture was more important than their skills and experience, which I don't disagree with. Hilariously, a P.W. UC survey on company culture found that 69% of companies believe their culture gave them a competitive edge, presumably over the 31% of companies that realized that an office doesn't need a ping pong table and kombucha on tap to be a nice place to work. Managing corporate culture is expensive. Corporate culture managers are earning an average sour package of $110,000 a year, according to Glassdoor direct salary. Okay, so there's kind of two points on these guys' spectrum.

One point is that this whole idea of company culture is ridiculous and laughable, and it's failing in corporate America. On the other end of the spectrum is that if we put in a ping pong table and a kombucha, then we call that company culture, then we've taken care of everything. Neither one of these are correct. There's a third point on the diagram. It's just draw it as a triangle instead of a spectrum, okay? Let's just go outside the lines and go over and drop a third point.

The third point is that we get our work done with excellence and diligence. We care deeply about each other. And we can have fun at work. We have a massive Battle of the Bands thing here. But we're not awesome at Ramsey because we have a massive Battle of the Bands thing. We're awesome at Ramsey and we have a battle of bands thing. We're awesome at Ramsey and we have incredible food. in our cafeteria. We're awesome at Ramsey and we take care of our team members when they're in a

lurch, when their house gets flooded or burned or a tornado hits it or someone's mom's got cancer. We take care of people. We love them. And we get our work done. It's not instead of. See, if you do all that stuff and you don't do excellence and you don't take care of people and you don't treat people with dignity and you don't demand accountability for behaviors inside the organization, then you are papering over with fun the lack of the wussification of your team or not the lack of it, the pure wistification of your team, right? And so the guys on how money works are assuming that every time you do that stuff that you're wrong, no, every time you do it and to paper it over, to paper over to camouflage that all your other screwed up stuff and you call that

company culture, then you're giving company culture a wrong name, a bad name. But, Company culture is the culture of how your company works. I mean, every company has a culture. Some of them have a toxic culture. Some of them have a great culture. Some of them have a work culture. Some of them have a fun culture. Some of them have a production culture.

So what is your culture of your company? That's what we're dealing with. And what you've got to concentrate on out there if you're running a small business is both. But no, you can't have an ice cream party and it make everything okay in a place that's not okay. Completely agree with that. But let's go back to this other thing. This one caught me here. And these guys are criticizing this, apparently, on this How Money Works, guys, and they're sharp guys.

But I think they missed the point. According to a survey of job seekers and hiring managers conducted by Robert Haft, 91% of managers said that a candidate's fit in the organizational culture was more important than their skills and experience. Now, by culture fit, you mean someone likes ice cream parties, then, yeah, that's BS. but if your culture fit is we have values, we have 14 core values on the wall here at Ramsey, including share of the profits, including we do our work as under the Lord, including we have a self-employed mentality, including excellence in the ordinary. These are our core values, and if you have wonderful skills and experience,

but you don't align to those core values, we don't want you here. Not 91% of the time, 100% of the time we don't want you here. because all you're doing is bringing a well-educated, sophisticated, crazy into my building. You need to align with those values first and foremost and have skills and have excellence. But yeah, culture alignment to actual real culture, healthy culture, a culture of healthy conflict, cultural alignment to that is more important than your skills and experience. And so, but I think if I'm reading this right, that these guys are saying, No, skills and experience are, they're the Trump card.

They're the king of the hill. No, they're not. No, they're not. We all know people that have skills and experience who are too deadgum stupid and dysfunctional to work with. They mess up everything. They are the ultimate fly in the ointment. We all know those people.

And so that's a time you should not hire them. You should hire a cultural fit. And you can help them get the skills and experience if you've got to choose. but my contention is you don't have to choose. You can get skills and experience and a cultural fit. But we don't want people that aren't cultural fits at Ramsey. They cause us all kinds of problems and they're not happy. They don't like it because this is an uncomfortable place to work if you don't fit in.

Intentionally. And that's company culture. So that's what you want to create. This is who we are. That's a cultural fit. We think this way. We do things this way. now you need to ask yourself the question, are you a we?

Are you going to be French? We, we. This is us. Are you going to be involved in who we are? Are you going to stand back and collect a paycheck from a place and say they? No, you're a we. You're just a dysfunctional we because you work there and took their money. So that's a, that's a, so a hundred percent of managers ought to say culture trumps.

experience, culture trumps skills. But what you really want is both, skills experience and culture fit. But I hope we don't ever let anybody else in this building. That's not a culture fit. The rest of the time that we work here, 98% of the problems I've had as a leader have been due to culture fit problems, not skills and experience problems. I very seldom have run into somebody that's a fabulous culture fit

and just too deadgum dumb to do the job. that's very seldom happens. Of course, part of our culture is we're get them people, so we attract get them people. Get it. Get it. And you know, you don't want to work here if you're not going to do that because we're all getting it. So, you know, that's the thing.

So not sure if I got this all exactly in context or not, but that's my take on this whole corporate culture thing. Yes. If what the guys at How Money Works are saying is we're papering over dysfunction and lack of performance and horrible human beings by having an ice cream party and calling that company culture and paying some goober $125,000 a year to run the ice cream party, well, that's dumber than a rock. I agree with you.

But to say that you want to hire people that aren't cultural fits that have skills and experience, no. We'll go on the other side of the fence on that one, boys and girls. So I think there's a third point on the diagram. That's my point. And so you're going to have a company culture. it's by default or by creation. So you ought to get with creating it and decide what it is.

Hopefully, you're not papering over dysfunction, malfunction, junction with ice cream parties. This is the Entree Leadership podcast. So we've been talking about the stages of business, the roadmap that's going to help you grow your business. I hope you've been paying attention because the stages are going to help you accelerate your growth like you wouldn't believe. If you're a business owner and you're trying to level up to the next stage, you're going to need more than just the high-level summary we've been giving you here on the air. You need to attend Entree Leadership Master Series.

This conference says five days of tactical crash course on how to grow and how to run a business. It is our playbook at Ramsey opened up and gone through every play. We break down the skills you need to advance through the stages of business, delegation, hiring, strategic planning, everything, time management. Best part, none of its theory. All of these lessons are taken directly from what we've done to grow Ramsey from the treadmill operator stage all the way to the legacy builder stage over the last 30 years.

There's so much to talk about. We've even added an extra day to the conference this year, and it's happening November 5 through 10 at our headquarters in Nashville, Tennessee in the new Ramsey event center. We're very close to selling out. I think there's like 49 tickets left. So if you want to join us, do not wait any longer. Go to Entryleadership.com slash master series and get your tickets today. Seth is in College Station, Texas, Aggie Land.

What's up, Seth? Hey, Dave, great to talk with you. You too. Well, I run an air-condition business with my two brothers. My father started it early 90s, and we are really doing well and trying to figure out how we can move forward and enhance our business and expand primarily with more real estate for our space here. So I wanted some ideas and suggestions on how we do that. Okay, so your dad owns the business? He is a current shareholder in the business, but myself and my two younger brothers also have holdings in the company as well.

Who makes the decisions? I do. You have the majority shares? I do not have the majority shares. I am an acting president of the company. Okay. All right. How many team members have you got?

Six. And you're in the heating and air business. That is correct. And so you do residential or commercial heating and air installation and repair? That's correct. Yeah, it's about a 70 to 30 split primarily residential. Okay, and what's your gross revs? 1.7.

Okay. And why does real estate enter into this discussion? Well, that's a good question. So my father owns the property and the building, and we rent it from him. Oh, correct. As a means, well, it's been a really good deal for both parties. And you're saying you're outgrown it, though?

Well, we haven't outgrown the actual land. We just need to do some major modifications, tear down an ancient thing and rebuild it. You're ancient, what you've cut out? building, building. Oh, tear down the whole building. Yeah, well, part of it. Yeah, about a, probably about a third of the... Okay, I assume you're making sales at people's houses, not out of your building.

That is correct. So why do you need a better building? Well, we are using it to both store and maintain. We're not in college station proper. We're more out in the boondock. We have to hold some materials for jobs. So you're using it as a warehouse? Yes, sir.

That's correct. And why do you need a fancier warehouse? Well, we don't need a fancier warehouse. We just need a warehouse where we're able to utilize a forklift and stage our equipment for our jobs that are coming up. Why can you not do that there? What's wrong with this building? It's got eight-foot ceilings. and it's just an old metal building.

Okay. Yeah, we're just, we just need some more space to store and also build duck work and do some prefab. Yeah. Yeah, pre-fab, things like that, yes, sir. Okay. How many square feet is it? The current square footage would be about 6,000. Okay. This is the problem with small businesses owning the business, owning the real estate that they work in.

Okay? Because what happens is suddenly the building starts telling the business what to do. Instead of the business telling the building what to do. If you were a tenant in this building, you would just simply move. Right. To a place, to a place that was high ceilings and that gave you more square footage and that you could run a tow motor on. Right. It would be that simple because the old place,

that you are, or you would tell your landlord, if you want to keep us, you've got to build us a building over here. This one's not working. But the problem is, is that one of your shareholders in the business happens to be the owner of the real estate. And so suddenly these things are telling each other what to do in a dysfunctional way. So you can never allow the building to tell the business what to do. The business always has to tell the building what to do. And it's very difficult when you're the owner of both to keep that perspective. And so your dad, it probably, if I'm an investor of real estate in your area, it probably doesn't make sense for me to tear my building down and build you a different building

on the same property. It probably doesn't make good economic sense to do that if I'm the investor. if I'm just a real estate investor, if I'm your landlord. Right, right. I'm probably just going to lose you as a tenant and get a different tenant. But this thing's in the middle of nowhere. Can your dad get another tenant? I suspect he can.

And primarily the reason the building needs to be rebuilt regardless if we need more space or not. I mean, it's probably 100 years old, a concrete's cracked. Okay, so then let's step back and look at it, not from your... perspective, but look at it from your dad's perspective. All right. What are you guys paying in rent now? Currently we're paying $3,000 a month. Okay.

And if you found the place that did everything you were, I would assume you could make more money because you could store more and do more prefab work and have the ability to move around, right? So if you were doing that from your perspective as the president of a business, and you're going to go rent a different building from a different landlord, but you're going to pay a little more rent because you're going to have a better situation that makes you more money. What is your rent budget at your new building that you're going to move to? I would say it'd easily be six to seven.

Okay. All right. Let's just, yeah, okay, let's double it, $6,000. And this building is how many square feet? You told me, but I forgot. The new building. No, the old building. The old building.

The one you're in now. It is about 2000s. And the building that you would rent as the president's company, if you went and found the perfect building would be at what size? It would be about double that size. So we'd probably be around like 6,000. 6,000 feet with an office warehouse. That's correct, yeah.

Office on the front warehouse stuff in the back, high ceilings, good solid concrete loading dock, etc. Yeah, right. Okay, so what can a real estate investor, if I want to come out there and build this building for you, what can I build 6,000 square foot of office warehouse in the boonies outside college, Texas, a college station, Texas for? What's it going to cost me to build that? I would probably say somewhere between 250 to 350.

Okay. And that'd just be, yeah. That'd be warehouse only, because that's what I'm looking at. But, yeah, we'd have to add office, so that that probably increase it by another 100, 150. Yeah, I'm guessing I can do it for 350 or you know, 250 to 350. I think you're probably right. All right. So am I going to make a good return at $6,000 a month? $72,000 a year on a 250,000, $250 investment? Is that a good deal for a real estate investor? That seems like a good one.

Okay. All right. You start running your numbers back. This is how you, so what I'm teaching you by asking this series of question is separate this deal because it's it's all entangled with each other and it's screwing up your decision-making ability you guys need to make a decision for the business your dad needs to make a decision on real estate if we can get both of them aligned then do the deal tear the stupid thing down your dad does this your dad puts up 250 builds it and he has this and then you guys are going to inherit this piece this nice building from your father not from your landlord when your dad dies someday. In the meantime, the business is the tenant. But they're very

separate transactions and it has to be win-win, win for the landlord, win for the business. And if you can make those numbers work that way, which is the, that's the exercise you and I just went through on live podcast right here in front of the whole world. So, yeah, I think you're okay. I think these numbers do work, by the way. The only question is where your dad's going to come up with 250 grand. And no, the HVAC business is not going to go borrow the money for the landlord. It's not your money. It's not your building. They're separate. You see what I'm doing here? This is where people get screwed up on this and where you set yourself up for a fall, because now we're really convoluted. Yeah, but I put up the building. No, you're the landlord.

You didn't put up nothing. You put up the building for yourself and found a tenant that's excellent, who happens to be the children that you sired. That's it. That's all it is. Okay. So, you know, that's the way this works. You've got to keep this stuff separate. And when you get ready to sell the business, you can keep your real estate separate from your business sale. If you're going to sell the business, you keep the real estate. They do not have to be inextricably tied together, woven together, you know, cut the cord. And so I've run into this in our business at Ramsey. We had a 55,000. square foot building that we completely outgrew. We rented a big bunch of office warehouse from the

neighbor right behind. Put a bunch of people out there and outgrew that. We went half a mile, three-quarters a mile away and rented another 60,000 square feet of office space. We were all over a two-mile radius over there in one particular neighborhood. All we did was walk back and forth to meetings or dried shuttles. God help us. It was a horrible time. And all of that was because the business outgrew the building. And when I think, finally realized the problem I had created was I almost just went and rented a big office tower and moved us all in it. And then I thought, no, I think we can take three years and just build us a big office tower. Okay, let's do that. So I'm going to be a great landlord. I'm going to go over here and

build what Ramsey needs and then Ramsey's going to move into it. The Ramsey Solutions, that is. But the deals are very, very separate. You know, I've got half a million square feet here now under roof in excess of a half a million square feet under roof. And it's all paid for, and I'm the landlord, and then Ramsey Solutions is the exclusive only tenant. And the deal works mathematically for both parties beautifully, but they're very, very separate. If Ramsey Solution ever turns upside down and goes away, the Ramsey family has some awesome real estate.

So you've got to keep the win-win, separate deals and win-win. separate deals and win-win and then you'll be right on track great question set sounds like you guys got a great and booming business i'm proud of you thank you for being in the audience of the entree leadership podcast thanks for listening to the entree leadership podcast if you like this help us spread the word follow share five-star reviews this is all helpful it changes the algorithm and people actually are able to discover this show whether your podcast or youtube or wherever you are, thank you for letting people know about this. Our marketing budget consists of your mouth. Yep, you got to spread the word for us. So thank you, thank you, thank you, thank you for doing that.

And you can submit your questions here anytime, be part of the show. Just leave a voicemail at 844-944-1070 or put your questions online at entreleadership.com slash ask. Danielle is over in North Carolina. Hi, Danielle. How are you? Hey, Dave, I'm doing good. Thank you for taking my call. Sure. What's up? Sure. So down here, North Carolina, I have a small gourmet peanut processing company that I started back in 2009. I came from an agricultural background and kind of ventured off and started this peanut processing company. And through the years since 2009, have had ups and down, both personal and business, had some things personally going. on that unfortunately affected the business too.

And I've just, over the last probably four years or so, it's just been really more of a tornado whirlwind type thing. And I've made a lot of bad financial decisions. To quote you when you talk about dumb butt stuff, you know, my picture's probably in the dictionary beside that word because that's what I've done.

And I'm just trying, I have, trust me. So I'm just trying to get on the right track and stay there. And it's kind of like I've... Is all the personal crap stabilized? Somewhat. What was it? Well, so in 2014, I went through a divorce, which was very difficult.

And then right after the divorce, like three or four months later, my mom had a major heart attack and had to move in with me. then in 2016, my oldest sister was diagnosed with cancer and she moved in with me and I took care of her until she passed away. During this time, I had to relocate the business because of having gone through the divorce. And so I purchased a warehouse here in our little town and was doing renovations in it to get it up where we had to build in rooms and get everything FDA sort of and everything. So I was doing that, taking care of my sister, who was passing away, taking care of my mom. My sister passed away in 2017. Then my mom passed away in 2018. And then my baby sister, who was 13 years younger than me, passed away very unexpectedly in 2019. So with all of that going on and trying to, you know, keep the business going. And like I say,

during a couple of those years, I was going through dealing with contracts. and renovating this building and making those decisions and just kind of had me stretched really thin. Have you been making money through all of those years? We have been making sales. I mean, how are you eating? Are you making a profit? All of those years. I mean, you're talking about nine years here of tragedy.

Yeah, it's been difficult. I mean, how have you? This sounds like this business was barely. operating. I can't imagine it was making enough for you to even pay your own personal bills. Yeah. It's been tight. It's been very tight, which is one of the reasons that... Okay, so give me an example. In 2021, what was your gross revenues and net profit? In 2021, it was about $480,000 in sales. And what was your profit on? Last year, the profit was in the negative.

Okay. How did you pay your bills? How did you buy groceries for Danielle? So I did draw a salary. I was drawing a salary of about $30,000. But the thing lost money and you don't have the money to fund the loss. And I put savings back into that. That's what I've done through the years. Oh, you've had a big settlement from the divorce.

I did have some settlement from the divorce. How much? Savings that I kept up. How much? Um, did I put back in the business? No, how much money did you get from the divorce? Um, it was right around $120,000. How much of that's left nine years later?

Um, not much, probably about $15,000. So you've been living out of that in the years that the business didn't make money? Right. Yeah, but, okay, I couldn't figure out the math. That, this is what, now it's logical. Well, so now, so now you're not. making money. So why are we still doing peanuts when we lose money? Well, that's kind of the situation. That's kind of what I have been thinking through the years

is, you know, it's like there's potential there. How long has it been since you made a profit? It's been about five years, about four years. Okay, this has got to stop. This is not a business. This is a bad hobby. So you need to set yourself a deadline that you have to become profitable in a few months. Why are you not making, you don't have these things priced high enough to make a dadgum profit and yet you called them gourmet peanuts? Right. Well, the biggest thing that I've done that I think caused the no profit is because I took

out stupid loan and they were high interest rates and... How much debt have you got? It just kind of, right now it's about, about $200,000 in debt. And do you own the warehouse that you renovated? I do, yes. And what is it worth? It's worth about $400,000. And what do you owe on it?

About $200. Is that the $200 we're talking about? Yeah, that's the $200,000 I'm talking about. So you have $200,000 worth of equity. So if you close shop today, you sell the warehouse, you've got $200,000 in your pocket. Right. And you're debt-free. But what I'm trying to do, I mean, because the business has sales, it has potential, it has.

When? I missed it. You're not making any money. And that's what I'm trying to figure out without closing, because I've looked at that too, about just closing up. Okay. I am not going to participate in a hallucination. I'm happy to participate in a dream. But a dream has to have a place where it comes down out of the clouds and starts having some reality to it.

I got five years of business losses. Yes, you had personal tragedies and you didn't have your eye on the ball. But you've got to give yourself and me in this conversation. You're more important than me in this conversation a reason to believe we're going to be profitable very soon. or we need to say I'm hallucinating, delusional. And I guess that's the reason I want to make the call is because those have been the thoughts in my mind, but I want to, that's what I'm trying to figure.

I was drawing that line. There has to be a strategic and tactical change in the next 12 months that's going to cause you to make $50,000 profit. What are you going to do that causes that to happen in the next 12 months? So what I've done is one, I've cut expenses way back. You can't cut expenses enough to get profitable. Right. And I have cut labor back as well.

You've got to increase your margins and increase your sales. And I've, yeah, and I have taken on, we've just got a new client and it's going to be bringing in about, probably about $75,000 more in sales with this one customer. What is your, what is your margin on? versus cost a good sold, do you know? It's low. It's about 35%. So a bag of peanuts or whatever they are, or a jar, or whatever we want to call it, however your packaging goes,

if the retailer is paying you $10, if whoever you're selling it to is paying you $10, you got $70. You got $0.65 in this thing. $65 in this thing. Right. $6.50. $0.50 out of $0.

$10. $6.50. $0.50 out of $10, right? It's for everything. Yeah, when I figure in everything, the cost of everything on labor and everything, yes. That's about, about, right? It's about 35, 40 percent, depending on whether I'm selling it retail or wholesale. Don't think those margins work in the world of food production, do they? Well, food production is a tight market.

I, uh, yeah. But, you know, I want to be careful. I don't get a bigger truck when I'm losing 20 cents of watermelon. on, right? Oh, no, that's exactly right. Yeah. So, all right, so 75,000 will add $20,000 to your bottom line, right? So we've got to go get, we've got to go get two more of those, or we've got to change your pricing. Why is gourmet, what do you, if they're truly gourmet, why are they not selling for ridiculous margins? Um, um, well, I think, Part of it, I guess, is I'm in line with what some of the other gourmet type peanut companies are in our area or in the eastern part of the country. Are you selling to wholesalers and retailers, or are you selling direct-to-consumer?

I'm selling to wholesalers. I have a distributor, and then we also sell retail as well. We have a walk-in store as well as online presence. So I got a buddy of mine that owns five barbecue stores here locally. and he started doing barbecue chickens and putting them in the warehouse and selling them online and he ended up with a direct-to-consumer online sales making more out of the warehouse than he was out of the restaurants. And that starts making me think about that for you.

Like if you've got some kind of crazy, cool narrative story and you're on with your great Southern charm on some television shows talking about your gourmet peanuts and people come straight to you. And then we don't really care because we're buying the story because of, I honestly, as a peanut consumer, I can't tell you the difference between $6 worth and $8 worth. So I probably pay you $8 if I liked your story. Right. And I think that's, I think that what I was looking for was from you and from the call was just, yeah, what you're giving me basic, honestly, because I kind of figured that's where you were going to go.

But with me, seeing, I do see potential, and I do see that I have been. in making some changes, especially this year. You have to have a valid, reality-based reason for hope of profit soon, or you've got to look at yourself in the mirror and go, my dreamer button's gone too far. And I'm going to have to call it. But you've got to have it from a business perspective. You have, Henry Cloud talks about necessary endings.

I have to have a logical reason for believing things are going to get better. and if I don't other than I'm just being, you know, I'm just in denial. That's not a reason, okay? If I just keep persevering, no, if you keep persevering, you don't keep getting what you've been getting. So you have to change something to get a different result. And no pun intended, but we've got to change the recipe, you know, I mean, so that, yeah, and it means you've got to change your business mix, your brand mix, your pricing.

By mix, I mean, wholesale, maybe you need to pick up some retail with some great online marketing and become the place to get wholesale or, I mean, get online gourmet peanuts in the entire world. You've got to get them from Danielle in North Carolina. I mean, everybody knows that and you got to go there. And that website just goes boom, boom, boom, boom. And you do a YouTube channel or you do whatever and get some business moving there. And you start being ashamed, stop being ashamed of your pricing and

try to compete with price because competing with price and dumb and down your price is running you out of business. You've got to get your margins up. and you've got to get your volume up, and you've got to get your brand mixed. Your business model mix changed. And if you do those things, maybe there is a reality-based reason for our hope, yours and mine for the future. But if we're going to keep doing what we've been doing and say, oh, we've had some tragedy,

yeah, you had tragedy, so you have a reason to be here. What you've been through is horrible and sad, and I feel horrible for you. It's a, man, you've been through the decade of hell for sure. and you don't want another decade of hell. So face this music and go, yeah, I know how I got here. I got here with all this crap that happened and all this death and these problems and these people I had to take care of and divorces and all this stuff. But now I'm here.

So for the next decade, I've got to say, this is my reality and I'm going to take these steps to get this thing moving or I'm going to go do something else in my life because this is no longer fun. because I got to tell you, make a $30,000 a year working your butt off while you're sitting on a $200,000 asset is not fun. That's not my definition of fun. I want to make some money. I want to make some peanuts in the peanut business. Hello.

Let's get this thing moving. All right. I want a jar up and send them to me. I'm crunching on them right now. However, they're packaged jar bag. We never did establish that, did we? All right. So I love it, love it, love it.

I always wondered what a gourmet peanut tasted like. I'm going to find out. I'm getting some from Danielle. Hey, Danielle, thanks for calling. Hey, remember, better a weary warrior than a quivering credit. Leaders serve. Leaders are active, not passive. Leaders act on principle, not appearances. This world needs more high-quality leaders. So choose to lead. I'm Dave Ramsey, your host. Thanks for listening, the Entree Leadership Podcast.