EntreLeadership - Avoid Business Failures and Restore Your Profits

Episode Date: August 21, 2023

Today we’ll hear about: •       How to reopen a business that’s a good concept but failed under prior management •       A business owner who’s making $16 million a year and growing •       The top things you should watch out for when buying a business •       Why it’s so important to have a succession plan in place with a family business Links mentioned in this episode: •       The EntreLeadership Podcast •       EntreLeadership Master Series 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 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 in any stage of business and leadership. I'm Dave Ramsey, your host. I've been doing this in the trenches for over 30 plus years running a business, making all the mistakes, making all the decisions and doing what it takes to turn it around. And we're here to walk with you and talk with you about the five stages of business, the six drivers that drive you. through those five stages of business and how your particular situation falls into that. We're here to help you. We want you to move to the next level. And the only advantage I've got on you is I've already been there. And we're not theory here.

This is actual practitioner stuff. I do this stuff every day. The phone number is 844-944-1070. If you want to leave a message, 844-9-4-1070, you can be a caller on the show or go to Entreeleadership.com slash ask and leave your question, and we'll do our best to answer or get back to you and make you a caller on the show so that we can answer your question. Cassie's in Phoenix. Hey, Cassie, welcome to the Entree Leadership podcast. What's up?

Good to be here. Thank you for taking my call. Sure. What's up? Hi. Yeah, so I just recently purchased a business that I was a long-time customer of. I'm super excited about that. but I do have some concerns about dealing with any of the past issues that kind of linger from the previous owner and maybe get some advice on how to deal with that.

So that way I can keep them as customers and keep them happy and just keep them coming back to serve my business. Cool. What kind of business? So it's a coffee shop, nail salon, and child care. It has on-site child care. you can drop your kids off. The whole theme of the place is guilt-free self-care where your kids can play while you get your nails done or hang out with friends with coffee. That's cool.

Sounds fun. Yeah. Very cool. Yeah. I'm excited about it. Okay. So what kind of disgruntled customers do you have? I assume they're still customers, so they're not super disgruntled.

Yeah. So it's kind of a unique situation. I like I said, I was a customer and I was in there almost every day working from home. And I kind of watched the business fall apart. The place did get taken by the landlord because they fell to pay their rent. And so the place went up to auction. I purchased it. I purchased the assets but not the intangible.

So we're changing the name. The place has been closed since April. and we're just now getting ready to do a grand opening. We are soft-opened right now. Okay, so it sounds like you've got a lot of things to overcome, and somebody that is a former customer being disgruntled might be the least of them. Getting them to come back over there and know your back open might be a bigger problem. I'm finding that a lot of people are super excited to be coming back,

and we've already heard from a lot of them. But I guess to answer your question, we do have a lot of customers that the previous owner owes money to for gift certificates, child care packages, things like that. And I wish I could give them their money, but I can't. So that's kind of what I'm looking for. You're not obligated in any way. You bought that auction. You're not obligated legally or ethically or anything else to cover that. but what you might do, you might turn them into a customer by giving them some kind of a deal.

Okay. I mean, like, what would one of these certificates be worth? So the unlimited child care package was like $200 a month. So I've been kind of thinking of doing something like giving them a discount for coming back. Yeah. Not coming back for coming. Okay. Because they're coming in.

You're a brand new business under new management. That's what the sign says out front, right? And, you know, translation, you know, the other problems are gone and they're here. So, but, you know, you liked the concept before, and we'd love to have you here. And we don't have any moral or legal obligation, but we'd like to have you here. So if you're holding one of those bogus certificates, we'd like to do X or Y for you. And I don't know what that is. So unlimited was 200 a month, but they wouldn't have paid for a year in advance.

How much would they have paid? One month? Yeah, so a lot of them had just paid, and then it was closed down two days later. For one month? For one month? Yeah. What's a lot of them? Well, I don't know the exact amount yet, but I've had close to a dozen people reach out to me asking if, you know, I can get a hold of the previous owner and where's their money at? They've actually come into the shop and posted things on social media. And so I'm just trying to find solutions of keeping them happy, but also not going out of business.

Yeah. Okay. Well, obviously, they don't need to post on social media that you did something wrong, or I would go after them. Yeah, they haven't said anything about me personally, but just wondering if I have connection with her. No, you don't. Do you know where she is? No, I don't. Okay, then that's not.

I don't know anything. I bought this thing at auction. It went broke. Your beef is with the lady that went broke. Now, what I will do is this. Okay, so you got a dozen. What's your capacity for kids? We can take about 15 per hour is the limit.

Okay. So if you gave a dozen people unlimited for one month, what would that do to you really? Because they're not going to be there all day long. Yeah, that's true. This is kind of a drop-in thing. So, I mean, it'd be a maximum of like five hours a week or something, right? I think you can cover it.

And I think you might want to just say. But I want them to, like, sign a statement that says that they understand that you're not liable in any way. But in return, we want you as a customer because you believe in the concept. And because they're going to come in. In the next month, they're going to give you $200. Exactly. And the next month they're going to give you $200, and the next month they're going to give you $200.

And so really what you're giving them is a sample, a free sample. Let's pretend that they didn't have anything, any previous certificates. But they walked up to the front door and said, well, we might give you a try. And you say, okay, I'm going to give you a free month just to get you hooked as a customer. And they were just off the street.

And, you know, you just took on, I'm the first 10 people that want, an unlimited child care deal, I'm going to give you a free month just to prove to you were awesome. Just to get the message out there, get the word stirred up, right? I would do that just to get some customers coming and get some stuff moving because, again, the next month is $200 bucks, and the next month's $200 and the next month's $200. So your lifetime value of one of these customers is probably $4,000 or $5,000.

Okay, that makes a lot of sense. If you can handle the capacity, so you may have to put a limitation on it. You know, the first 10 people that come back with old certificates, we're going to honor them for a month. And then the next 10 will do the next month. And the next 10 will do the next month. So you don't get overwhelmed and operate a free thing because you can't afford to do that. I don't think you can afford to do that. I don't think you want to do that.

But I'm going to use this as a marketing opportunity rather than feeling somehow indirect guilt because the other lady just screwed up her business. She probably wasn't a crook. She probably just screwed up her business and walked away. That's probably all it was. But, hey, it sounds like you're doing a really cool thing. I think you've got a great opportunity. You do need a name change. You need a color change.

If you have the money to paint the place a different color, paint it. Let everybody smell and see with the name and the logo and the color change. It's all new. Put up a big, old hairy sign. Even if it's a little obnoxious. you know, maybe even put the story out. I bought this at auction from the people who went broke because I was a customer and I believe in the concept under new management. When you walk up to a market that, you know, the food, or a place the food was bad or something,

and it says under new management, it says, try our food, it's good. The other place sucked. That's what under new management says. And so kind of, you know, telescope out there, you know, telegraph out there what it is or the message you're trying to get. across it and that this is a whole there's a new sheriff in town cassie she's got her own little badge her own little gun she's in charge and that's where we're going with this so very cool stuff cassie i'm proud of you sounds like you got a fun endeavor there and the cool thing is you love the idea you were already a customer man that's just that's sweet very smart on your part

this is the entree leadership podcast thanks for joining us in the entree leadership podcast i'm your host, Dave Ramsey, answering your questions about business. We love small business people. Small business is the backbone of America. Fifty-four percent of the gross domestic product, the GDP, the economy in America is created by businesses with 500 or less team members. Small business literally, economically, mathematically is the backbone of the American economy. As long as there are garages, there will be people inventing stuff. There's always somebody doing something. Michael Dell started in a garage. All these stories of the people getting started in a garage. This is the best place on the planet to start and run a business. It's called America.

And I am so proud to be one of you and so proud to help you in any way I can. If you want to ask a question, call me at 844-944-1070. Leave a voicemail, and we will get back to you. Stanton is with us in Atlanta, Georgia. Hey, Stanton, I understand. you got to brag. By the way, folks, we invite people to call in and brag because there's very few places in America today. You can brag about success, and you should brag about success because it inspires other people to do it. So Stanton, tell me your story, man. Yes, sir. Really excited to be on the phone today and love the podcast. Yeah, I started my general contractor, Atlanta, in Georgia,

started the business about four years ago. And last year we did just over 16 million in sales and I made a net profit at 1.5 million. And this year we're on pace to do almost 30 million. Wow! Same kind of margins.

Yes, sir. Yeah, we'll be probably in the 2.5 range this year. I hate it when that happens. Way to go, man. How old are you? I am just, turn 37. Man, you are killing it.

So you're a G.C. What are you building? Residential commercial? No, it's all commercial. We do a lot of K-12 renovations, additions, municipal work, and also, like, self-storage facilities. Okay. Very cool.

Good for you. Good for you. So you're going to do like $35, $36 million this year and make $2.5 million net profit? Yes, sir. And doubled it in one year. And what were you the year before you did $16 million? We did just over 11. So we did 16 and then we'll be over 30 this year.

Okay. Did you grow up in the business? Yeah, I worked in construction through college. I studied civil engineering. And then that's really kind of where I got introduced to you in college. I started the baby steps. When I was in college, I had $20,000 in student loan when I ran into you and I was all right, I got to get rid of that. So after I graduated within the first year, I got that paid off.

and then been debt-free. Then we got a house. I tacked the house, got the house paid off. And I have four kids, so a lot of people looked at me with four eyes. And I said I was quitting my job to start my own business. But now it's kind of being debt-free and not having any debt was allowed me to do that. And I've always been entrepreneur-minded and wanted to do that. So I started the company and it's been going well.

So you started because you'd follow. us on the financial stuff. You started following the Entry leadership principles, too, then. Oh, yeah, I read the book a couple years before I started the company, and so much I learned from the book. I've been following the podcast ever since. And I really love the first episode I heard with you doing the podcast. I mean, I loved it with all the different posts, but really been enjoying it with you.

But, yeah, so many stuff I've learned from, you know, just from the book. And, you know, I think probably the biggest thing that I would, say to our success that I learned from the book is just like how, and one of the reasons I really wanted to start the company because the last coming I worked for it and do this, but was just really, you know, the people are what makes this thing happen, really caring about people taking care of the people. We've had people have been out sick and we paid them through that. And it's really seen returns because we have such a loyal team here that's on board and helping me grow this thing. Yeah. It's amazing when you treat other people like you'd want to be treated.

word gets out. Yeah, yes, sir. And all of a sudden, good people say, you know, that's a good place to work over there. They love their people. They take care of them. And then you can attract talent that way. When you crap on everybody like corporate America does, and they wonder why they can't get good people. Well, that's why, because they know they're going to get crapped on.

And so, absolutely, man. You're killing it. I'm so proud of you. Very well done, sir. Very well. I also have a question for you. So I have three Q leaders now. on my team, operations manager, a senior project manager,

and then a pre-construction manager in the next few years, I want to kind of appoint one of those guys to be my direct report and kind of have everyone filter down from there and just wondering what advice you would have to kind of build that person up into that position as over the next couple of years to be able to handle that. Yeah, I mean, it's just developing bench depth is what it amounts to and developing your bench to where they can do that.

The big thing is anytime you have the opportunity to pull them aside and mentor them on something beyond their current job on an issue that would be something you would deal with, just go, hey, I just want to take a second and show you. This is the way I'm going to handle this thing over here. I know it doesn't apply to you today, but I want to just see how I'm going to handle this thing or let them sit in a meeting while you're handling it even. and then you can start to telegraph to the team by handing a few of those things to them before they're given the title.

And then it's kind of like the best succession plans in general, in your case, the best promotion plans are gradual. And then when you make the announcement, so-and-so is going to be the new vice president of operations, he'll report to me, the rest of the company is going to, you know, funnel up through him or whatever title you give. them. Then when you make that announcement, no one's going to get whiplash. They're going to go, oh, I kind of thought he already was. Yeah. Because you've been kind of handing stuff over there,

dropping stuff on him. He's been picking that stuff up with the idea that he started to look like that position already, even before you made the formal announcement. And then he will, you know, obviously he will have had the people skills to have earned the trust of the team before you do that. And then there's no political whiplash with the guy, you know, the other guy that's similar position to him that thought he was going to get it because he didn't think he was going to get it and he'll already he if that guy's there he will have already exited once he sees he's not going to get it by the way you're treating guy number one uh the other guy will bail and you'll have to replace that position if he if he's a guy that wants that role and he sees he's not going to get it

that you're going to lose him probably but that's that'll be part of your process too so very very well done stanton so gets out of debt from a civil engineering degree using the financial peace principles, plugs into entree leadership, treat people like you want to be treated, grows a business in just a series of years, to last year being 16, this year being $35 million. I love this country. I love what somebody can, like Stanton can do. Man, what a stud.

Way to go, man. Way to go. That's just impressive. Hey, guys, if you want to help us with this show, we would appreciate it. You can follow us. You can subscribe. You can leave a five-star review. Those one-stars aren't helpful.

If you don't like the show, just go somewhere else, for God's sakes. If you love it, leave us a five-star review. We need the help and share the show. Share the link. Click the share button. We're on all the different platforms now. Anywhere there's a podcast, anywhere there's a YouTube thing, we're there, and you'll be able to find us and just share it, tell people to come in and join.

us and make a phone call over here at 844-9-4-4-1070 if you want to be on the show and I will certainly work you in to 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. The stages are going to help you accelerate your growth like you wouldn't believe. When you do what it takes to level up, you're going to see a difference. If you're a business owner, you're trying to level up to the next stage, you're going to need

more than just a high-level summary from a guy on a podcast. You need to attend Entry Leadership Master Series. This conference is a five-day tactical crash course on how to grow and run a business. We'll break down all the skills you need to advance through the stages of business like delegation, hiring, strategic planning. And the best part is none of its theory. All of these lessons are taken directly from what we've learned growing Ramsey from the... the treadmill operator stage to the legacy builder stage over the last 30 years. There's a lot to talk about. We've even added an extra day.

It's November 5 through 10 at our headquarters in Nashville. You don't want to miss it. We're going to sell out, though, and then you're going to have FOMO. So go to entrell leadership.com slash master series to get your tickets today. Brandon is in Wichita. Hey, Brandon. Welcome to the Entree Leadership podcast. I do.

If I ever met you, I would want to, like, strangle you. Well, depending on the order of that, I'm glad we're doing this on the phone. Okay. Cool. Yeah. Yeah. My wife and I, we went through the whole baby step deal, and we're able to get out of a lot of debt and do a whole lot of smart things. And it's been an absolutely amazing journey.

And, yeah, we're kind of doing it again, actually. So cool. Well, I'm glad I'm avoiding strangulation then. What's up today? Yes. Yes, there would be no strangulation. So what's going on now is I have been working for a heating an air company for the last six years. And over the last three years, three to four years, I've been really contemplating purchasing the company. And so we've been kind of just looking into how that's going to. to go. And, you know, I've bought a lot of things in my life, but I've never bought a business, and I'm excited, nervous, and just looking for any kind of advice on how to do it. Just to give some background on the company, it's been in business for 61 years. Currently, there's seven employees. This year, we did just over a million dollars in sales. And a lot of of those sales came from myself as a serviceman. And serviceman and sales going to do better once I or should I be able to take over the company. But I'm just looking for any kind of

advice and do's, do's not, do's or do nots and yeses and knows. Okay. A couple of things come to mind. I'll throw them out and we'll see where we go from there. But the first thing is you are a great salesman, obviously, and a great service tech, but you may or may not have the skills to actually run a business. How much hiring have you done or firing have you done? When I was 18, 19, my mother was, she had her own daycare center. But you've not done it at this place. You've not done that at this place.

You've not been in operations or in management at a heating and air company, and you're getting ready to be. Correct. See, the skills to run a business are different than the, different than sales skills. Sales skills come in handy, but they're different than sales skills. You know, so, you know, you got to be able to pay the bills. You've got to be able to work with the suppliers.

You've got to be able to work with the customers after that when something goes wrong or sideways. You know, we've got to work with the landlord if you're renting the building. So you've got a whole bunch of different things you're going to be doing that you've never done before. So recognize that when you step into the role of owner, you are now wearing the hat of the CEO, the chief everything officer. You're in charge of everything. And so you've got to get people around you that can help you with the skills on things you've never done before, like, for instance, hiring and firing, or even just holding a service tech accountable for

bad behavior or for or giving them good compliments for good behavior or developing their compensation plan. How are they going to get paid? And are you going to change any of that? And all of those kinds of things come into running the business. So what you want to do is get in search of and I'll send you a copy of the book. Have you read Entree Leadership yet? I have not. Okay, I'll send you a copy of it. That's a good place to start because that's the playbook on how we grew our business from a card table in my living room. And that'll get you started on this. And you may want to jump into Entree Leadership Elite. You can get a free trial in that and get some coaching of the different areas. But what you're trying to source here with those two things or any other place you go to is

I need skills that I don't yet have to run a business. And you need to source those and start getting them around you. Good CPA in your corner, that kind of thing. Now, then switching gears, the other thing that comes to mind is how you're going to do the purchase and what you're going to pay for it. Don't go to the bank and take out a big loan and write this guy a check. Because if the next year there's a pandemic and you can't pay the payments, you'll lose everything. So don't go in debt to buy a business, traditional SBA loan or traditional bank loan or those kinds of things. what I would do is work with the owner to establish a price, and then here's what I would do. What do you make now?

What's your income? 52,000 a year. Okay, and you can live on that? Yes. Okay. And what is the net profit of this business? Do you have any idea? Net profit, I believe, last year was around 50,000, 60,000.

On a million bucks? Yes. your margins suck. Something wrong. I agree. Yeah. I don't know if I want this or not. But, okay.

The max, the way you value a business is about four times net profit, maybe five times net profit. So if they want more than a couple hundred thousand dollars for this, it's not a good deal. Okay. Do you know what they want for it? $400,000. Okay. There's no basis for that on a $50,000. thousand dollar income. That's eight times the net profit. That's double what it's worth roughly.

It might be worth $250, but it's not worth $400. Unless you've got the net profit figure wrong, I hope to God you do, because I hope that they're including like high salaries to themselves that you won't have or something. You think they're taking that's net profit after they paid themselves a big salary? Do I don't. I see them being more modest people, but I honestly don't know. Well, I mean, they can pay themselves a big salary and be modest when they got home. I mean, that's possible. Yeah. So what I'm trying to figure out is what the real margins are on this company, because for a heat and air company, you ought to be doing better than 5% margin. That's, rough. Okay. So anyway, let's get into the numbers and figure out what the numbers are a little

bit better. I'm going to pretend for a second because I'm going to take, I'm on a hunch, okay? I might be wrong, but I'm going to pretend that when you dig into this, that you actually discover that if you didn't have to pay them salaries, that you would have a net profit of around 100. Okay, let's use that as an example, which, by the way, would make the business worth about 400. Okay? That would actually, yeah, okay. Let's use that as our example for a minute. You dig into it and figure out if I'm right later. Okay. Here's your model, though, if that's the case. What I would tell them is, is that I will pay you 100% of the profits each month after I pay myself my $60,000 salary, but I will take no profit out of the business until we get to $400. Translation,

if the thing makes $100 a year and you owe them $400, you would be. be out in four years, debt-free. Follow me? And you don't need the money, so we're going to take the profits out. I mean, we're going to dump the profits back to them, 100% of the profit, or 80% of the profit, 90% of the profit. If you want to keep some in retained earnings and savings, that's fine. But keep the lion's share of the profits go to them until they reach the $400,000 mark.

Now, if your profits go way up, you're going to pay them out in three years. Yeah. Okay. But if your profits go down because there's a pandemic and it goes down to 25,000, you're not out of business because you promise them a percentage of profits, 80%, 90%, 100%, whatever it was, a percentage of profits until we get to 400. So if there is no profit, there is no payout until there's a profit. So if something goes sideways over there, then you don't go bankrupt. And that's what I'm trying to keep you from doing. So let's work on the valuation about. four times, maybe five times the real net profit, you know, after you pay all salaries that really need to be paid to operate the business. So whatever they're actually doing every day, if you've got to hire somebody to do what they're doing, that would come out before you figure out the net profit. That number times four or five, and then say the formula is I'm going to give you 80%, 90% of the profits. I'm just going to take my same pay, 60 grand, maybe a little bump there from 52 to 60, but I mean, 60 grand is not out of control until we get you your 400.

And then I'll be free and you'll have your pile of money quickly. And that's appealing to them. They get their number and you don't go broke if something happens like a pandemic and you get squeezed off of the other side. So that's the route to go with this, my brother. Hey, man, but really lean into the other part. We're going to pick up and send you a copy of the book, Contrae Leadership and get you going, jump into Entree Leadership Elite and do the free trial and start studying how to

operate a business. It's a different skill set than sales, different skill set than being a technician. This is the Entree Leadership podcast. Real leaders don't virtue signal. That's for wusses. You're so worried about what other people think. You're ain't going to get nothing done. Nobody wants anything to do with you because you just go along with everybody that comes along because you've got no backbone. Leaders act on principle, not on appearances. Real leaders aren't passive. Passive leader is an oxymoron.

Get with it. Get it. Even if you're wrong, for God's sakes, make a decision. Stand around with your hands in your pockets waiting on somebody else to figure it out. Leaders get there first. You know why? Because they left first. That's how they arrived first.

So get up off your butt. Sit around, wait on somebody else to figure this out. That's not what they call a leader. You've got to do this. And I'm promising you that you, listen, if you keep the mob happy, if you make everybody happy, you make nobody happy. If you're playing to the masses, you will soon discover that the M is silent. It's a problem.

You know, you got to lean in here and go do the right thing and expect that some wuss with an opinion is not going to like you doing the right thing. You got to step into it. That's what we call leaders. You got to decide. And that's what this shows about. It's about helping you say, hey, throw my shoulders back. We're going to get her done, man.

Get up, leave the cave, kill something, and drag it home for God's sakes. Grace is next up. Grace is in Athens, Georgia. Hi, Grace. Welcome to the Entry Leadership Podcast. Hi, Dave. Thank you for having me. Sure. What's up? All right. So I work for as a manager for my parents and the family business. I've been here for about six years now. And my question is, how do I help my dad step back from the business and enjoy life? Okay. How old are you? 31. 31. How old is he?

72. 72. And how many people working in this business? As of right now, it's just us three, my parents and I. Oh. So if he steps back, a lot of crap's not going to get done. Right. Okay.

So in other words, the way he's going to step back is he's got to hire somebody to do what you do so you can do what he does. Am I wrong? No, you're right. And we are in the process of trying to look for some part-time, like, college students to be able to come help us. No, no, no, no, that's not what I'm talking about. Okay. You're not a part-time college student. We've got to replace you because you've got to replace him.

I see. He's 72. Mm-hmm. Yeah. I mean, he may have another 10 years. He may have another 10 minutes. I don't know. Y'all got to get it.

Y'all got to get with it here. Oh, my gosh. So, what kind of business? We do wholesale accessories. Okay. Does he work because he just loves it or just because he knows if he quits working, the whole thing's going to fold up like a tent? It's a mix of two things.

Part of it is just, sorry, let me think. I think part of it is I do need more help. And then the other part is that if he doesn't work, he doesn't have hobbies on the side. So he doesn't do anything else besides work. Yeah, that's, but, okay, so what do you do with your week? What is your title and what do you do? Mm-hmm.

So I'm the manager. I help with like customer sales, inventory, and ordering purchase orders. Okay. And what does he do? He does more of the payroll paperwork, well, paperwork accounting, and then a lot of the shipping, so packaging and shipping. Okay. All right, cool. So you guys do a lot of online ordering instead of in-person.

You don't have a retail stop, do you? We do. We have a brick and mortar. It's a mix of both. Okay. Walk-in and a lot of phone call orders or online. What's your percentages? How much is walk-in?

How much is online? Right now it's about, it used to be 60 in-person, 40 online, but recently we hit a good growth. And so more people are finding out about it. So now we're closer to 50-50. Okay. And you're, you want to head that way. It sounds like that that made you happy. Your voice just changed.

I like it. Good for you. Yes. Okay. Good. All right. Okay. So he can relax when, okay, stage one to him stepping back and relaxing is knowing that the work that he's doing is going to be done.

Right now he thinks if he takes his hand off the plow, nothing gets plowed. Okay. And so we have to figure out a way to hire someone to do some of what he's doing so he can, quote, enjoy life. So what are else gross revs? gross rev we hit 1.2 mil last year okay and so you're you're in a hard product so you run a 1012 percent margin what are you running um about 30 percent margin i think good so what are you what are you being paid um i get paid about 70 and what's he get paid um he's no longer taking an income He's just relying on Social Security.

Okay. Well, I think we need to have the big question of what succession looks like. And that's you and him and mom sitting down and saying, all right, we need a plan. Youth tossing the keys to me as you fall back into the grave is not succession. Right. That's not going to work. Okay. By the way, all the data we have on family businesses, if that occurs, there's a high probability it fails.

You can't make the transition that's suddenly in the middle of grief, it's almost impossible to stay open. Okay? So you guys need a plan. You need to say, all right, in the next 36 months, by the time you're 75, we are going to do one, two, three, four things. And I don't even care what they are. They're going to be obvious to you more than they are to me. But it sounds like we're going to replace what he does. He doesn't need the income.

but he does like to be involved. Yes. So I don't care if he hangs around as long as he's not causing problems, but we need a succession plan that moves me into the role of president and owner over the next 36 months. And that succession plan also involves the hires that take the pressure off of you so you can go fishing for the first time in your life. Yes, that would be. Great. Yeah.

And that's the way you talk about it. I don't want to steal this business from you, Dad, but I don't want this business, but I don't want to sit here and watch it go in the dirt because we didn't plan. That's bad stewardship. That's bad management. And so we're going to plan. I as your daughter, I as your only employee are going to require, as a part of me continuing to stay here, that we develop a 36-month plan to where this looks like you.

get some relief and I get some control to guarantee your relief and to guarantee the perpetuation of this place that you've worked so hard on, Dad. I want to honor you in this process. Honor is a big word for him, by the way. Yeah, that's definitely really great. Language that would help. And you need to give him lots of honor often in this process, not just one conversation. Every time it comes up, he's the founder.

He's the guy that started it. this whole thing was his idea he gets all the credit you can handle that emotionally can't you yes yeah if you'll give him lots of honor you'll allow him to rest and allow him to have an emotional footing to start to do the handoff i hope but let me just tell you and if you have to lean into this part of the conversation i hope you don't but you need to tell him and your mom that this is going to go very poorly if he becomes ill or dies before you guys get a plan implemented. Yeah, that was what I was worried about, too.

Yeah. And he also missed out on the chance to go fishing, which he's earned. Yes, I 100% agree. That's why. And if he wants to come pack boxes too, okay, so what? But we don't have to have you. We'll allow it because you want to be here. You need to be able to come, Dad.

You've earned it, Dad. You've earned the right to come because you. want to not because you feel like you have to. And right now there's too much of this is because you have to. And so yeah, lots of honor to him and you guys need to do this. The best succession plans are gradual and you're already late to that party. So you three years is not gradual, but three years is as gradual as I can come up with right now. So you need to get with this because you guys got to have this conversation like this week, like now, because I'm worried about you. I'm worried about him. I'm worried about your mom. What's going to happen

in these situations? And what's going to happen with the transfer of the ownership in this business? And is there a will? And what's set up? Because this guy is a bootstrapper, and he's scrapped, and he thinks he's just going to be able to scrap for the next 20 years, and he's not. He's 72. 92-year-olds aren't scrapping much. Some of them do, but not many of them. So, you know, You got to have a game plan. And it's only fair to the customer base. It's only fair to your mom. It's only fair to you for you all to develop a game plan here and go that direction.

I'm so proud of you, Grace. Your name is evident in your life. Grace is evident in your life. So thank you for being there. Thank you for being the kind of daughter you are. And thank you for having these tough conversations you're getting ready to have in the next 72 hours. And don't wait any longer than that. This is the Entree Leadership Podcast.

Better to be a weary warrior than a quivering critic. This world needs more high-quality leaders. Choose to lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast.