EntreLeadership - Dave Ramsey Won’t Do This When Recruiting

Episode Date: July 8, 2024

Today we’ll hear about:  A business owner wonders how to recruit talent from another company in an ethical way  A business owner looking for the best place to keep large sums of money for her business  A woman is proud of her business’s rapid growth and wonders how to remain content  A woman and her husband feel nervous about making big business decisions for their profitable small business.    Next Steps  📞 Have a question for the show? Call 844-944-1070 or send us a message:  https://ter.li/askus    👣 Find out what Stage of Business you’re in:  https://ter.li/axd39b  ✉️ Sign up to receive tactical tools, advice and resources in your inbox every week: https://ter.li/y8qdo7     🏢 Attend EntreLeadership Summit: https://ter.li/fcazl2     🎤 Attend EntreLeadership Master Series: https://ter.li/wcjhpu     ☎️ Learn more about EntreLeadership Coaching: https://ter.li/ycznhl    💵 Learn more about SmartDollar: https://ter.li/4imot0    🗳️ Help us make the show better! Please fill out the quick survey form.  https://ramsey.qualtrics.com/jfe/form/SV_01hjJ6UN8mnQPNI       Offers From Today's Sponsors  NetSuite: https://ter.li/x1t20q   BELAY:  https://ter.li/yohiu6  Payority:  https://ter.li/fh2oau  Trainual:  https://ter.li/a8zexl  Found: https://ter.li/ggwmrv    Listen to More from Ramsey Network  💼 The Ken Coleman Show  🎙️ The Ramsey Show    🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💰 George Kamel  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show    Ramsey Solutions Privacy Policy  https://www.ramseysolutions.com/compa…  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, just like you. This is not theory, boys and girls. This is someone who actually does this stuff. Entreeleadership.com slash ask is where you can leave your note. If you'd like to be part of the program, we would love to have you be a caller here. Entreeleadership.com slash ask.

Or, of course, you can leave a voicemail at 844-944-1070. 844-944-1070. Heber is with us in Salt Lake City. Hi, Heber. How are you? Good. How are you, Dave? Better than I deserve.

What's up? I've got a question for you about diversification. I'm the CEO of a mechanical contracting company, and our revenue is around 90 million a year. And we'd like to diversify our client base, and we're wondering how we do this and still make money in multiple market niches. Is it better to buy another company in that space and combine or go out headhunting key people in the sectors we want to get into? And I just wonder in which way is the best way. I kind of feel guilty stealing employees or headhunting them from other companies.

Well, recruiting happens from other companies every day. There's nothing to feel guilty about on that. The only rule we have at Ramsey on that is we don't recruit or poach out of our friends. And so, you know, like I've got a friend. I mean, if it's a company that we have a relationship with otherwise, then I don't, you know, we don't hire their team members away without or even talk to them without their permission. And so we treat that like an athletic situation. Like if you're going to talk to the coach, you know, it's not unusual for you to call the athletic director and get permission to talk to the coach.

It's kind of a courtesy thing, you know. And so we treat it like that with friends. But companies that we don't have any relationship or knowledge of, obviously we can hire. I mean, we don't target certain companies and poach them, so to speak. But we recruit from anybody. And I don't think there's anything to feel guilty about it. It's nothing unethical about that at all. Okay. So it sounds like, because I've had a banker tell me, it's better to go out and recruit

key people than it is to pay a premium for a business when you can get those people. My one concern is if you can recruit them away, how loyal do you, are they going to be if someone else comes along? It depends on why they're coming, okay? If they're only coming because you stole them based on money the first time somebody else comes along with more money, they'll leave you. So you don't want that. You don't want to. get in that game at all. But if you've got a startup and that's appealing to them, they want to be a part of a startup, and they want to get a ground floor or something, and they have the opportunity to move into

leadership where they're in a big company now, maybe they're stuck in the ladder, you know, and so something like that, or they like the culture of your company and who you are and what you, you know, what you represent in the market. People come to Ramsey all the time because it's because of who we are, you know, because we help people and they want to do something. they want to do work that matters. That hasn't got anything to do with money. Now, we pay them well, too, but I would never hire, I would never suggest, and I would try here to never hire someone who's only jumping over here for money, more money, because they'll jump to the next place for more money, like you said. You know, I probably would agree, although it makes me cringe to agree with a banker,

but I probably would agree with your banker that, you know, just staffing it and building it, organically is probably going to be a lot less expensive than buying something. Now, if you're buying something that's not at a premium, it might be that. And we've looked at a few situations. We've actually bought out a couple of small software companies. And we didn't buy them for their software. We bought them for their team. So we got the developers, you know, and so we brought them in that way and just bought

out the little company. But the little company was not at a premium. it was just like these guys wanted to get a little of their money back, and it was cheaper than recruiting, honestly, in those situations. And so, and that's worked okay. It's not been a perfect thing. The other problem you get when you buy a company is you have to integrate your culture into that company.

And the people, you know, they're coming in with a whole different set of values, possibly, possibly a whole different set of experts. and the way things operate. And you've got to retrain that old dog new tricks, and it's hard. It's a hard process. So I would probably, around here, we would more have the tendency to hire the talent and build the division with the hired talent. I can't walk away from this, though, without making the negative comment that I think

I'm getting my business advice from someone other than a banker who's never run a business. bankers are funny they seem to have opinions about a lot of things they've never done just because they loan money to people doing things they've never done and so no your banker's not your business consultant although I do happen to agree with this as I said it makes me a little cringy but to have to do that but that's you know you're right and yeah so I think it's a good thing to revisit one of the few times I've actually had problems with a company in our space or in our backyard that we were quote-unquote friends with is I look up and three of our people are working over there and they're basically, you know,

poaching actively and they're supposed to be out of my team and they're supposed to be our friends or our neighbors or something like that. And I've confronted a couple of CEOs in that situation. Like you're supposed to be like you came over to our office and said, you know, you wanted to be friends and we were doing all these things. and then I look up and you're freaking stealing my people. You know, that ain't cool, man. So that is an ethical thing as far as I'm concerned. It's not technically illegal.

It's just, you know, I wouldn't. Let me help you. Let me go a step further, okay? There are now classes being taught, which is also humorous at the university, on business ethics. Let me help you with business ethics. Almost all your business ethics,

business ethics can be solved by saying do unto others as you'd have them do unto you Jesus's golden rule so and so I would not want someone actively poaching my organization that I call friend and so I don't actively poach their organizations as a matter of fact I won't even talk to them I'll give an example the way that Jeremy Boring, who's the president of Daily Wire, where Ben Shapiro is and others, and Jordan Peterson, the way he and I became friends was that they hired one of our people, and we weren't even, we didn't even have this relationship, I didn't even know him, I just knew they moved to Nashville. I mean, I met them one time. I was on Ben's show, but I mean, we weren't like, and they actually

hired one of our people, and he called me up, like, freaking out, apologizing. and he and I are instant friends after that and have been ever since. And so, and I said, listen, it's no problem. I do it. And if somebody wants to go to work over there, we'll let them. You know, that's fine. But your guys, your recruiters actively,

and this guy wasn't even poached, he just applied over there and left and went over there. And he's a good guy. He's a friend. He's still over there. I know him. And it's fine. No problem.

But it freaked Jeremy out because he's like, we don't do that. And I'm like, that's a high standard of ethics right there. I really like that. And so the Daily Wire folks and us have traded ideas and done a bunch of stuff together ever since. And just as an example. And that's actually the first time I ended up spending a lot of time by Jeremy,

and we've done a bunch of other things together since then. So the traded ideas and, you know, developed a whole relationship off of someone actually having good ethics. There you go. A good mindset on that. So it's good that you're concerned about that, Hebert, takes you in the right direction. for sure. This is the Entree Leadership Podcast.

If you're struggling to know the right next step for your team, while you're in good company, most business owners deal with all kinds of seasons of uncertainty, but that doesn't mean you have to keep blindly stumbling from one obstacle to the next. I know how to get you from where you are right now to where you want to be in 10 years. It's called the Entree Leadership System. It's the roadmap that takes the guesswork out of business growth so you can build the life and business you really want. If you'd like to learn more about how to solve the right business problems at the right time and the right way,

well, we've coached about 10,000 companies through this, and we've observed them following this exact system, and that's how we developed it. It's not an accidental process, and it's not theoretical. It's actually how you grow your business through the phases of business. It's the Entreyship.com slash system. Entreeleadership.com slash system. Again, if you want to be on this show, we would love to have you. numbers 844-944-1070 if you've got a question.

Madison is in Phoenix. Hi, Madison. Welcome to the show. Hi, Dave. Thank you so much for taking my call. Sure. I am a president of a specialty construction company that has grown to the speed of cash. And now I have 50 employees, and this year I'll probably do about $25 million in top-line revenue.

Good for you. My question is, thank you. My question is, we've been able to save a substantial amount of cash to pay our vendors to discount and to fund a big capital project. Where do I store our cash to keep it FDIC protected and yet not have to do an excessive amount of bank reconciliation and still have the ability to reasonably access our cash? Now, you're not going to be able to do all of that with FDIC protection. I don't.

I've got a whole bunch of mine way beyond FDIC protection. Because you've only got a couple hundred thousand bucks there or whatever it is. It's not, I mean, and you're talking about you've got seven figures laying around, multiple seven figures. So like five or ten million or something, right? Yes. Yeah. So the only thing, I'm not worried about the protection.

What I want to deal with is a bank that's solid because FDIC protection only comes into play with. The bank fails. Right. And so what I want to deal with is a bank that has solid financials. And I don't want it all in one bank, but I don't want it in 16. either trying to hit the FDIC limits, right? Right. So ours is spread across two or three banks, but our primary bank, of course, has the primary.

And in each of the other banks, we run a float where it drops out of the accounts into some kind of money market instrument overnight. And you can kick your points up several points. I'm looking more to make some money on that cash with some kind of overnight floats. and you can negotiate different versions of that with different banks, but we're seeing as much as 1% extra by screwing around with that, and that's a lot of money. So it's worth doing that. It's still very liquid.

I can still lay my hands on it. And then the second thing that we have done some of is when we got way out over the pale, like let's say we were working on these huge buildings over here that were 50 million bucks, and we're trying to stay ahead of the cash needs on that. And we got way ahead of the cash needs on it, but we didn't want to spend the money or take it home. We wanted it laying here. So in those cases, if you got like two years out or your three years out for you're going to need it, I started peeling off portions of it, and you can decide what portion. But I just sat down with our SmartVestor Pro and we dropped some of it in mutual funds.

I wouldn't do that on personal finance, where it's only a three-year window, but on business finance, I'm picking up, you know, 10% on that money, and if it's sitting in some kind of high-yield instrument, it's nowhere near 10. And so, you know, let's say, for instance, you're sitting on $10 million, but you're not going to have a need for $5 million of it, unless something weird happened, unless something blew up, right, for three years.

Well, of that five that I'm not going to need for three for five years, I'm going to take some of that, three of it maybe, and put it in a good, a good stable growth and income type low turnover mutual fund. And just park it there and let it ride the market a little bit. And then the other part, I'm going to put in these overnight floats where I'm not getting hammered that way. But that's a good question. I gave up a long time ago obsessing about FDIC because I so, you've blown past it. And as you said, you're going to have bank reconciliation, 16, 17 banks trying to keep up with, you know, trying to hit those limits. And I just, screw it. I'll take the risk.

And the risk is based on the strength of the bank. I'm not playing around brand new banks or startup banks or, I'm certainly not dealing with freaking Bank of America or those guys. I'm the fifth, third, oh, gag. You know, I don't want anything to do with these mega-levels. banks either because I don't trust them either but um and they treat you like crap anyway but but so I deal with regional banks that have strength and some small local banks I'll do some with depending on their strength but a brand new startup I'm not dropping money over FDIC a startup bank I'm not money even if it's local only if it's friends of mine on the stinking bank I'm still not

putting over FDIC limits in that puppy because if that thing turns upside down because those goobers don't run it, then now I'm at risk. So, and it kind of defeats the point of being in cash. So, yeah, floats and mutual funds with some of it that's longer term. And I spread it across three, but heavy in one of the three. And that's how we've solved for it. Good question. Thank you for joining us. We appreciate you being here. This is the Entree Leadership podcast. Thanks to you that have loved this podcast. We appreciate you and we appreciate you spreading the word. That's right.

We need your help. Help! Tell people about the show. And by clicking the share button or clicking the link and sending it to someone telling them, hey, we want you to check this or share the show, like the show, follow the show, subscribe for the show, whatever the verbiage is they're using on your particular platform where you're consuming this. Thank you for hanging out with us. and leave the five-star reviews.

All that stuff affects the algorithms as to whether it's pushed out front when somebody starts searching for something. Thank you for doing that because our numbers are way up. We appreciate the help. Jamie's in Houston, Texas. Hi, Jamie, how are you?

I'm doing great. How are y'all today? Better than we deserve. What's up? So I initially called into the show just for a brief brag, and I do have a question on the back end, but I own a children's fitness franchise called Stretch and Grow here in Houston,

and we primarily work with Montessori schools, daycares, and preschools to provide in-house programs for their kids. My revenue to date this year has been $75,000 with a 42% profit margin so far this year. Nice. But my main reason for calling was just to encourage and brag about the growth. So I started my company in 2022 in about March or April. and finish the year with 47,000, blood, sweat, and tears, you know, teaching the classes that we offer myself and eventually hiring two people by the end of the year. So you're the outsource phys ed teacher? Yes, absolutely.

And it's convenient for parents, too, so that way they don't have to take their kids to the gymnastics facility after work. We come in-house, we can do it for their kids and partner with the schools that way. It's pretty sweet. Very good model. I like it. And it's growing fast. Yeah, it's been pretty crazy. I'm very, very grateful and have kind of been taken back by how God has blessed our family and my business. But by the end of 23, I did 103,000, so just about doubled. Wow. And then I'm on track to finish the year at 250,000.

Look at you. She's on fire. I'm just a plain Jane, you know, 26-year-old. Oh, yeah, you sound like it. Yeah, we just took this from 47,000 to 250,000. while we were talking. Wow. That's pretty impressive. It's been pretty cool to see it grow, work through the growing pains, figure out what to do, what not to do, fail miserably, watch things go up in flames and then get back on the horse and keep going. But it's been incredible to be able to have the mentors through the other owners that own a stretch and grow as well. So reaching out to them, my husband working seven days a week in 2022 so I could even get it off the ground. And granted, I,

had a 10-month-old when I found out I was pregnant with my second kid, right in the middle of starting this business. Well, why not? Yeah. Wow. No, I said, I'm not busy enough. So let's just throw another kid in there. Why not?

Yeah, that just keep it interesting. Way to go, Hero. Proud of you. Thanks for bragging. By the way, those of you listening, if you didn't know, it's one of the things we feature on the show. We want you to call in and brag because it's so, well, you can't just, like, go up to your friends in the neighborhood and start bragging.

and it's weird. But here we encourage it because it encourages other entrepreneurs to say, yeah, you could be Jamie if you were as cool as Jamie. Wow, that's cool. Very neat. I like it. So thanks for breaking. And then you said you had a question too?

Yeah, my question on the back end after thinking about all of this, watching the growth, you know, keeping my head above water while I'm doing all of it, is how can you determine a good time to slow down and be content with the growth, you know, trying to set goals and think about finishing out this year next year. Well, doubling in 2025 would be 500 grand, and I can't even fathom that in my brain. You couldn't fathom 250, though. You couldn't fathom 250 18 months ago.

Well, this is also true. Okay. So get with your fathoming. What you can conceive and believe you can achieve, Earl Nightingale said. You get with your fathoming. I like it. So how do you know when to slow down? Well, here's the thing.

If you've got the thing profitable and you have a template that's duplicatable and you're able to staff into that, I mean, you've moved from treadmill to Pathfinder, maybe even into the edges of Trailblazer, okay, in the five stages of business. And so, you know, all the income is not dependent on you. You're not out there teaching the classes. you've got people teaching them. You did that almost immediately. Good for you.

That gets you off a treadmill, right? You're managing your time. You're managing your growth. You're managing your processes. So you're right on track with what we teach in the Entree Leadership system. Now, so I think the thing is more emotional than anything else at this stage to say, okay, what would have to be true for us to get to 500 and me not be doing 80 hours a week? Ah.

Okay, I got to staff that. I got to staff that. So what could happen is you could be not content with growth, but become content with a little less profit because you bought some of your life back by staffing. Yeah. Did I miss it? Nope. I see it. And I've got one full-time person coming on in the fall because that's what I need. So that way I don't have to manage everybody and I can. and, you know, enjoy my kids. I have a three-year-old and a 13-month-old. And then, you know, right after that one comes on in the fall, in January is your another one. You're going to have to staff the administrative stuff and lead it.

You're going to have to executive, the executive function is on you to lead these people, just like you're leading the ones that are teaching the classes. Right. And so you don't turn it over to this administrative staff and forget it. It's not set it and forget it. You're leading them. and you're checking their work,

just like you would check your teacher's work, to make sure they're treating the children properly and not, you know, pissing off the clients and all this kind of stuff, right? So, but yeah, but it's easier to check their work and delegate to them than to do all the work, assuming you've got someone that is a delegatable person, and a delegatable person is someone who you trust their competence

and you trust their integrity. And so, like, if you've, got an administrative person doing scheduling, and that gets that off of you. That's what you mentioned. Then, yeah, I'm going to trust their competence to do that, and I'm going to trust their integrity that they're really doing it, and all the teachers aren't getting sideways because our schedules are all screwed up because this person half butt works and whatever. You've got to check, you've got to inspect what you expect, Zig Zig Zigler used to say, and then you can let the delegation go. But after you've had a scheduler or somebody doing that for two years and they've never skipped a beat, that's pretty

easy to, you know, step back and we'll just watch that happen. And again, you're checking it, but it doesn't take long to check it because you've got a longer track record. But when they're new, you're going to be all up in it, training them, making sure they get it right, and doing it your way. That's the idea. Great job. I love your business. I love your growth curve. Very cool. I love it. Small business people, they make them. miracle work. This is the Entree Leadership podcast.

Thanks for hanging out with us. We would love to have you on the show as a caller. If you've got a question, entreeleadership.com slash ask or call us at 844-944-1070. It turns out you are our content. We can't do it without you. So if you got a question,

and this is your place. 844-9-44-1070. Jennifer in San Jose. Hi, Jennifer. Welcome to the Entry Leadership Podcast. Hi. I'm so excited to be here. Thanks for taking my call.

I'm honored to talk with you. How can we help? So I am the founder and the CEO of a child care preschool business. We have four locations. We've been open for about 10 years. We do own three of the four buildings. We hold title, though, with SBA loans for each of those three. And last year, our revenue was about $1.6 million, and we have 30 employees.

Cool. Yeah. Congratulations. Thank you. I do love conceptually. I love the work. During COVID, being an administration for schools was really hard.

The preschools did suffer financially, and it was really challenging on our family emotionally. And then right when things were feeling better, one of our sites also experienced a completely devastating fire. Oh, I don't know. Which, yes, which we have since repaired and reopened last year. So needless to say we... Business is not for... sissies, is it?

No, it's not. We've learned that over the last 10 years. Definitely not for cissies. I love that. You got some calluses. Way to go. Yeah. So we definitely became scared during those few years.

I would say that's the best word to describe us as business owners. You know, emotionally, financially, spiritually. So my husband and I, we, we felt like, I guess the word would be diversifying our income, and we both went and got second jobs while we own these child care centers. And so now, fast forward a couple of years, we have four kids, by the way, but we continually are questioning, you know, if we're doing too much, We get overwhelmed easily. And I really worry that something's going to suffer from our lack of attention.

So I'd love to know some of your thoughts about moving forward with these second jobs that we hold, with the businesses. They do run on their own. We have an executive director who I work with, who holds the space really well, and we've trusted her for years for the preschool. So I guess I'm just trying to decide how to be the best mom, wife, and business owner that it can be and being careful in my steps at this point in life. My oldest has just started middle school and it feels like kind of a fragile time. So I want to get, kind of make a plan.

rather than reacting to the wounds that we all get in business or reacting to a needy teenager I would probably pan back and say all right what does my world look like when these kids are all in college and leaving college and I'm an empty nester what do I want my world to be then Does that world, when I have a clear picture of that world, and this is you and your husband sitting on the back porch with your Bible open and a cup of coffee, right? And you're going, okay, God, what's our world look like a decade from now, it sounds like?

Because the oldest is middle, so that puts them out of college, right? So a decade from now, does the picture of the world that we want to paint for our lives include owning these things, these daycares? Mm-hmm. and if you go, yeah, well, then this is some fear that's been speaking to you that's not true. Okay, so we play long-term, we play long ball with our decision-making. Because short-term decision-making will always, you know, fear will always drive that one. But the way I get courage when I'm afraid is I look past that.

that. And so that's exactly what we did during the Fauci pandemic. We looked past it and said, okay, how are we going to, how's the post-pandemic world going to look for Ramsey? Because we had entire, just like you did. I mean, we, you know, we didn't have a fire, but when you have entire segments of revenue that evaporate, now what are you going to do? And how are you going to keep 1100 people fed and the payroll made and all that stuff? And so, oh, meanwhile, there's a bunch a crazy butt people out in the world decide that they know how to run your business. But, and that, you know, all this.

So in the middle of all that, you know, how do you look past it? But you've got to make the decisions in the moment when you're dealing with the fire or you're dealing with the pandemic. But if you're looking past it, you now are an experienced, excellent small business owner.

Now, do you want, you know what it takes. You don't have any illusions as to how hard this is. It's hard. You don't have any illusions that it's going to be automatic. It's not automatic. You've got a scratch and you've got a claw. You don't have any illusions. But the good news about all that is, is you're a realist now.

You're not a dreamer anymore. And so you can look at this and go, as a realist, is this what I, you know, is carrying the weight of this something that I want to do that I can do versus the returns that come from owning it because I like the work, I like the profit 10 years from today. If the answer is yes, that this is a part of your picture, then you gut it through this time. And you say, okay, I'm going to step back a little bit, let this executive director run it and lean into these teenagers a little bit. But do you have to sell it to be a good mom to teenagers? No, you don't have to. But do you have, would you change maybe some of your

operating principles for a period of time? Yeah, you might. And then you may look out there and go, you know, 10 years from the day, I don't want to own this. Well, then maybe now is the good time to sell it. So it gets the money in your pocket, you get that portion of your life back to pour into teens as their last period, their last decade at home here that you've got with these kiddos. So I just, the way I make better decisions, when I'm, when I'm got some fear or some tenderness from a wound or two that's causing me to hesitate is I look forward far enough. And I ask myself, is this what I want to look like? If it's not what I want to look like, then I need to get about the business of changing it. because otherwise you're just doing this by default instead of by strategy and by plan and that's

what we want to avoid. I can't tell what you're going to do from listening to you. Sometimes I have a feeling that you've already sold it and you just wanted me to tell you. I didn't hear that here. I just heard somebody who's got some scars and some calluses and is trying to figure out if it's worth it or not. And that's okay. It's an okay question. Do I want to keep doing this with my life? you did it one time and that's what got you here but there's nobody said that you have to keep it you can have an exit strategy there's nothing wrong with that at all i think you're amazing by the way i think you did a great job you've survived all kinds of hell i mean there's covid and then there's

covid in california good lord that's a whole different level of nuts you know and you survive both of these things you know you're you're you got to be you got to be a warrior a princess warrior man I mean, it's like Xena on the phone here, you know. So there's no question. You're amazing. But you can choose not to do that, though. That's okay. Remember, better a weary warrior than a quivering critic.

Huh. This world needs more high-quality leaders like her. So take courage and lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast.