EntreLeadership - How Should I Manage My Dad’s Business?

Episode Date: June 10, 2024

Today we’ll hear about:  A son looking to find a way to lead his dad's company well  A business owner wondering if he should continue commuting five hours to work every day  A co-owner questioning the value of the company if he’s not a part of it  A team member wondering if he should purchase the company he works for or go out on his own    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 Ramsey SmartDollar: https://ter.li/4imot0    🗳️ Help us make the show better! Please fill out this 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 Ramsey Show    🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💰 George Kamel  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💼 The Ken Coleman 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 just like you at any stage in business and leadership. And I'm here to help you level up and move on to the other stage. I'm your host Dave Ramsey. I've been doing this business stuff, my whole adult life running Ramsey for over 35 years now. And so we're glad to have you. We're from the trenches. We're from the ditches. And sometimes we actually keep it on the highway.

So thanks for hanging out with us. We're going to not give you think tank answers. We're going to give you real practical stuff that works. If you want to be a caller on the show, we'd love to have you. The phone number is 8449441070 or go to Entreeleadership.com slash ask. Travis is in San Francisco. What's up, Travis? How's going, Dave?

Better than I deserve. How can I help? So I am in a pretty interesting circumstance. I actually just got laid off recently from my engineering position with Tesla. And I'm looking to help my parents out in my father's H-FAC business in Las Vegas, Nevada. I'm going to be moving out there to help them with that and also help them so that they can go serve a church mission hopefully this year. And so this year I need to prepare myself in developing my business skills as a manager

and in understanding and growing his business. I've worked with him in the past throughout college and high school as being a part-time apprentice and technician and not being him built up his business, getting him digitalized in QuickBooks and various things like that. The company is right now about four technicians, including my, and then also my father, he spends probably about 25% of his time managing the different jobs,

and we revenue about $650,000 a year. Okay. All right. And how can I help you? Well, I'm just trying to figure out how should I set up this relationship with going into business with my father? Is this something that if he's going to be away for, say, two years, do I need to become a co-business owner? Do I need to establish anything in writing? What type of best practices should I exercise with him?

I know he's my father. He's one of the best people I know. But I just want to make sure that I'm doing it right. I don't develop any bad blood between him or even his employees. I think the big thing is unmet expectations or assumptions is where when communication breaks down like that, that's when we have anger and frayed relationships and those kinds of things, whether it's with team members or with father or whatever. So I got that you're going to move in there for two years, run it for him because you just lost your time.

Tesla gig while he goes to Mission Field. What's the long-term play? So the long-term play for me is I want to get his company into a self-managing self-running company where he has

managers for his technicians, being able to supervise jobs. We have somebody in the office being able to take calls, make sales, and that he is able to step away from an owner-operator, which he's already slowly been doing.

What are you going to be doing five years from now? Five years from now, either be able to be in that same position as more or less an owner. And hopefully, if it's able to run itself, be able to be more of a serial entrepreneur and establish other things. I mean, coming from engineering, it's kind of hard for me not to want to to solve problems and to be able to create new things. And so I can imagine that long term that I don't know whether or not growing this,

his business that he's had for the last 25 years is something that will be able to scratch that itch long enough or more or less be able to grow large enough that it'd be something that would keep me interested or if it's something that I'd like to just help out with and then move on to something else. Well, I think I would start with your relationship with him then and sit down and say, sit down and say, I need the 10 things that you absolutely want to have happen while you're gone. And I'm going to give you 10 things that I want to see that I want to be able to do while you're gone. Okay.

In your case, you're trying to get the thing where it's operationalized and not run. so hand to mouth, which probably means you're going to double your volume because you're probably not running enough volume to run all the support staff that you're talking about right now. Yeah. Yeah, I would say that we need to at least double it, get somewhere closer to like $1.5 million. Yeah, you get in that $1.5 range, then you can start talking about some office staff and some sales staff to support and a layer of management to run the techs and then a general

manager to run the whole puppy and it becomes operationalized and you can take your hand off the steering wheel, right? Right. But you're going to have a little. So part of it is, dad, I'm going to grow it. I'm going to operationalize it. I'm going to demand excellence, and I'm going to love these people well. And because your dad's going to be real concerned about how you love these people because

he's a lover of people. Yeah, 100%. I know that because he runs a small business and he's going on the mission field. I know he loves people. And one of his fears is that you might be too tough. and coming in and trying to optimize things a little too harder. Well, you're a systems guy, and he's going to want you to remember there's blood, guts, and feelings in there, too, not just systems.

And so you can't engineer your way to this. You have to work with humans to get there. Then if I'm you, what I'm going to do is I'm going to sit down with the team as soon as possible and start asking a lot of questions about what we can do to make this place bad. what we can do to make it more, to make everybody make more money, what we can do to make the place make more money, what we can do to do a better job and have less frustration. Don't be coming in there with answers. You don't have any answers, but the people out there doing the work, they got the answers.

Be very curious. Go on a listening to her. It represents humility and service on your part. Real leaders serve. and your job, you're going to be serving them by removing people that won't work, by removing people that are toxic, by adding people who are high character, high quality, hardworking thoroughbreds, and adding systems and processes that allow this thing to get operationalized and get to the next level. Basically, you know, your dad's hanging on by his teeth at the path, what we call the Pathfinder level,

and then, you know, if you want to move up from there, you know, the point. problem you have at the pathfinder levels, you have a lack of clear direction. He's just still trying to make payroll by Friday. And he's not thinking about clear direction. And you're stepping in with a clear direction. I'm going to double this thing and I'm going to operationalize it in 24 months. I'm pretty lucky with my wife. She's working remote. So this move is not going to be as hard for her. And us moving to Nevada and dropping a lot of our expenses down allows me to be to be a lot of be able to come in this as a pretty low cost and be able to clarify clarify with your dad what his expectations what he wants you to be doing when he comes home because if he has this dream that you're

going to take this over and be in that office every day and run it for the next 10 years you both need to know that that's his dream I don't know if it is but if it is you need to know it because it was not your dream that you described a minute ago it's not what you want to do So you want to get it up where it's self-sustaining and operationalized, meaning you don't have to run it every day. You don't have to go over there and put out fires. You've got a fireman on board. And so you can go be serial entrepreneur and do some other stuff. So your goal, your job, your dream is not to be running a heat and air company on a daily basis 10 years from now.

He needs to know that. And you need to align your expectations, your goals, your dreams, your desired future with his. that way nobody's mad when you come out the other side. So lots and lots of communication between you and him up front, details, and then you talk about how you're going to get paid, whether you're going to get an ownership position, and how much power you've got. I mean, if he comes home and you fired two of these people,

what's he going to do? Is he going to freak out? You didn't have the power to do that. I didn't say you could do that. Well, then you told me to run it. What's that mean? Well, you say that's the kind of stuff you've got to align on ahead of time. Have I got the power to hiring fire?

Have I got the power to make some systems changes? Have I got the... Because if you don't, you're not going to be able to do what you're talking about. You're not going to be able to double it and operationalize it. It's not going to work for you. So really lots and lots and lots and lots of clarity. And then you enter both of these conversations with asking questions and curiosity and humility and service.

And if that's your mentality, you're going to be just fine, Travis. This is the Entree Leadership Podcast. If you feel like your business runs your life more than you do, then it's time to do something different. You're on a fast track to burn out, if that's you. And you've got to make some time to work on the business, not just in it. My friend Michael Berger, who wrote the e-myth, that's what he says.

You have to work on your business, not just in your business. And the Entree Leadership Master Series is the best place to do that. Master Series is a crash course for small business owners on how to grow a successful and a sustainable company. You're going to hear practical leadership lessons on hiring and firing, delegation, team unity, compensation, and strategic planning. This stuff is the meat and potatoes of running a business and of leadership. And every lesson is taken directly from actual wisdom that we've gained over the 30 years of doing this business myself. Master Series is happening November 10th to the 15th here on our campus at the Ramsey Events Center in Nashville.

It is almost sold out. There is less than 100 tickets left. So don't wait. Go to Entreeleadership.com slash master series and reserve your seats now. Dustin is in Philadelphia. Hi, Dustin. Welcome to the show.

Hello, Dave. How are you doing that? Better than I deserve, man. What's up? I am the owner of a small interior demolition company. I have three employees to include myself. We gross four to 500,000 a year. I spent the last three years training someone to take over my day-to-day management

so that I could move closer to my family, about two and a half hours away. after I made the move, I find out that the gentleman can no longer work for me due to health reasons. And now I am trying to fill that position. I can't find anyone who's willing to fill in for that. And I don't know whether I should continue searching or sell the business. What's your day job? That is my job.

Currently, I'm driving two and a half hours every day, you know, five hours. What were you doing when you moved away, and he was running the company? I, for the interior demo, I also do complete house tear downs. So I was doing that. The last year, actually, I was more or less getting our house ready to sell to move. So you weren't working? Not every day, no. Well, I mean, if you were working, what were you making?

What were you doing? Yeah, the last year, when I was working, I would be running the excavator, carrying down houses. At the new location or the old location? Oh, I'm sorry, the old location. Okay. Everything is at the old location. So you were still coming back and forth? Correct.

We're currently after we moved, and then I found out he couldn't. I got that part, but I'm trying to figure out what your plan was. Where were you going to? I was two and a half hours away. I know. What were you going to be doing? to a new location and start new work there. What?

Demolition. Oh, you're going to do the same thing there. See, yeah, I'm sorry. Same type work, different area. Okay. Yeah, sell it. Yeah. Do you have equipment?

I do. I have excavators, you know, trucks, tools. Mm-hmm. Won't you just take them with you? I did just it was an established business in that area 12 years in business there and I just yeah but I mean you can just sell your customer list yeah yeah I just

you're gonna go over to the other place and buy equipment and right now what you're getting ready to sell with a 400,000 dollar business that does not have a manager running it really you're gonna be selling your equipment and your customer list is about all you're gonna be selling because I can't buy if I'm an absentee investor, I can't buy this business because it won't operate. Yeah, that's what I've been looking at.

So you can't sell it. You're going to end up selling it off, selling off the stuff. And if you're going to sell off the stuff and then turn around and buy the same stuff over at the other place two and a half hours away, just load up the truck and head to Beverly, man. Well, the equipment I could take, the interior demo work is a lot more manual labor for like renovations of residential homes. Yeah. That I don't want to get back into.

Okay. And most of my equipment is tied up in the portion I do want to take with me. Okay. Then take the equipment and sell the customer list. Okay. I just, yeah, I didn't see it being that value. What kind of profit? Well, I mean, what's the equipment all worth if you sold it?

If I sold, um, about 200,000. Okay. So that's the book value of the business is 200,000. And you grossed 400,000. This business won't bring 200,000. So it's worth more breaking it up than it is trying to sell it. Gotcha. Yeah, and I just take my $200,000 with equipment and go start me a new demo business over two and a half hours away near family.

Net goal is achieved. You're not got any money in your pocket, and it's going to take you a little while to get things going. And hopefully you can sell a customer list or, you know, work with somebody over there, maybe a competitor that would buy a little bit. of something from you. What's left of the business other than the equipment that includes your employees going to work there. Gotcha. Yeah, we don't have any competition.

We have a niche little market here. We do a lot of high-end work for high-end contractors. Well, one of them may want it. I've been asking around. Yeah, I've been putting the word out for six months now and just haven't gotten any good feels on it. It's a very tough thing to sell a business in this situation. It really is. And so basically, if you were just going to go,

to work for somebody doing whatever, something completely different over in the new place, then I would tell you to just sell your equipment there because it's going to bring more than this business will bring. And basically you're shutting it down and breaking it up. And that's called a book value, meaning what can you sell the assets of the company for? Because the company doesn't have any value as a going concern because there's no manager to cause the profit to happen. That makes sense?

Yeah. Yep. Yeah. So I think you're going to be, I think you're having an equipment sale. And in your case, I don't think I, you may be pick up a piece of equipment and you sell it out of the 200, maybe sell $50,000, maybe sell $50,000 worth and take $150 with you. You got that $50K in your pocket to get you up and going in cash and get you some operating grease in that other market because you need some grease.

It sounds like, sound like this is squeaky. And, but I mean, you. You have never hesitated to jump on the business end of an excavator and start tearing something down. And so it won't take you long to get to tearing something down if you've got an excavator over there. You know how to do it and you've done it before and you know how to talk to talk and walk and you know who is the customer. You know where to go, find them. You're just going to be doing it in a new location. It's going to take you a little while longer to build up word of mouth.

But you've got to, you just got to go knock on the doors of the builders, the contractors, whoever it is you're dealing with is doing this stuff. House movers, wherever it is you're doing demo. and just start talking to all of them and then start swinging that excavator around and we're making a little money. But I think you're going to spend a lot of your energy and calories running back and forth for no money.

And so I'm not going to spend any time running back and forth. I'm just going to close this thing, take the equipment, sell one piece, take 50 grand, put it in my pocket, and go over the other place and set up two and a half hours away and start a business. And I think you're going to end up making more money that way than you do any other thing you do. It's what it sounds like to me anyway.

And that's the problem where a business is not making even a million dollars yet. Top line, both of these calling in this hour, one was 650, one's 400. It's hard to get to scale. You're stuck there at what we call the treadmill operator stage, which is where you're doing all the work. And if you don't do all the work, the work doesn't get done. If you don't show up, nothing happens. And that means you're stuck on a treadmill. And the way you get off of that is you grow the business in size enough

that you're adding team members, and then the business doesn't 100% rely on you. And his exact problem is the business relies on him. The first guy, his dad's going to the mission field, the business relies 100% on his dad. It's $650,000 top line. And so those are treadmill businesses. Now, it's not a top line thing,

except that it's harder to get enough people on board when you're not bringing in any more than that to get the delegation to occur. But the way you break the back of being a treadmill, operator and level up to Pathfinder, stage two of the five stages in the entree leadership system, is you've got to get the income where it's not all dependent on you personally. Now, in Dustin's case, he's going to go over, and it is going to, he's going to start over at treadmill.

We all start at treadmill, just about. But then once he gets that going, I want him to start adding people and create some bench depth on people who can do work when he's not on the job side, people who can get work going when he's not there to do the sale and all of that. So all the revenues not dependent on one single person. That's what we're doing. Hey, this is the Entree Leadership Podcast. I'm Dave Ramsey, your host.

This is the Entree Leadership Podcast. Thanks for hanging out with us. If you want to help us out, please consider hitting the subscribe or the follow button. Share this show. Tell people about it or hit the share button on the platform that you're watching or listening or consuming this podcast. Thank you for the.

that and thank you for your five-star reviews. All of those things help us get bigger, badder, and quicker, and help more people just like you. Again, if you want to be part of the show, leave me a message at 844-944-1070 or go to Entreeleadership.com slash ask. Anthony is in Detroit. Hi, Anthony. How are you? Hi, Dave. How's it going? Better than I deserve. What's up? Dave, I'm the president of a commercial real estate brokerage firm here in Detroit. We currently have 5W2 employees and 13 1099

contractor salespeople. I've done your assessment. I'm currently in the Trailblazer stage. And I also am the largest producer within my office. I'm a salesperson also and out there in the field, kind of pounding

the pavement every day. And I do have a partner in the business. He's currently 67 and over the last couple years, we've been talking about succession and buyout and moving forward and kind of giving him a succession plan to move on. And I understand the valuation that has been discussed multiple times on your show, three to four times net earnings. And my question is, net profit. Net profit. Net profit. Not EBIT. Yeah, okay. I apologize. That's okay. Just making Sure.

Topline last year was about $3 million. Net profit landed somewhere around $250. Okay. And one of the concerns that I'm having is that... And each of your real estate agents, they made their own money. That's not even in the equation. Correct. You split with them or they pay you a flat fee for officeing?

They split with us. Okay. And you split with the office as the top producer as well? Correct. Okay. All right. The concern is that... You know, I could, frankly, go sell anywhere at another firm.

And I'm having a little difficulty understanding that I'm going to pay net when, frankly, I'm by far the largest producer. I'd pull your number out. So I want to bring in one little wrench here. And although we've done this very well, my partner in the business happens to be my father. But we have a very good relationship. that we follow very closely that at work we got our partner head on and on Sunday dinner he's my dad and my best friend so and I feel he helped me start the business he took a leap of faith and helped me start the business and and I do feel he's he's due his fair share as well

so I want to be fair to both parties here okay but there's two things going on okay you're a salesperson that's the 800-pound gorilla. Okay? And so if I divorce myself from everything and I'm just doing an analysis from a business perspective only, and I said, okay, I'm going to come by your company. The only way I would value it based on 250

is if you were under contract to stay. Because if you leave, the valuation changes. That's why I said pull your number. out. And so, because here's the thing, you can take your real estate license and set up, are you, are you a broker or an affiliate broker? I'm a broker. Okay, so you're the managing broker already, probably. So you could just take your shingle, go next door, rent a $3,000 a month tiny space that's very nice, and you're a one-man band, and you would make how much, because you'd make all the commission, you wouldn't be splitting anymore. You'd make a bank. You'd make a bank.

you'd make bank. I'd probably make more. Yeah. Yeah. I do currently get paid on top of my split, but that salary is for running the office and managing the other 12 brokers or the other 12 agents. Okay. So the volume of real estate sold is what kind of volume? How many millions of dollars are sold?

I guess you're doing commercial leases as well, right? Yeah, so we do gross commissions earn. around $3 million, which, you know. Okay, that's gross commissions earned. Okay, and how much of that did you earn? So my production always lands around somewhere between $700 to $800,000. Okay, so you're, let's call it a mate. You're one-third of the whole production.

Okay. Yeah. So I don't think it's unfair because a real estate company is a unique business model. It's way different than a hate-and-air company or something else. In that, you've got all these independent subcontractors working for you. that are creating this revenue and if you blink, they bounce and go to the next guy. And so it's a sales operation is what it is. And so the sales team is what matters.

And the problem in your scenario is that you're not operating as an owner primarily. You're operating as one-third of the sales volume. And so I think it's very fair to your dad to value this. the 250 at 65% or 70% of that 250. Okay. Because it wouldn't be there if you're not there. Is it fair to me as well? Yeah.

Yeah, because if we compare that to you going next door, next door you're the ultimate treadmill operator by yourself, maybe with a personal assistance you hire or something like that, but you're, you go on vacation, nothing happens. You get sick, nothing happens. At the end of the story, nothing happens. You die, nothing happens, you get disabled, nothing happens. That's the ultimate treadmill operator, right?

In this case today, you're one-third of the treadmill. And so what you're building is a sustainable business here, and if I'm you, I want this business instead of my own shingle. Because I can hopefully, over time, not be one-third of the revenue. hopefully I can grow the revenue through hiring and training and mentoring more and more team members, agents, and the whole thing doesn't count on you. Now, you may enjoy the hunt, you may enjoy the deal, you may enjoy the negotiation, and you want to do some of it, that's fine.

But from a business model perspective, the less of it that counts on one person, you know, the less risk there is in the organization. because also right now this organization would be crippled if you were if you were sick yeah it definitely would hinder it would hinder production now i do have um multiple i'll call them juniors beneath me that i i work with and am able to take vacations comfortably and and have and i'm confident that my team is committed to my clients just as much as i am so i yeah i'm not question that but what i'm saying is is the day that we don't have this conversation and you're not one-third of the revenue is the day you're in a better place.

Yeah. And so that's what I want to move towards. So for that reason, I do want to buy this. And for honoring your dad and the process that got you to hear, I do want to honor him. So it's fair to you. Yeah, to say, you know, to say instead of, you know, it's $150,000 we're going to value this on or $160,000 or whatever, instead of $250,000. And so, you know, this thing's worth a half a million dollars.

You know, something like that, right? I mean, that's what we're talking about here. And it's not a million dollars. You know, it's four times of 600, maybe 700, whatever, but it's not a million dollars. And so, and I'm going to pay you a large percentage of the revenues until we get to that number, and that's going to be your retirement. You're going to take that money as I give you those big chunks and you're going to reinvest it. Meanwhile, I'm going to build this thing where it operates.

and isn't as dependent on my personal production to create this wonderful $253,000 net profit. Yeah, yeah. I think that works. I think that works for everybody. It's very fair. The rub will be if he doesn't think it is. And here's the thing.

A third party buying it is not going to give you any more value than that because you are so much of the production. and in the real estate business, I'm very aware, because I grew up in this business, that you can leave and go set your own shingle out. And that's how some of the 100% commission residential, where they pay a flat fee and they get 100% of the commission instead of a split, that's how those residential things were born. The first one to ever do it was remax that I remember. And I started the business in 1978. So, but that's how that was born is it kept them from all the producers from going, because, you know, they get big.

and then they go hang out their own shingle, start their own company. Get big, start their own company. So you're constantly losing your best people in the former model. And so you've got to figure out a way to solve that problem as you go and then get this thing grown, get enough volume coming in here that's not all based on just your work. So, hey, very good question, man. Very good. Sounds like you guys got a great business and a great relationship too.

Congratulations. Very well done. This is the Entree Leadership podcast. Thanks for joining us, America. We love small business. That's what Entree leadership does. If you're a business person and you've got five to 200 team members, you're the backbone of the American economy.

We'll wave the flag, drape it over you, and say, way to go, great American. This is how it works. And some of you have created businesses out of the weirdest, most nuanced, tiny things, and you're making millions of dollars, and I'm so proud of you. way to go you're giving people jobs you're causing the economy to move you're awesome thank you thank you thank you for what you do we're here to serve you it's what we do the phone number here if you want to be a participant is 844944 1070 or go to entreeleadership.com slash ask Daniel is in Chattanooga hi Daniel how are you I'm doing well how are you better than I deserve what's up

So I work at a land surveying business. We have four employees, not including the two owners. My revenue was a little over $600,000 last year. And my question is, in a little less than a year, I'll be licensed to be able to own my own business and operate under that licensure. My question is, should I wait to purchase this business when the owners are ready, or should I go ahead and start my own in the next year or maybe two?

When are they going to be ready? You have any idea? Yeah, so about a month ago, we started having these conversations about purchasing the business. One owner is 64 and the other is 60. The one that is 64 is all in on me, the business. The one that is 60, however, wants to wait until he's 67. How old are you? I'm 27. And how long have you been surveying? Eight years. You've been working for them the whole time? Yes, sir.

I think I hear you saying you don't want to wait seven years. Yes, preferably that would not be the case. Yeah, I agree. That's too long. Okay. For you. It's perfect for him, but it's too long for you. But maybe we, and he wants to keep working. Does he actually go in the field and do surveys still?

No, so he works in the office, mainly drafting, and working in the office there. So like drawing out plats? Yes, sir. Okay. All right. Hmm. So maybe we do a hybrid, okay?

Okay. Okay. Where he stays in the office seven years, but he's not an owner for seven years. Okay, meaning he would work at the company. Yeah, the 60. Well, and maybe he's a partial owner. and his ownership is being bought out gradually over the seven years.

And the other one you start working on immediately. Like so, are they 50-50 owners? So they have the same split, and then their mother owns 10%. So I assume it's 40-40. Okay, two brothers? Yes, yes, sir. Okay. I'm just making this up on the first.

fly, but what I'm talking about is kind of a hybrid thing. So brother number one is 60 and you want to buy out his 40% and his mom's 10%. Okay? Yes. And before we buy out brother two. And so what we're going to do is we're going to take all the revenues that come in past you making, barely making a living. And brother number one is going to get his 40% of the revenue profits, but you're going to be off the the other 60%, you're going to throw it all at mom and brother number one until they're bought out. And that's probably going to take you three years. Okay.

All right. And at that point, he has agreed contractually to transfer his ownership to you, and over the following three years, you're paying him out. Meanwhile, he's still working there on a salary. Now, that would entail, number one, they agree to these buyout terms to pay them out of profits until you get clear. But number two, the younger brother that wants seven more years is going to have to understand that immediately you are the majority stockholder.

You have 60% of the stock. And you're his new partner. and then three years later, he's not going to be an owner at all. He's going to be an employee for his next three years. Okay. And he's got to be emotionally okay with that and financially okay with what that represents. And so, and you just keep him on. He's just a, you know, he's a draftman, and that's his exit ramp into retirement.

His last two or three years he's sitting there doing that because he still wants to work. Right? Well, yes. And I try to say this respectfully, but he's got it made how he's set up currently. And I don't know how to say that respectfully. You mean he's overpaid or he doesn't work? He doesn't work. Oh, well, my whole idea sucks then.

I was assuming the guy was productive. Okay. So you need him to exit. Okay. Yes. The older brother, I could see working with more than the younger, which complicates it. I got you. Well, I think then you're probably going to have to sit down with the three of them,

mom, or if you sit down on mom at all, or with the two guys, and maybe come up with some kind of an interim thing. This is, okay, I can't do seven, I can do three. Okay. I'll mentor here for three years, and then I'm going to. to become the stockholder and you guys are going to go and both of you. And I'm going to take the majority of the profits and throw them at the number that we've agreed to until that number is covered. And so 80% of my profits are going to go towards that until we hit that number. I'm going to live on

almost nothing. I'm going to take a living wage out of this as all so that we get you guys paid out and take the net profit of the business times four or five. And that's the value. of the business and then we're going to pay that out of profits and you should be done in three to four years doing that and that that's just the payout but they need to exit the building into 36 month when you make the purchase then because you don't want this guy there okay and that's not you were kind about it but that's what you were saying and if they don't want to do that and then once you wait seven years I think you go open your own thing um because that it's a it's a it's a the only the only the only the The only downside of your opening your own thing is the customer base. You've got to go get customers. And it's going to take you a little while to build that up. But I'm not going to sit in this, I'm not going to sit in a situation where this guy doesn't work and is getting paid.

He's not being, he's not in a position that you can respect him. And it's going to be frustrating to everyone involved if we just hold on to that because he wants to stay in this sacred cow type seat. and we just got to break the variable on that, man. So, hey, thank you for calling in. You sound like a sharp young guy. I appreciate your respect for the founders there. That's always a good thing to have.

And also respecting yourself enough to say, I don't want to sit here seven years. I won't be 34 before I can do this. I need to be an owner before I do that. And you could just say something to them like, hey, guys, my goal was to own something by the time I'm 30. If I can do that here and own this, that's three years from now. I think we can work a deal. But gosh, if we can't, then I probably

are going to have to think about something else. So y'all talk about it and figure out how that might look. And let's talk it through. I appreciate the opportunity and I appreciate being with you and all those kinds of things. Just be kind and respectful. You're an honorable guy. The way you carry yourself, your language structure and everything's incredible. Way to go, stud. Way to go. Hey, folks, remember better a weary warrior than a quivering critic. This world needs more high-quality leaders. So take courage and lead. This is the Entry Leadership Podcast. I'm Dave Ramsey, your host.