EntreLeadership - How to Pay Your People and Survive a Down Economy

Episode Date: October 30, 2023

Today we’ll hear about: •       A business owner trying to honor her mother’s legacy without going into debt •       How to establish annual bonuses and avoid entitlement from your team •       What to do when your staff deserves a raise but you can’t afford it •       Why the best thing you could do for your business is to eliminate debt Links mentioned in this episode: •       The EntreLeadership Podcast •       EntreLeadership Elite •       Have a question for The EntreLeadership Podcast? Leave a voicemail at 844.944.1070 or submit your question for a chance to be on the show with Dave Ramsey: https://www.entreleadership.com/ask Start growing in business and leadership with the EntreLeadership Newsletter. Sign up to receive tactical tools, advice and resources in your inbox every week: https://bit.ly/3IRWnsL   Support our sponsors: •       NetSuite •       BELAY •       Payority •       Trainual Learn more about EntreLeadership Events: •       EntreLeadership Summit •       EntreLeadership Master Series Learn more about EntreLeadership Coaching: •       Elite •       Advisory Groups •       Executive Coaching •       Workshops Find out what stage of business you’re in with our new Stages of Business Assessment Listen to all the Ramsey Network podcasts anytime, anywhere in our Ramsey Network app: https://apple.co/3eN8jNq Learn more about your ad choices: https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy: https://www.ramseysolutions.com/company/policies/privacy-policy Learn more about your ad choices. Visit megaphone.fm/adchoices

From the headquarters of Ramsey Solutions, this is the Entree Leadership podcast, where I take calls from leaders like you about what it takes to win at any stage of business and leadership. I'm Dave Ramsey, your host, with over 30 years of experience from the trenches. Yeah, no theory around here. This is the stuff we really do. Practical advice. And we'll take your calls. The phone number, if you want to be on the show, is 844-944-1070. 844-944-1070.

And you can also go to Entreeleadership.com slash ask. Our team will get with you and line up the time to get you on the call and we'll make you part of this podcast. Beth did that. She's in Springfield, Illinois. Hi, Beth. Hi, Mr. Ramsey. Thank you so much. I have a health care business.

Our revenue from last year was $6 million. Cool. Good for you. And we have 100 employees. Wow. So my question is that my dad is working on his estate plan with the goal dividing it equally between me and my siblings. It includes the health care business, a farm ground cash and investments. My mom passed away two years ago and I'm the CEO of the health care business that she founded.

My sister's husband used to work in the business, but after my mom passed away, there was a bad falling out. and so he is no longer part of the business and everyone agrees we need to, my sister should not inherit the business because of those issues. And so with the current values of the businesses and everything in the estate, I would need to buy out part of my sister's shares from the business. And it was suggested to me as part of the estate that I would then take out a loan in order to buy. out her shares. However, my husband and I are 100% debt-free, including our house. And we want this to be even with everyone, but we don't want to go into debt for an inheritance. How many siblings are there again? Three of us total. Okay. So you, the sister that doesn't need to be involved in your brother?

Correct. Okay. Does your brother work there? He does the farm. Okay. So the healthcare business represents more than one-third of the value of the estate. Correct. With that, and then my dad also wanted to evenly split the farm ground. So one option is I could give up part of the farm ground. Definitely, definitely. Your dad doesn't get to do this to you. Okay? I don't care what he wants. I'm sorry. I mean, it's his money. He can do whatever he wants, but I can choose not to take the health care business if he doesn't want to do it my way. So it's silly for him to mess up this situation. So the farm, I'm sorry, the health care business, if we don't split, if you took only one, what's the total of the estate?

Value. If it split evenly, we would each end up with $2.7 million. And what's the value of this business? It's not $2.7 million. No, it is, I'm sorry, I should have that. Oh, roughly. I believe it's roughly four or five million of it, and then there's the park and ground in the investments. No, no, no, no, no, no, no, no.

No, no, no, no, no. No, that can be right. I think it's roughly... The health care business is grossing $6 million. What's it netting? The health care business. What is it net? When we did that time, sorry. When we did the valuation when my mom passed, it was around $3 million value.

Okay. That sounds reasonable. Okay. Yeah. And the estate is smaller than $9 million? Correct. Okay. So even if you only took this, you can't get clear.

You still owe at least your brother. Right. Right? Yeah. So unless it goes up in value, well, of course, the stupid business is going to go up value faster than the farm is, it's going to get out of whack the longer he lives. If you keep growing the business, you're going to grow faster than that farm value is growing. Okay.

Let's go back on a couple of basic principles. Number one, principle number one is that your dad's money, he can do with it what he wants to. You can't make him do anything. But you do have to, you do get to choose whether or not you want the health care business, and you could choose if he doesn't do it on terms that are reasonable to you to not take it and go do something else with your life. rather than be forced into a situation with a sister that you're not talking to or don't want to be in deals with or be forced into a bank loan.

Okay. And I'm not going to be forced into either one of those by the fact that dad refuses to structure this properly. Okay. So number one principle is I can walk away. Number two principle is he gets to do what he wants to with his money. So I would sit down with him, your brother, and if your sister can sit in the room and be civil, I don't know how that works, and go, So, guys, we need to work this out because I'm willing to take just the health care business, but I'm not willing to be in debt to do it.

Sure. And I'm not willing to take the farm, a third of the farm, and that forced me even into more debt. But if the health care business is more than one third, dad, you've got to decide if you want to split this unevenly, which there's no law or even a moral construct that says it has to be split evenly. You know, her husband misbehaved with the owner of the company, your mother, and so he got booted out. There's nothing that says it has to be even. Matter of fact, the Ramsey kids are already on notice. If they're not serving God, walking with God, if they're going to misbehave, if they're going to go do cocaine, they get nothing.

And the other two will get all of it. You know? And so that's, you know, because I'm not going to finance. stupidity with my death. That's dumb. I'm not going to do that. So your dad could decide, I'll give you an idea, but I don't know if you can pull it off relationally in the middle of all this, but I'm trying to think of structures that'll work. Number one, I think you could put forth the idea. I don't want anything, if you will leave me, if you want to leave the whole healthcare thing to me, no strings attached, I'll take nothing else and be fine. Would you be fine with that?

Yeah. Okay. Number put that forward. And then you could say, and we can lock in the values for purposes of all that right now. And, Dad, if you live 10 more years, then we're going to go with today's values. Or we could say, Dad, you're going to do, brother gets the farm, sister gets this pile of investments, and I get the health care or whatever, regardless of the values in the future, we're going to do that based on what it is today. Mm-hmm. Because the farm is worth $3 million. The health care business is worth $3 million today. The health care business could become worth $10 million while the farm goes from $3 million to $4 million. If he lives 10 more years. That could easily occur because you're growing this, aren't you? Yes.

And you're growing it right now if you're only getting, if it's got to be split even, you're growing it for them, not for you. you. That's weird. Yeah. So, you know, what I would do is, okay, the way you can structure it is you have an option to purchase the health care for $2.7 million, yeah, $2.7 million against the estate, against your share of the estate. And I promise to take at the estate, and the will can say you get nothing more than the health care option. Mm-hmm. Okay, so what an option does it locks in the price.

And the value of the health care company doesn't go up and offset the, and throw this thing into a tizzy. Because it's not fair for you to grow this health care 5X while he's alive, and the farm grows 10%, and the sister does nothing, and the brother's a farmer, and you're the CEO of a health care company. These things are not equal. Mm-hmm. And then you get screwed because you get a third of the thing that,

you grew most of it. That's not fair. So locking in the valuation today with an option is fair. Is this making any sense? I'm making this up on the fly, but that's what feels right. Yeah. I mean, emotionally, obviously I want to be even with my siblings, but also emotionally, I understand I'm doing the blood, sweat, and tears in the business right now. Yeah, I don't want, I have no desire to work for them. Mm-hmm. No, thanks. You know, I don't mind working for dad, but I really don't want to work for my sister who

we had to throw her husband out because he's a twit. I don't want to work for her. And that's what you're setting up. Accidentally. It's the unintended consequences of this not being thought through well. So it may be you need to get an estate planning attorney and with the discussion with y'all in the room. And you all sit and go, how can we do this?

Because here's the concerns. I don't want to grow this thing, 5X. and then be responsible for, you know, paying you guys out for what I grew. No, thank you. So the only way I know to do that is lock it in with some kind of option price today. And I will tell you, I don't want anything. Y'all can have everything if I take this business. If I'm not going to get this business, I don't think I want to quit, I don't think I want to keep running it.

I don't if I'm you. And that's not, that's not being mean. It's not an ultimatum. You're not threatening people. It's not blackmail. But, I mean, it doesn't make sense that you're, that you're, that you're, that you grow something to create a problem for you and for your sister. So I'm, I've told my kids growing up, fair is where the tilto world is and the cotton candy is. Okay. There is no fair. This is not socialism.

This is Ramseyism. So we're going to do what we want to do. And so what makes sense is this. You get that, you get that, you get that. It didn't come out even, oh, well. You know. So an example of that was when we started saving for college, our oldest child was, our oldest child was, already six. And so she got more money put into her account because it took more to get her to college level by the time she got to 18 than it took for the others. I didn't put the same $100 a month in the three-year-old that I put in the six-year-old because the three-year-old's got more time. Well, that's not even. I don't care. Even isn't necessarily fair. If I work twice as much, I should make twice as much. That's not even, but that's fair. And so,

that, you know, that's the kind of stuff we look at when we're building an estate plan around our place. I think maybe some kind of an option where you tie the price down today and you agree to not take it. Whatever you guys do with the other stuff, you can have it. I don't care. And I don't think it's healthy for your family, you and your brothers and your sisters. I don't think it's healthy for the possibility of reconciliation for you to end up owing either one of them money. It's not good. Or you to be forced to go against your principles and go get a dad.

gum loan to buy them out of the share that they got by nothing other than the luck of DNA lottery. It's just a, so y'all need to lock down your values now and decide, okay, you're going to get this, you're going to get this, and you're going to get this. And if it grows to more or less, that's okay. It's still, it is what it is. And just set that up in the thing. And you need written confirmation of that to continue to grow this health care company.

that so let's pretend it wasn't your dad and it wasn't your brother and sisters i'm just rambling but i mean i'm trying to think of how to properly emotionally set this up you would never do this deal with a stranger where you get it when they die for an under for an undetermined amount of money later you'd lock in the price now wouldn't you correct correct you know i may not become the owner for 10 years but i've got my price set and i have to weigh that on, I have to wait on the old man that owns it to die, and I'm buying it from this old man. And it's not your dad. I mean, that's, that's not a good, that's the only way that'd be a good business deal. Because otherwise, you're growing against yourself when you're the CEO.

You're growing a thing and you're costing yourself money on what you buy it for when the old man dies if you're buying it from a stranger. You would never do. That's why I'm coming up with this. It's not right. It's the wrong thing to do. And your dad didn't mean to do that. He's not thought about it. Your mom evidently had the business acumen. and but it's an unintended consequence of him fumbling around with this. So clarity, real communication, kindness, but firmness, bluntness. Don't leave things unsaid, but don't be, you don't have to insult your sister or her twit husband. You don't have to do any of that.

You don't have to say I said that because I don't even know who they are. But, but I mean, you don't have to do it. You don't have to go there on that. It's just you've got a principle here. If I were going to buy this business upon the death of the owner, from a stranger, here's the only way I would do it. I would not continue to grow it and increase my cost of purchase based on my success. That's a backwards incentive plan for a CEO.

They would never do that out in the rest of the world. And you shouldn't have to do that for your dad or for your brother and sister. There. Now I got to the bottom. It took me a minute to wander around, but I finally got where my gut, it was wrong. It took a minute to come out of my mouth. So there you go. but it's a very cool situation and you guys have obviously done a good job but let me tell you if you don't get this handle

it's going to end very poorly if you don't get some clarity and some good solid legal documentation locking this stuff down this is going to end in y'all having a fractured relationship that your mom or dad didn't want after their death this is one of those estate plan situations that's going to cause that this is the entree leadership podcast Hey, listen up small business owners. I don't care which stage of business you're in. If you're doing it alone, you're doing it wrong. You need people. People need people.

Yeah, we do. We need people. God said it is not good that men be alone. You need people in your corner because owning and running a business might be the hardest thing you ever do. Ideally, I'd like to see you in an advisory group or an executive coaching so our team can really wrap our arms around you, walk alongside you through every season, every stage, even some of the details. sale. But if you're not ready for that, at the very least, I want you to get into Entry Leadership Elite. Elite is our digital membership that will connect you to teaching and tools

designed to guide you through all five stages of business, no more questioning what to do all by yourself. You'll also get access to regular e-coaching sessions and our private Facebook group. You can stop doing business alone, and you should. And Entry Leadership Elite is one good way that you can do that. Go to Entreeleadership.com slash elite and join today. Meredith is in Raleigh, North Carolina. Hi, Meredith. Welcome to the Entree Leadership podcast.

Hi, how good talking to you today? You too. What's up? So we own a small civil engineering consulting company in Raleigh, and our last year's revenue was $773,000. And this year we're just found out we were going to be projecting over one million. Way to go. Thank you.

We're so excited about it. That's cool. That's a big milestone. Yeah, it is. It is. We were kind of jumping up and down yesterday. So, yeah. So I started on my own about six years ago.

And now we have five salaried employees, including my husband and I. And we just feel so much. So you and your husband plus three? Yes, sir. Okay. And we just feel so blessed that people want to work for our company. And just given that we are a small business and so appreciative of the team members that work with us, we would like to give them something at the end of the year.

So the question is, how do we set up or is there, because I'm an engineer, is there a formula to use to give year-in bonuses? And then also secondary is how do you take into account growth or new employees for the following years? Well, number one, you don't have to do the same thing every year. So just because you do something one year doesn't mean you have to do it every year. As a matter of fact, it's a good idea to not make it. You don't want entitlement to set in or expectation to settle in because the bonus is an unexpected pleasure, right? Correct.

And if it's expected, then by definition, it's not unexpected. So there we go. You know what I mean? Yeah. So, you know, we don't, we do, we do a profit, for instance, we do profit sharing and we do it every month. And that is expected as long as there's a profit that month. But it vacillates pretty dramatically between month and month because some of our months are really dry and we've got some really juicy months. So the bonuses or the profit sharing checks are all over the map.

So anyway, that's there. Now, how can you determine how to disperse this among the three people? So what is the sum that you think you will be dispersing that you're going to divide by three in some method? Let's see. We're looking to hire two new employees in the beginning of next year as our goal. This is for the end of the year. This is this year. Yes, it's for the end of the year.

So I guess I'm already, yes, in the future. but probably about 100,000 or so. Among three of them. Well, that's going to be the revenue, yeah. That you're going to give away to the three employees. Well, no, that we'll have the ability to it. It would be the revenue for the company. No, you don't give all the revenue to the three employees.

No. So I guess I'd be just our extra leftovers. Yeah. I mean, I wouldn't want you to anyway. Yeah, our extra is 100. You got really excited about this million, didn't you? Yeah. I just, yeah.

Okay, so you got an extra hundred grand, and really there's you and your husband involved, and you're the owners, and so the maximum of that you would distribute to them would be about 30. 30. Because you're the owner. Right.

Yeah, and what do they make? Average about 115? Yeah. And so they get a $10,000, unexpected bonus or $15,000 or unexpected bonus, that's a really nice day. That's a lot of money. Correct. Yeah, so that's the kind of thing you do.

But they get disappointed, though? I guess I want to. Why would they be disappointed? They don't have anything to, they don't expect anything. If they got a dollar and they didn't expect anything, it's a dollar. Right, but what about next year would they get disappointed? if it wasn't as. Oh, I think that's a different conversation.

It's a different. I'm talking about this year. Okay. This year, I want you to just sit down with your husband and go, this feels good. 20,000 apiece doesn't feel good. 15 does. 10 feels a little chinchy. I don't care.

You make it up. I'm not saying that's true. You guys talk about that. But you don't need to give all of this money to these three people, number one. You all are the owners, and you work there too, your owners and employees. So, you know, if you split it five ways, that's $20,000 apiece. That's your max. And you wouldn't, and you, why would you give them the same amount as you?

You're the owner. You started this. Okay, that's not, that's not equitable. But you always talk about how, as a small business, we don't really have, you know, all the fancy things, the 401Ks, the insurance. You're not trying to offset all of that with this bonus. Okay. All you're doing is saying we had a great year. And we want to say howdy.

Okay. And it's a really nice howdy. It's all you're doing. You're not changing the whole philosophy of compensation. You're not setting up something that necessarily goes forward. This is a one-time, good-time thing. And that's what you tell them. You go, this year we had a great year.

I have no idea what we'll do next year. Last year you got zero. Right. Next year you might get zero. But this year, howdy. here's 12-5, here's 15. That's how you set it up to where there's no, and you say clearly, no expectation for the future is allowed because you didn't have an expectation for this year

because last year was zero. We could be back to zero. I don't know what this economy is going to do. We got an election year coming up and a bunch of crazy people running for president. We don't have any idea who's going to get in there. I mean, it's a dad-gum fruit show. So, you know, it's unbelievable. and you don't know what you're going to get.

So you just talk like, just tell me, that's a truth. I don't know what we're going to have. We'll deal with next year when we get here. But we have one of our core values at Ramsey is we share the profits. That's it. We don't tell you how. We don't promise you win. We don't say based on what.

But if we make a, you know, we make a bunch of money, we're going to share it with the people that brought us to the dance, our team. Right. But if we don't make a bunch of money, we ain't going to share it because there's anything to share. And so there's no expectation. This is not corporate America. We have a little formula, and this is our corporate bonus program, and everyone knows what the formula is. And nobody gives a crap about anybody, but we have a formula.

No, this is just, I got some money. Howdy, here's some of it. Next year we'll deal with it again. And I would keep it that open-handed, and then as you come into fourth quarter of next year, you've got two more team members that started in January. They haven't been there as long. Maybe they don't get the same amount.

Maybe it's not an even split among that group of five if you have a profit next year. Maybe the newbies get one level. You got one level of bonus for newbies. You got another level of bonus for the others. Or maybe you got one level of bonus. We had, for a while, we had people that were on commission that got almost no bonus. Because if they wanted a bonus, they could go sell something. And the admins, the people making this place run in operations like in accounting

and the administrative assistance, that kind of thing, those people, the admin people, they're stuck, they got a salary, they can't affect their income. So we would dump profit more on them than we would the people that could affect their income with their actions. So we just, we developed class, so to speak, classes of bonuses. And we would share different amounts with different people and based on that. And all we were doing is just sitting down and going, hey, what feels right this year?

And ours has changed many years. every year. It hadn't changed every year for the last two or three, but I mean, we used to change it all the time. We don't, our team does not know how our profit sharing works. We don't, because we don't share the formula because the formula is never the same. It'd be tough to share. So do you just keep that between the people that need to know? Yeah, we just, we make it up for my husband and I, and then, um, we have, we have a principle, we have a principle of generosity. And we have a formula that we're using for this quarter that the accounting team knows to run the bonuses out. Because the formula doesn't matter. All that matters is the principle is there's profit.

We're going to share it with you. Right now you've got to be with Ramsey a year before you're in profit sharing. Right now, if you're at a certain level of leadership, you're exempt. You don't get profit sharing because you've got other kinds of, you got other kinds of comp programs. Okay? Sure. So my operating board doesn't get profit sharing. They're the ones paying it. They don't get it. So that'd be dumb. And so, you know, we're trying to make sure the money is distributed to the people doing the work. And as a howdy, howdy, howdy, howdy, thank you, thank you, howdy.

And to hand them a check. And it's a great way to say thank you. And if you don't get all caught up and trying to make it predictive and entitled, then no one gets predictive or entitled with it. And you just make a big loud noise about we just share, we love you, we appreciate you, we appreciate you we're going to share with you and that's all you need to do and then figure it out yeah the problem is you get into corporate america and they think they have to put a comp plan in place that stays in place for 10 years and then it becomes part of people's lives they get

dialed into it and they have an expectation and i didn't get my christ you know you got clark griswold he didn't get the christmas bonus didn't get the pool you know because it was an expectation and that's what you get into you know stay away from clark griswold bonus programs. There we go. This is the Entree Leadership Podcast. This is the Entree Leadership Podcast. I'm your host Dave Ramsey. Melissa is with us in Richmond, Virginia. Hi, Melissa. Welcome. How can we help? Hey, Dave, what an honor. It is to talk to you. Thank you. You too. How come? What's up? So I own an architecture firm in Virginia. We've got four team members. And last year we did about 185K. I'm not in a position to give them a raise this year. And we're, and we own. And we've got a

You got four people working there. You did 185K top line? Top line, two full, two part time. Oh, okay. Okay. All right. I couldn't figure out how you could pay four people out of that, much less keep an office open.

All right. Well, you can't. Yeah, yeah, you can't. Are you on an upswing or a down swing? We're on an upswing. Okay. We'll do about $2.35 this year. Okay.

All right. How long you've been open? I've owned this business 25 years, had employees for five, so I owned my job for a while. Now I'm getting serious. Okay. So you're trying to move from treadmill or solopreneur up to treadmill up to peak performer then. Okay. Yeah.

And so you're going from 180 to 235, and you've got two part timers, two full timers, and you? I'm one of the full timers. Oh, you have one full-time employee. Okay. Yeah. And then two part-timers. Why did you choose two part-timers rather than are they different disciplines? So one handles admin and that's not a full-time job at our firm and the other one is an intern, which is also not a full-time job.

Okay, I got you. I got the picture now. Okay. I see what you're doing. I think it's good, very good. How can I help? So I'm not in a position to be able to give my staff raises this year and they've earned them, but that's just not where we are. and I'm looking for creative ways that I can express my appreciation,

let them know how much I value them, even though I can't do it with dollars. Okay. I don't want this to sound unappreciative or cold, but an intern doesn't get a race. They're a freaking intro. Correct. My intern would not get a race. You're correct.

Anyway. And a part-time admin might not. It's a part-time gig. I mean, it's just a, it's not like something that, It's a different situation. The only one I'm concerned about your one full-timer. Yeah. And what does the one full-timer make?

She makes about 50 a year. Okay. And what was your profit? Our profit last year was 42. After you were paid or before you were paid? Before I was paid. So she made more than you made? She sure did.

Okay. Well, that is the last year that happens. Yes. Okay. Yeah, we're not doing that again. We're not doing that again. So you, you, you've got to get, you've got to get enough business in the door to justify the position of that person. And right now, last year, you didn't because you should make at least what the team is making.

Yeah. Unless there's a sudden, unexpected downturn, but you're in an up. upswing and you just hired into the upswing heavily, too heavily. So, all right. Your question is how to make that person feel appreciate. The other two, honestly, I would just say thank you. I mean, we're growing a firm. Thanks for being here.

Appreciate the help. And I'd do that on a regular basis anyway. And if you want to buy pizza or something for everybody ever so often, that's fine. We do stuff like that around here all the time. We celebrate with food. around here like it's nobody's business. So, you know, bring in a box of chick filet every so often or whatever, right? And that's not a big deal. It's not a big expensive thing. But just, it's just use. And you just say, hey, guys, I just want to tell you, thank you. I mean, I appreciate what we're

doing. We're a small band here. There's just four of us, and it's us against the world. And, you know, we're having to scratch and claw. And these are the stories we'll tell people about someday when we get this thing going. And it gets to be a big deal. And you're, You know, you're here on the ground floor and thank you. Thank you for your dedication. Thank you for this and just saying it. And you don't have to do that once a year. You do it once a month in terms of saying thank you. So that takes care of the admin and the intern. They don't get any money. The other one doesn't get any money this year. I might even tell the full-timer, hey, listen, there's not a raise this year. But, you know, I need to be real authentic with you. We can look forward to that as we make more profit. But you made more than I made this year. year. Right. And I think I would tell them that. I think that's fair information. And by the way, I'm not okay with that. And it's not going to happen forever. He's never been the plan for that to happen forever. I know, I know. I didn't think it was. But I'm just saying, I think you share that. Because, you know, people can't add. The number of people walking around my business in the last 30 years that don't know the difference in gross revenue and profit is shocking to me. You know, people don't know the difference in gross. I have a $7 million business.

What's that mean? It means you grossed $7 million. What'd you net? Oh, we had expenses of $8 million. You have a bad hobby is what you have, you know. And people don't know the difference. So, I mean, because really your gross doesn't matter. It's your net that matters.

So, yeah, anyway, it's good to explain that to team members from time to time in different ways. And in this case, a private conversation with this person. and telling them that, and along with some kind of appreciation. Is the team member married, the full-timer? Yes. Are you? I am not. Okay.

Are you in a relationship? I am not. Okay. All right. I'm trying, because I was going to suggest going out to eat, but that might be weird. I don't know. You know, the two couples going out to eat, and we just want to say, hey, this is our celebration dinner. We had a good year.

You guys made more than we made this year, and we're going to have, you know, a great year. But it's kind of weird. I mean, I don't know. It feels awkward to me. But it might not to you. I don't know. I'm okay with it. It's not a statement of it's wrong.

I'm not saying it's wrong to be single. God, don't see me hate mail people. But that's not the point. But I'm trying to think of some way that I can do it on a relationship. level, something that is not awkward that is just me saying thank you and saying, I appreciate you, and so on. And it does start with just saying that out loud periodically. Did you do business with anyone that has a business that might let you get an item from them at a deal? Yeah, perhaps.

Okay. Like we, a thousand years ago, it feels like there's a really good country ham place that does mail order country hams down the road here. And they advertised on our show. And I didn't have any money to do anything for Christmas bonuses or Christmas gifts. And we had about 40 people working for us. And I talked that ham company into running some extra ads for trade. And I traded the radio ads for country hams. And it. everybody got a country ham that year. And that was, that's all I could do. I didn't mean money. And we weren't, you know, we had the money to pay, give 30 people a Christmas bonus. So that was, and it's a big joke around here now with all the bonuses and the crap we do for people now

that if you've been here back in the day, you've got a ham, you know, so, but anyway, but still, it was nice at the time. Because we walked, you know, we walked in with some country hams or,

I don't know, maybe you renovated our debt of some work for a bike company, and the guy likes to ride bikes, get him a bike or something. I don't know. Something like that is a way to get creative and go at it, I guess. I don't know, Melissa. But I think you're the reason that small business works and corporate America sucks

because you actually are asking this question. I appreciate my people. How can I tell them I appreciate them with something that goes beyond simply a check when a check isn't available, cash, when cash isn't available. And you can do that. I'll throw out something else that we do from time to time for the rest of you out there. May not work for you too, Melissa, but my leadership team is all authorized to take money out of petty cash.

And not very often, but occasionally walk through an area, catch somebody who's been working hard on a Friday afternoon, hand them $100 bill and say, hey, go out to dinner on us, this weekend, you've been kicking it. And just a $100 handshake, a $50 handshake, whatever. And they're authorized to do that. We probably don't do it enough. And the guys in the booth are going, yeah, you don't do it enough. But anyway, shut up.

But, yeah, you're not getting any. Oh, I'll catch you afterwards. Don't worry about it. But, yeah, I mean, that kind of stuff. You can just, but $100 is not worth it. But that goes a long way because all it says, says is you caught somebody doing something right, and you said, thank you. And corporate America doesn't know how to do that, because corporate America's loss is sold. And the small business

owner loves their people. They can be good to their people and just smile and tell them the truth and take care of them when things are not going well and all that kind of stuff. And corporate America doesn't have that ability. So just by you asking the question, Melissa, you set yourself apart and you make yourself an absolute amazing person. Thank you so much for being there. We really, really appreciate you. See, this is the kind of people that listen to this podcast. That's not leadership theory. I'm not making any money. How can I say thank you? What a great question. This is the Entree Leadership Podcast. This is the Entree Leadership Podcast. Thank you for joining us, America. I'm your host Dave Ramsey. If you are looking for business theory,

very high-brow discussion, I'm actually capable of doing all. that crap, but I detest it, and so you won't find it here. You can find that in your college professor's classroom who's never made payroll. I made payroll this week. I made decisions, along with my leadership team, to hire people or fire people this week. We actually do this crap. And so if you want to deal with somebody's doing that, you're in the right place. If you want people who, you want to have a business leadership theory discussion, you probably need to listen to those cool podcasts with the cool people because this ain't the cool people. This is the people get crap done here.

And we knock stuff down. We pick stuff up. We leave the cave. We kill something. We drag it home. If you like this, help us spread the word. You're our best marketing program because you're her only one. Share the show.

Click like, click subscribe, click follow, and tell people that you are getting business advice that you like. And help people, help us get some more people tuning into this. tiny little pitiful podcast, and we're honored that you're here. Thank you. If you want to be on this podcast, we'd love to have you. The numbers 844-9-4-4-1070. 844-9-4-1070. We'd love to have you. You can be part of this. Hector is up next. He is in Albuquerque, New Mexico. Hi, Hector. How are you? Hi, Dave. Well, good. How are you, sir? Better than I deserve. What's up? Thank you for taking my call, sir. And sorry, I'm a little nervous, so I'm just going to read

off the script I have here. That's cool. We are a second generation family-owned Mexican restaurant that is being operated by my siblings and myself with two locations and have 75 team members and do 7.2 million in sales. And I'm calling me because I want to know if given the current market conditions with the slowing economy, if it is wise to pay off our $673,000 loan at 3%, and deplete our savings. How much do you have in the savings? We have $850,000. I would pay it off today.

You want to survive a down economy? Don't have payments. Oh, man, that feels so good. I feel like I just got chips and salsa. I just feel great, man. You got no debt. Do you own this or does your dad own it? So my dad owns it.

Okay. So you got to talk him. into doing that? Yes. Okay. All right. Here's the thing. COVID hit,

pandemic hit, Fauci's quarantine hit, Fauci's disruption of the economy hit. We got Faucied. Remember that? Yes. Oh, yes. Yeah, you were shut down completely because,

you know, the little COVIDs were hanging out in restaurants. We all knew that. So, right? Yeah. So you were shut down completely. Yes. Yeah.

And we were shut down for a little while. We had entire segments of, our revenue evaporate in 30 days. We had a healthy thriving live events department. It's making millions of dollars. It evaporated. We have a high school curriculum that is taught to high school students in 48% of the high schools. It's a tens of millions of dollars a year business. Almost all of the purchases for next year's curriculum happen in April. Guess what we were all doing in April of 2020? sitting in our pajamas getting fat. We got foul cheat, remember?

And so that whole thing evaporated. Nobody's in school ordering curriculum, right? And so, oh my gosh. I mean, I had tens of millions of dollars of incoming revenue just leave. We were scrambling. We had to create new levels of revenue just to make sure we could keep payroll going. We had tens of millions of dollars in retained earnings. you got a big old pile of money and retained earnings based on the size of your business.

A great job on that. But we were sitting here with zero debt. We were careful. We were stressed. We were trying to take care of our team and make sure no one lost their jobs due to revenues evaporating. We were able to move revenues around, move people around, keep things moving. Not a single person lost their job. And we did not get into complete freak out mode.

We never got into the red. We made money through the whole thing. We turn the whole thing around where our profits are up so much year over year. Right now, it's like crazy good. And guess what? All of that's because I didn't mean debt. And I had a pile of money. And so if the economy is slowing down and that is your fear, the best way to handle that is to have some cash, which you do.

You have a couple hundred thousand bucks and you're debt free. Please pay this loan off. Please get rid of it. it is a weight that you guys don't even realize you're carrying until you set it down. When you set it down, all your brothers and sisters, your mom and dad are going to go, whew, we've been carrying around a deadgum, 300-pound weight on our back. I promise you, you're not going to regret it. I promise you.

And don't go back in debt again. Y'all are making money, man. Y'all work your butts off, too, don't you? Yes, we do. Restaurant business is hard. It's rough. High turnover. You can't keep people.

One of my friends in the business, he said the average thing in your all's world is 300% turnover a year. Does that sound right? That sounds about right. Yeah, he's got his down to 125% turnover less than half the industry average, and he feels like King of the Hill. Man, if I had 125% turnover in one year, I'd just give up. I mean, we have, you know, nothing turnover here compared.

nothing nothing we're hard to lose anybody in a year so uh but you you guys work you deal with turnover you deal with team members you deal with crazy customers you're doing 7.2 million dollars in mexican food out of two spots in a year y'all are kicking butt man but you're stepping and fetching too you're working there's a lot of sweat a lot of late nights you're tired am i wrong no you're absolutely right for god's sakes don't let this thing be va vulnerable to Bidenomics. For God's sakes, write a check and be dead free. Oh, please.

I beg you. It's just best thing you will never be mad at Dave Ramsey for telling you to do this. It won't happen. Because, you know, even if your sales go way down, you got no payment. If you got no pay, I mean, the biggest line item on your, you got two big numbers on your P&L, payroll and payment. And we just got rid of two of your biggest problems on your P&L. You're going to have profit next month like you never.

What's the payment on this thing? This thing is running about $7,000 a month. Okay. And what's your, on your 7.2 million gross, what's your own net profit in a year? Net profit. After cost of goods sold, after labor, after everything, everything, everything. About 18%. $2 million, right?

Yes. Okay. And $7,000 is $7,000 a month? Yeah, that's $100,000 a year then. Okay. Yes. So, yeah, it's not, it's not, it's going to change your profit a little, but it's not going to change it that much. But it's not as much I thought it would.

So I was wrong on that part. But I was hoping the math would just smack you around, but it doesn't. So 100 grand on $2 million doesn't change your life, right? But I was hoping it'd be a lot more than that. But still, you have an extra $100,000 to the bottom line. Yep. That right now you're just, you know, you have another partner, the bank. Stupid bank is your partner.

And they're a merciless twerps. They'll come take the place. They got no soul at all. Man, please, please, please. I love your business. I want to come eat there right now. I got my mouth water. I bet you that's some good food, man.

I mean, we're talking Albuquerque, New Mexico, Tex-Mex. I can eat me some of that right now. Way to go, Hector. Proud of y'all. Killing it. Very well done. Please talk your dad into this. I don't know if you can or not, but if I woke up in your shoes, I'd be debt-free by Friday.

No banker in my restaurant unless he's a customer. That's it. I'm no longer his customer. He can come over here and have a taco. That's it. Man, I'm done with you people. That would work perfect for me. Hey, guys, remember, better a weary warrior than a quivering critic.

Leaders serve. Leaders are active, not passive. Leaders act on principle, not appearances. This world needs more high-quality leaders, so choose to. to lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast.