EntreLeadership - How to Set Realistic Expectations For Your Business

Episode Date: August 14, 2023

Today we’ll hear about: •       A woman who’s hesitant to take over the family business because of how her dad has managed the business finances •       How to help your business when you have heavy turnover •       A new business owner who needs to know the top skills he should focus on to succeed •       What to do when team members think your success and wealth came from blind luck Links mentioned in this episode: •       The EntreLeadership Podcast •       EntreLeadership Master Series •       The E-Myth by Michael E. Gerber •       Have a question for The EntreLeadership Podcast? Leave a voicemail at 844.944.1070 or submit your question for a chance to be on the show with Dave Ramsey: https://www.entreleadership.com/ask Start growing in business and leadership with the EntreLeadership Newsletter. Sign up to receive tactical tools, advice and resources in your inbox every week: https://bit.ly/3IRWnsL   Support our sponsors: •       NetSuite •       BELAY •       Payority Learn more about EntreLeadership Events: •       EntreLeadership Summit •       EntreLeadership Master Series Learn more about EntreLeadership Coaching: •       Elite •       Advisory Groups •       Executive Coaching •       Workshops Listen to all the Ramsey Network podcasts anytime, anywhere in our Ramsey Network app: https://apple.co/3eN8jNq Learn more about your ad choices: https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy: https://www.ramseysolutions.com/company/policies/privacy-policy Learn more about your ad choices. Visit megaphone.fm/adchoices

From the headquarters of Ramsey Solutions, this is the Entree Leadership Podcast, where I take calls from leaders like you about what it takes to win in any stage of business. I'm Dave Ramsey. I've been running Ramsey Solutions for over 30 years. We grew it from a card table in my living room to where it is today, major national brand doing about 300 million top line. And we did all of that the hard way. No debt, scratching and clawing, doing a lot of stupid butt stuff and recovering from it,

And so, no, I'm not a college professor with a tenure that's never made payroll. I'm quite the opposite. Not mad at you if you're a college professor that's never made payroll, but don't really want your opinion on running a business. This business has been run by and grown by people who actually do it. We don't just talk about it. And that's what this podcast is about. It's for you, you people that are out there leaving the cave, killing something, and

dragging it home every day. We do it. So if you got a question and you want to, I'm beyond the show. Just call me at 844-944-1070. That's 844-944-1070. Or you can fill out the form on the website at entreleadership.com slash ask and be part of the program. Hallie is going to start off today in Houston, Texas. Hey, Hallie, how are you? I'm doing great. How are you? Doing better than I deserve. How can I help? Hi. Okay. So I am the marketing manager and I'm approaching my one year anniversary at my family business, which is an IT managed service company. My father and mother have talked to my husband and I and we've discussed taking over the business when my dad retires. But there's been a little clarity on how or when that'll happen and I'm not sure if I'm comfortable with how the business is right now. My question is, how can I approach a conversation with my dad to learn if taking over this business. will be a good idea relationally and financially or if it's time to grieve the loss of the

picture I had of taking over the business. Okay. How old are you? I'm 24. And how old is he? My dad. He is, I believe he's 56. Okay.

So do you think he was planning on doing this in 10 years when he's 66 or do you think he's planning on doing it next month? Oh, no. It'll probably be longer, probably around the 5. to 10-year range. Okay. And how long has he been running this business? 25 years this year.

Okay. And what is it that you've discovered in your one-year's experience versus his 25 that he's doing wrong? So from, we've been listening to your stuff for a really long time. My parents raised me on the baby steps and everything. And I'm nervous because he's kind of gone away from the debt-free life. style and I'm not sure how the business is really financially doing since they're pretty tight on how that information is given out. And he's pretty much always been on the treadmill stage.

There's not a ton of training or really guidance that's been gone on for my husband or my brother who are the technicians that help him out. So those are the main things that really concern me. Okay. How many people work in the business total? Five, yeah, three technicians, including my dad, and my mom and I are kind of administrative or operations. So there's no one there that's not family?

Correct. You have any idea what the revenues are? I know that whenever in 2020, we were doing almost half a million, and then we lost about 40% whenever my dad almost passed from COVID. We lost some business while he was in the hospital, and we're still recovering from that. Wow. Yeah.

Yeah. Okay. Well, the only thing that there's a couple of things we know about successful transitions. One is the more gradual that they are, the more successful they are. So starting now on a 10-year plan is a better idea than starting right. starting two years before the plan. Absolutely. The second thing we know about this is that it requires a ton of communication,

not only between the buyer, in this case you, and the seller, in this case him, but also the rest of the team and even the vendors and even the customers need to know what the plan is. because let's pretend he's 64 and still running this and your customers don't understand what the plan is when he steps aside, then they are nervous customers and you're going to lose some of them. So not communicating the succession plan to your customers is bad marketing. Okay. And so at Ramsey, we've been very clear about what our succession plan is to everyone, anyone that will listen, we'll tell them, you know, over and over and over again. We know exactly what we're doing.

We've got a game plan. We've laid it all out. And we're in the, you know, I'm in my late, in my mid-60s or my early 60s. So we're in the last few phases of it, right, of what the plan looks like and what's going to happen. In our case, I'll continue to do what I'm doing here on the microphone, but I won't be the CEO anymore in a few years. But in this period of time, this next phase, my son, Daniel, has become the president of the company. and he and I are running it together. And the three Ramsey siblings, including his two sisters, are the owners of the company,

with the exception of I own the only voting stock. And so I'm still in control today. But at any point, it'll be easy to flip the switch, and the three of them are in control, in charge, and they're running things. And the customers know that. I just said it on a microphone. The vendors know that. The team members know that.

and, you know, we know the Ramsey personalities are able to step into the Ramsey show and the other shows that we do and, you know, fill my shoes, including this show. It wouldn't be hard at all. And that kind of stuff. So this is the kind of things you could share with your dad. Look, Ramsey says the more gradual it is, the better off it's going to be, and the more communication there is. We got no plan, so we don't know how gradual it is. And there's been almost no communication because we don't have any idea what's going on over there. I just work here. Now, I'm 24. I've been here a whole year, so I don't know spit. And that's your line, okay? But I do need to know. I'm not here to tell you how to do it, but I do need to know where we're going and how we're going to get there. Because if you expect me to go along blind for the next eight years

and hope you run it okay, that's not good communication. And that's not a good openness. It feels weird. and it's not that I don't believe in you. It's not that I don't trust you, but a proper way to do this is lots of communication and lots of knowledge. You need to know all about the financials, and he needs to be training you, and then later on, you need to be involved in the decision on whether we do this thing or don't do this thing. Today, you haven't earned the right to do that, but you have earned the right if he says he's going to hand it off to be involved in the communication and for a plan to be laid out.

year plan, that's fine, but just tell me. If it's a 12-year plan, let's talk about it, or if it's a plan based on certain check marks. In our case, we were not moving Daniel. He's been here 10 years into a president's role until he had proven competency, and until all of our senior leaders checked off on him being the leader. And that proves his competency, not just me. And they did.

And so as a friend of mine said, Daniel was elected president in the elevator, not the boardroom. and so that's your job is to go be that person right you've got to earn the right to speak up but you just by your presence and the idea that you earn the right to hear what's going on you don't really get it your advice is not going to be adhered to and you need to pay honor to his 25 years your advice doesn't mean spit after one year there's not a one year person on our team that's going to run this place okay we love them and we're glad they're here and the expertise you bring to the table is valid

but not for running the whole place. And you can ask questions about, okay, look, I was raised, you raised me on the Ramsey stuff, and here you are borrowing money. I don't understand how that works. It feels inconsistent to me. Explain to me, Dad. That's a fair question, okay? But you can't wag your finger and go, we shouldn't be doing that.

It's improper way to run the business. No, you're not in a position to do that at this stage of the game. You're really, really young to the situation and you're young. So pay honor, lots of honor to the founder, but that doesn't mean you have to honor their misbehavior, but you honor the position, and you can ask a lot of questions. And a lot of people around here have asked me a lot of questions over the years, and I don't consider that belligerence. I consider that wisdom. And I don't mind a young person that's, you know, challenges, okay, I don't understand how that fits with our core values.

Okay, that's a fair question. But the answer to it you might not like because you're the fact, it might be that you really didn't understand. You know, the answer to some questions is you're wrong. Some questions is you're right. Some questions is you just didn't have all the information. So those are okay questions if they're real questions. But if it's a passive aggressive statement and you're being belligerent, that's another thing.

So you've got to be really, really careful to be patient, to lay in a plan, to exert honor. but it's fair to ask for a timeline game plan, a roughed out timeline of what it's based on. It's fair to ask for communication and openness about the books if you're expecting. And then on the purpose of dad, mentor me. Show me how to do this. Show me how to do what you've done. What you've done here is an amazing thing. You've grown a business.

And if you keep doing it with that approach, you're going to be okay. But, you know, when in doubt, be super humble. because that's the position you're in. This is the Entree Leadership Podcast. Welcome back to the Entree Leadership Podcast. I'm Dave Ramsey, your host. Our question of the day is from Daniel in Minnesota. When you own your own business and are paying off personal and business debt,

how many months of cash reserves do you recommend keeping in the business before you take any extra cash to pay down debt? Daniel, what we teach people to do in business is different than the baby steps that we teach in personal finance. If you're running a small business and you have debt, it's personal debt. You signed for it personally. It's all personal debt.

Now, if you want to categorize some of it as business debt, that's fine. The law doesn't see it that way. Your business doesn't know any money. You do. Because banks don't loan small businesses money. They loan individuals money that own small businesses. And so you're personally liable on this.

I'm almost sure. Now, so set it over there. Call it business debt if you want. So what we do is this. we teach people to set your profit and loss statement up where you pay yourself a salary that is your minimum living wage. What does it take you to survive? That's all you need. Just enough to get by, not prosper, but get by.

So let's say that's $60,000 or $100,000 or whatever, right? And you put that in your profit and loss statement, and then after you paid your service, that amount of money, whatever's left, let's call that profit, because that is profit. Okay? So you paid yourself as the manager a living wage. Nothing's fancy. Whatever their profit there is, I want you to put a percentage of that towards debt and a percentage of that into retained earnings. So probably like about 80, 20, 70, 30, something like that. Meaning the big chunk, 70% or 80% is going towards the debt, and you're going to save 10 or 15, 20% in the retain earnings.

So let's say you made $100,000 profit after you paid yourself your living wage of $60,000 or whatever that is, okay? So, and you apply your formula to whatever the profit is each month. And if it's 80, 20, we're going to say, okay, 20%, 20,000 is going into, of the 100,000 this month, that'd be a great month, right? 20,000 bucks is going into retained earnings and 80,000 is going on the debt. And you can throw it at the business debt. You can throw it at the personal debt because, as I said earlier, it's all just debt.

It's all just yours. And so now I'm not talking about monthly payables. Those are part of your P&L, paying a vendor that you do a 30-day terms with. That's not a debt like we're talking about. I'm talking about if you did an SBA loan or you got credit card debt that you used to buy crap in the business. stupid people do that. 38% of small businesses have credit card debt associated with a business.

Dumb way to finance a business. Really dumb. So be putting that in there. Work your debt snowball. Throw it at the debt. Throw it at the debt. And then when all of the debt is cleared, personal and business, then you change the formula and you say, I'm going to put a percentage towards retained earnings to always

grow retained earnings every month. Always be growing as your business is growing, your cash position. you're going to very seldom find you have too much cash. That's not something many people struggle with. So I have never caught up on cash. We save a percentage, and our goal is to have one half of a year, six months of operating budget, set aside and retained earnings. We've always grown our operating costs faster than we've grown our retained earnings.

We've never caught up to that number. So today, even with 300 million top line, I don't have six months of expenses in cash. That would be a lot. But I got a lot of cash, but I don't have anywhere near that much. So that's what I would tell you to do. Put a percentage towards that. But once the debt is cleared, then you keep some percentage going to retain earnings and the rest of it you take home. That's when you get a raise.

You don't get a raise until you get out of debt. You don't get to take some of your profits home and screw around by a boat until you get out of debt. so you get your debts cleared. And also that P&L includes some line items for equipment replacement. You've got some trucks that are wearing out, and you're going to have to buy some trucks. Well, you've got to have a plan to do that. So in your P&L is a line item to cover that as well. This is the Entree Leadership Podcast.

If you want to be on, call us and leave a message. We'll get back to you and make you a caller. The number's 844-9-4-1070. Paul is next in Fresno, California. Hey, Paul, how are you? Hey, Dave, I'm doing really, really well. How are you? Better than I deserve.

What's up? So I'm a part owner and editor of a newspaper publishing company that runs two local weekly newspapers as well. Our top line is around $2 million, and we've got 30 employees overall mix between full-time and part-time. And we just recently discovered the podcast, and we kind of discovered. that we've been in the pathfinder phase, but we've probably been there for quite a while, and maybe not doing necessarily all the steps to move past that, but now we found you, so.

Okay. But so right when we were going through some significant growth last year, and then we just had some key younger employees in pivotal positions just, you know, up and leave. You know, a couple of them left for better paying jobs and benefits that were just outside of our range. And then another has just left the industry altogether. So what I wanted to get your take on was, you know, how do we invest in our new and even current employees in a way that encourages them to buy into our mission? And hopefully, if we do a good job at that, we can reduce turnover. Yeah. Well, we've had the highest turnover in the past 24 months that we've ever had in our history, and so has most every company in the nation.

The nation has gone through, as you probably know, what we've called the Great Resignation. And companies, our size, have had a 29% turnover. Our turnover was nowhere near that, but it was still double what we're used to. And that's what you're experiencing. You didn't have turnover much, and all of a sudden, Boom, some key people walked out and you really feel it. I mean, you lose five key people in a 30-person organization. That's, dadgum, that knocks the wind out of you, scares you. And if I were you, that's what I would be feeling. And so, yeah, so we're constantly addressing that right now and looking at it.

So part of it, part of what we've done, and I'd recommend, is the recognition that this is a cultural phenomenon that came out of an existential crisis after a pandemic, after a quarantine. People came out of a quarantine and went, I really don't know what I need to. They're kind of wandering around with this deer in the headlights look and looking for happiness and trying to find it somewhere. And I don't know,

I don't know if I really even want to work. You know, you know what I'm saying? And it was all this weird crap going on, almost like the 70s kicked back in or something. And so, you know, we're losing people to that. The work at home movement, you know, evolved or hit a different stride or whatever out, out of that. And it was accelerated because of

COVID, because of the quarantine as well. And so we've lost some people that want to work from home and we work from work. So it's not an option for us. And it's our choice, but it's your choice not to work here. So that's okay. So we've lost a few people from that. And I'm okay with that. And it's okay. But we didn't change the program. You did. So anyway, one thing we've done is we recognize that this was a blip. Like a lot of things in the supply chain and other things, the great resignation is about run its course. It's followed up now by the great regret. There's a whole bunch of people left their jobs for what they thought were better paying situations or better situations overall that are wishing they didn't because they jumped from the frying pan into a bonfire. They got themselves

into a mess with, and corporate Americans turn around laying them back off and screwing them. And so there's been a great resignation followed by the great regret. This is going to smooth back out. We're going to go back to more normal turnover ratio. So, number one, it's not something you need to panic and overcorrect what you've been doing. Number two, it's a good thing to wake up and say, hey, we've got to do what you're suggesting, Paul, which is how can we actually address this? Yes, I want to address it, but I want to tell you up front that even if you had addressed it before all of this, you still would have lost some of those people because we did.

And we've got a great culture. We've got an incredible work culture here. So first thing is more that there's not a pay system that will cause you to retain people. You got to pay fairly, and I love incentive plans of any kind and Chatskis and anything where we can help people. But the biggest thing that retains people is two things. One is really good, open, clear, integrity-based communication with their leadership team, where they feel heard and are heard and their core. course corrected, and they've got accountability, they've got encouragement. So, you know, if you're at the

Pathfinder stage, one of the things we talk about is weekly one-on-ones. You guys got to take that to an art form to where the person is being heard by their leader, their leader speaking into their lives, cares about them personally, in a sense pastors them, knows what's going on with their sick dog, their kids, you know, struggling in school, whatever. We know some, you know, we care about the people, We love the people. We spend time with the people. And that open, clear and clear communication on performance and mentoring on how to get better. And people appreciate that so much.

They will do anything to stay in a situation like that. The second thing we find is they have to tie their work to something that has meaning. People don't go to the assembly line anymore and do mindless stuff. They won't stay with you. even if you pay them unbelievable amounts of money. And so they have to tie that, okay, you're in journalism, that the work you're doing with these newspapers, it matters. It's work that matters.

We've got it all over the walls at Ramsey. This is work that matters. When you write a line of code here, you're helping somebody with their money, helping them save their marriage, helping them change their family trees, and send their kids to college. This is work that matters.

When you ship a book here in shipping, you're not just a shipping guy or gal. You're somebody that actually did work that matters. Something changed because you did that because that book got their own time. And so you're engaged in something that has a noble purpose. And you are, Paul. So you just got to communicate that a lot over and over and over until you're sick of saying it. Because they don't hear it until you say it nine million freaking times.

And then the one-on-ones you're talking about, look, you've got to do this different because this is work that matters. And you tie it back to that. and I stand up in staff meeting. We have a staff meeting for the whole thousand plus people team every Monday morning, and I remind them, listen, this place is blessed. We've got unbelievable financial resources, talent. We've got brand recognition. People love us in the marketplace, and we are blessed, but we are not blessed so that we just become blessed.

We're blessed so that we can be a blessing. If you work inside these walls, you work for the people that aren't here. You work for the people outside these walls. That's your job. Serve that customer. Help them change their lives. and that's work that matters. It has meaning.

And so when you work at Ramsey, you're doing stuff that has meaning. And Paul, you've got the ability to do the exact same thing. So if you get good, clear communication and they see a path on how they are adding value and how they can move up in the organization, they've got good leaders that have integrity or clear with them when they're doing something right or when they're doing something wrong, they're plugging into work that has meaning. And then on top of that, you pay as you pay, you know, market wages plus some, and especially if you share some profits as we all win, we win together, that kind of stuff.

You know, that's about all you can do. And then still you're going to have stuff come along like the Great Resignation or the work from home movement or anything like that. It's still going to take your knees out sometimes. And I've lost some folks in the last two years that I love dearly. And I hate that they're gone. But, and I think they made a mistake in many cases. But, you know, if you're making $100,000 a year and somebody offers you $1,000

20, you walk out the door, you may or may not have made a good move. It sounds like on the surface that's automatically a good move, but you might not have. And in some cases, I knew where they were going, and I knew they were going into a cesspool, and I knew that it wasn't worth the money. And they're probably not going to last, or they're probably going to get kicked to the curb. But you can't tell somebody that. They've got to experience it for themselves. So all you can do is all you can do, and that's enough on this subject. But lean into those kinds of soft skills make sure your comp plans are fair and inventive and creative and that you're bringing on good, solid people.

The other thing we're looking for, the last piece of this ball, and I'm kind of spitballing some of this, but I'm telling you what we're doing right now real time is we have really tightened up our interview process. Oh, yeah. Because, I mean, if somebody works here 90 days and then they walk in and go, you know, I think I want to work from home. Well, that's our fault. We shouldn't have hired that person. Right, right.

I was going to ask you as well, what is, you know, what are some of the things that you do in the hiring process that can perhaps, you know, cut down on some of the more regulars that fall out, say, after 90 days? Or is it just something that you don't know? I'm going to dig in pretty deep on their maturity and go, you know, are they telling me the truth or are they just telling me crap to get a job? You know, and so we're going to, we're going to interview them a lot. We do a lot of interviews, four, five, six, seven interviews. We don't never hire one on just one interview. And in that process, different people are talking to them, and we're trying to get a bead on, does this person really want to plug into the crusade that we're doing here?

Or are they looking for a J.O.B? And if they're just looking for a J.O.B., they're not going to fit in. Because the people that work here and that last, they care deeply about this place. They care deeply. but they will fight you, you know, and you're not going to like it if you're in here going, I'll just here to get a check. You don't fit into this place. So we want you to know that up front.

And so we ask a lot of questions, leading questions, about stuff like that in the process and try to ascertain, is this person mature enough? But we literally had a person leave in the last 90 days that had been here 90 days. And one of my guys comes in and goes, what's up with that? And I'm like, what's up with that is you're stupid. You hired them. You know, it's our fault. We, something in our process let that person in the building.

And it's our fault. So I'm not going to blame that little immature 20-something that couldn't find their butt with both hands. And, you know, they, they just, they obviously wander into a building where we say very clearly, we work from work. We do not have a work from home program. And then they discover while they're working here that they can't work from home. Well, how dumb is that? That's our fault that we let that person in the house. the building. They were not qualified to be in here, maturity-wise, or anything else. And that's what

we get into. So, yeah, the interview process is something you'll find in Ontario Leadership Elite. We spend a lot of time on interviewing to make sure we get the right people in the building. Man, keep it crazy out of the building. It's a full-time job, man. It's a dadgum because crazy will sneak in. It's, and it will drive you bananas running a small business. So, hey, really good questions, And I don't have time to teach the whole thing out, but that's just some thoughts I had. And it's actually stuff that we're working on at this moment. We've always been pretty good at it, but we're getting even better at it every minute while we're here in some of those special challenges we've all had in the past 36 months or so. We've learned how to do all new stuff in the process.

That's how we do it. It's a really good question. Again, if you want to be part of the program, go to entreleadership.com slash ask. in your question. The team will get back to you, set up you to be a caller here on the Entree Leadership Podcast. This is the Entree Leadership Podcast. We've been talking about the stage of businesses. We're just talking about Pathfinder with Paul. The roadmap that's going to help you grow your business. We hope you're paying attention. The stages are going to help you accelerate your growth like you wouldn't believe. And the six drivers drive you through those stages. So you're going to love it. If you're a business owner and you're trying to level up to the next stage, you're going to need more. than just the high-level summary that we give you here on the air.

You ought to attend Entree Leadership Master Series. This conference is a five-day tactical crash course on how to grow a business. We'll break down all the skills you need to advance through the stages of business like delegation, hiring, strategic planning. The stuff I was just talking about in that last segment. Best part is, is not theory. We're really doing this. These are lessons taken from what we've learned as we grew this business through the

different stages and what we're learning today, hands-on, the day. Hands on the day. Live right there. So much to talk about, and we've even added an extra day this year. It's happening November 5 through 10 at our headquarters in the brand new Ramsey Event Center here in Nashville. You don't want to miss it. We are almost sold out. There's about 74 seats left as I do this recording today. So if you want to join us, don't wait. Go to Entreeleadership.com slash master series. Get your tickets. and that way you will avoid FOMO. It's a word I learned this week. Fear of missing out.

See, even old people can learn stuff. All right, Jeffrey is with us in St. Petersburg, Florida. Hey, Jeffrey, what's up? Hey, how are you doing, sir? Better than I deserve. How can I help? So I'm the broker owner for a small residential real estate brokerage in St. Petersburg, Florida. We've been in business a little over a year now.

But prior to that, I'd work in a different broker's company. for the better part of a decade. And I've been learning through this process. There's a pretty big skill and knowledge gap between what I needed to be successful as an operator in someone else's business and what I've needed so far to keep our company going and try to make it the best we can be. So I guess what I'm looking for from you, sir, is some wisdom on, like, what skills should I focus on as a new business owner?

I find myself dealing with things as they come up, and I'm trying to, I don't know what I don't know. So I'm seeking wisdom on that from you. Okay. Well, that's like, how do I run a business? That would be like a course. Right. I mean, my gosh, I don't know how to answer that in a single call here, but let me back up a second because I grew up in the real estate business. Mom and Daddy owned a residential company when I was growing up, and I got my license when I turned 18. I've still got that license. So love the world that you're in.

I observed, and we used to talk about in our family, that sometimes what happens, somebody's a great salesperson and they get promoted to be sales manager or they're a great salesperson and they say, I don't want to split with a broker anymore, so they go out and open their own shop, get their own broker's license, open their own shop. And like you said, I discover there's a different skill set between being a superstar and actually operating. But you're taking it a step further. I think you said you used to operate a brokerage for someone else.

Operate within. So, no, I've followed that. basically exactly what you just sat and did really well. Okay. So you're a great sales. Yeah. So it's like, you know, you can be a great heating and air person, but that doesn't mean you know how to run a heating and air company.

It just means you know how to fix the heating and air. You could be a great real estate salesperson, but it doesn't mean you know what there's a, so you move from the skill set of being a great salesperson, a great market, a great technician to actually operating the business. So what you're saying is is that the skills aren't, they're not transferable.

It's a different skill set. Right. Certainly not all of them. One skill is transferable, and that's the quality. In your case, you have quality people skills. Right. And that's certainly transferable. But if you don't watch, you try to sell everybody, and then the team starts to feel manipulated.

So you've got to be careful with that. I know I'm a salesman. So, all right, let's back up then. So the first thing we do is do what you did, and we recognize, there's this recognition phase where we say, okay, what does it take to operate? a business? Well, the basic components of business, right? There's the personnel aspects, the HR aspects, in other words, the hiring and firing of the team members. There's the leadership aspect setting the strategic business model in place. You know, how are you going to pay the brokers

that work on your team? How are you going to split with them? Are you, you know, doing 100% with them paying you a flat rate? Or, you know, what's your split on the thing? How's your business model work. You've got accounting functions. Somebody's got to do the accounting and how are we going to control the cash flow, the money coming in, make sure the expenses are paid and the, you know, the business is operated from a financial standpoint. Certainly marketing and marketing is different than sales because we're trying to put the brand of your company out there more than just the individual going and selling a house. And so you've got the- There's a more efficient way to go about it than just trial or error.

I think maybe a better way for me to phrase it is, when I was working in another company, if you need training or you need resources, you go to the broker. When you are the broker, you can give the training or resources to your agents for what their role is, but you have no one above you, you can go tap to say, hey, how did you do this boss-level stuff or this broker-level thing? Yeah, exactly. Well, yeah, that's, you know, you need to come to someone like us that can show you how to do it. and get a, you know, get a one-on-one coach, a business coach, you know, come to some of the events. I'll tell you what, why don't we do this?

You want to come to Nashville in November and come to the Entree Master Series as my guest? Oh, I would love that, Dave. All right. You're coming as my guest. Let's just start there, okay? That's five days. When you leave, you're going to be mentally exhausted because I'm going to, you're going up to a water fountain to get a drink.

I'm going on a freaking fire hose, okay? Because I can't answer this in one call on a podcast. There's too much going on. Right. Because the hiring and firing lessons are six hours, you know. I mean, it's like that kind of stuff. So there's, you know, but yeah, you're right. You've got to get the skill set.

You've got to tap into something like someone to teach. And we teach this stuff as practitioners on operating a business. We work with small businesses of all kinds, lots of real estate companies, by the way. We coach one-on-one. And they have coaches in the real estate world like my friend Brian Buffini or somebody like that. But they also have us coaching them on. the business side of it, which as you are recognizing, and we are in this discussion, there's two parts to this, not just the real estate coaching. So, now, the first book I'm going to tell you

to pick up is by my friend Michael Gerber. The book is called E-Mith, E-Dash-Mith. It's the entrepreneurial myth, and it's exactly what we've been talking about. The E-Mith is that because I know how to make pies doesn't mean I know how to run a pie store. Right. Because I'm a good chef doesn't mean I know how to run a restaurant. And his brilliant observation that changed my life 30 years ago when I read his book was that you need to learn to work on your business, not just in your business. Right. And that's really the discussion you and I are having, but you'll enjoy this book for that reason. And then I think what you've got to do is basically start to say, okay, here's the segments of the business that have to be addressed. Obviously, there's a small amount

of accounting that needs to be done. There's a small amount of accounting. There's a small amount of HR that needs to be done, meaning higher-end firing and recruiting. There's a small amount. Nothing's huge at this stage, but you need to touch the bases on these different things. A small amount of legal that needs to be done. You've got to decide if you're going to, you know, what the ownership entity is, is it an LLC, what are we doing here, that kind of stuff. You've got to get into every bit of that and the different components of business

and start to address every one of them as you go along. And I think you'll be able to start to move forward. You're probably instinctively doing a lot of them. You just feel really inept because it's your first ride on this particular truck. And I'm flying by the seat of my pants. I'm learning things as they become problems. And I much prefer to be proactive. Yeah, if you can get ahead of it, it changes everything.

And that's working on your business instead of in it. When you're in it, you're a fireman. You put out fires all day long. When you're working on it, you've already got all the fire protection in place. There's alarms up and everything else. and the fire extinguishers are on the wall. And you just, you know, we don't have the, and so what I did over the years was,

every time we learn something the hard way, because we did something stupid, we said, I don't mind the pain of stupid. I just don't want to do the same stupid thing next time. Right. If we're going to do a stupid thing, it needs to be a new stupid thing, right?

Right. And so that, that you will learn incrementally as you go along. You can't keep from doing that. But just, you know, don't repeat the mistakes is the thing. Figure out what you did, do an autopsy on the death of the patient and go, how'd we kill them? What happened here?

You know, what was this stupid thing we did? And, you know, we got to figure out not do that thing again, and that gets you there. So, I'm honored to talk to you, sir. Your wisdom and your humility in the business that you're in is refreshing. And you're going to do really, really well. You keep that posture for the next decade. You're going to be a very wealthy man, and you're going to be running a very powerful business. Because that sense of curiosity is essential to being an entrepreneur.

And it's a type of curiosity that has humility laced into it. And you got that in spades, man. You're ready to go. So that's why I'm giving you this ticket. This ticket's multiple thousands of dollars. I'm giving you for free. But I want to invest in you all. Be sure you meet me.

And we talk about this when you're up here, okay? This is the Entree Leadership podcast. The five stages start with the treadmill operator. The whole thing counts on you. Too much of the business relies on you. And the next stage of business is the pathfinder. The primary problem there is you lack clear direction. You've got to learn things like mission and vision and core values and role clarity and communication.

And then you move to Trailblazer when you level up and there you struggle with you. You lack the leaders in the plan to scale your business, the second level of delegation, leadership delegation, rather than just delegating a task, now you're delegating concepts. And you move from there to peak performer, and that's where things are rocking. Primary problem, peak performers face is your business has become too comfortable. And we help you re-energize it there when we're working with you in Entree Leadership Elite. And then the last stage of business, and there's no set number of years or months or dollar values that take you through the stages.

It's more recognition of how the business is run and operated. The last stage is the legacy builder. And the primary thing that the legacy builder has to work on is the concession, or the succession plan. There's some concessions involved, but it's a succession plan. Freudian slip. All right, you got to love it. All right, this is the Entree Leadership podcast.

We're glad you're here. The six drivers that'll take you through that as you work on you, the personal driver, you work on making. get sure your business is bigger than the bottom line. That's the purpose. Of course, we've got to work on people, putting the right people on the bus, or on people off the bus, the right people on the right seats on the bus, according to my friend Jim Collins. Then you lay out a plan. No one wins by accident. It's by plan. Of course, the product delivers the excellence and the profits, take care of themselves. The last one is profit. And then you start again. You get better yet again. Your

people get better. You drill the purpose even deeper. And we work our way through these five stages. of business. Gary is up next. Gary is in Syracuse, New York. Hi, Gary. How are you? Hi, Dave. How are you? Thanks for taking my call. Better than I deserve. What's up? How can we help? A quick question. I'll give you some background. I'm trying to understand how to handle and get your take on how to handle the visibility of building wealth as a leader, specifically me as a young leader. I'm a 31-year-old plant manager at a drinking water facility for a large international company. We're geographically separate from the rest of our company co-workers. So we feel like a small business.

I feel like a small business owner. I manage a team of seven. And, you know, I'm really grateful for the position I've been in. My wife and I have also gone through your baby steps for nearing baby step seven here in the next couple of years, which is awesome. And I'm trying to understand how to handle this, to build wealth and to whether to keep that secret from my direct reports or to share that. I'm dealing with some difficulty when it comes to discussions of pay and compensation for them. And my feeling is that they think I am more fortunate simply because of my position. And they think that I have a leg up on them and I'm making out while they're just grinding and working.

Just looking for your input. What do they do? What is their job descriptions? They're operator and maintenance technicians at a drinking water plant. So it's kind of turning a wrench, fixing, working, all kinds of different stuff. So there's two types, there's more than two, but there are two types of cultures that can evolve in a blue-collar setting. one is that the blue collar worker, the wrench turner, the heat and air technician, the carpenter, the roofer, sees their work as a craft, and they take great pride in the fact that they are a tradesman, and they have a level of personal maturity and a personal confidence. that they carry themselves as if they're a doctor or a lawyer.

You know what I'm saying? And there are cultures of people in blue collar that do that. We work with a lot of heating and air companies, for instance, and I've talked to several people that they have, these heat and air technicians take great pride inside their thing as an example of being able to walk into someone's home and put on the blue booties and, you know, take care of business, you know, make sure the lady the house feels safe.

all that kind of stuff, and the whole process. There's a whole customer service interaction, not just turning a ranch on something. But if they, the other culture is the negative culture, which is what I think you're describing. And the negative culture can be that they feel like second-class citizens,

and then they're supposed to sit around and figure out how to steal. They're supposed to sit around and figure out how to not work and still get paid. And the man has got his thumb on them and they whine a lot. Okay. Yeah, I definitely have the first group.

I think my folks are really proud of what they do. It could be part of this is my own paranoia of, you know, building wealth here and starting that and, you know, how to the visibility of me taking a two-week vacation with my family to Florida or, for example, you know, I've talked to other business owners and they've told me how they kept their wealth sort of hidden from their folks. Yeah. And I'm just trying to, you know, how to. I refuse to be ashamed of being successful because I have worked my complete butt off.

And if you don't like that I'm successful, you need to go somewhere else. You know, I'm not going to apologize. Now, I'm not going to rub your nose in it. But if you drive past my car in this parking lot, it's a stinking fine automobile. Right. But I've been working my butt off for 32 years. I got socks older than you, so don't be whining, you know. I'm an overnight success after 40 years.

So, you know, in your case, you're a little younger, you're saying, I get that. And you don't have to be caustic. I'm being caustic in my response, and I don't really say that to somebody, but that's my attitude in my head. If you don't like that my wife and I can take a three-week vacation and you work at Ramsey, then you don't need to work at Ramsey. I'm good with that. don't be here. If you,

if you, if you, if you, if you, if you, if you, if you, if you,

I'm successful with the amount of work I've done and, and how hard I've worked, I don't have time for you. But if you want to say, hey,

man, show me how I can do that. I'll show you. I'll teach you. I'll be right there with you. And I, I don't have to work. I work every day and I don't have to work.

So I got a better work ethic, you know, so we're not, we don't need to work, discuss work ethic. So you got, you know, You're not going to outwork me and I'm older than you.

You know, I mean, so that's the message that goes out. But again, I'm not going, nah, na, na, nah, with, you know, enjoying something. And I don't rub people's nose in it, but I don't drive a car to please or not please someone else. I don't take a vacation to please or not please someone else. I do it for me. Do it for my wife, you know. So I haven't bought a car because somebody else cared in a long time. I did that.

I was that shallow in my 20s. I bought a Jaguar because I thought everybody think I was cool. And then I figured out nobody gave a crap about what somebody else drives, but for about 30 seconds, you know? They kind of go, oh, cool, and then they move on, you know. But now I drive what I want to drive

because I enjoy the vehicle, you know, because I like cars. So that's an example. But again, we don't have to be caustic about it. I'm being kind of bombastic in my answer to you. You don't have to be quite that crazy about it. But I'm hiding it. I disagree.

I completely disagree. because I think that someone working in your place can make enough money to become wealthy if they'll apply the principles that we teach at Ramsey. And I'll show you how to do that. And if you want to take a two-week vacation, if you want to build wealth, if you want to become a millionaire while you're doing maintenance tech in this thing, I can show you how to do it. What are those guys make?

They're making like $70,000. Oh, good Lord, they could be millionaires. Of course. And I went through all six baby steps in their level. Yeah. And I think maybe part of my difficulty is that a lot of, they're all older than me, significantly older than me. And I may seem like an overnight success to them.

They don't see me at, you know, 9 o'clock at night on the weekend on my lap. Listen, man, I mean, I ran into a guy out here the other day, okay? He's, oh, it was out here in our lobby. He's 24 years old. Okay, he wrote an app on one of these game things. Okay, I don't even know what games are, but these games, right? And the stinking app went crazy. and the kid, 24 years old, he made $15 million.

Okay? Now, I'm an old guy, and I'm kind of going, this is impressive, you know? But I didn't have to, just because he's younger and he made a big pile of money, doesn't mean I have to hate him for it. I could just celebrate his success for him. I was happy for him. I think he's impressive. I'm still trying to figure out what the flip he did, actually, but it was pretty cool.

I'm happy for him, you know? Good for him. Way to go, dude. And, you know, I met another guy on social media the other day that has got like six million followers because he learned how to do a dance. Well, that ain't something I'm getting, okay? But, oh my gosh, that's so cool. Good for you, man. You're cool, dude.

That's neat. I'm happy for your success. And so if they can't celebrate your success because you're young, that doesn't say something about you. That says something about them. It makes sense. So you got to get comfortable with the idea that you didn't do anything wrong. You didn't steal anything. Your wealth came from effort and from working a system and from being very careful.

And I'm happy to share my knowledge with you and encourage you, and I'll be your biggest cheerleader. I will not tolerate you disrespecting me or rolling your eyes. You don't get to work here anymore, if that's the case. Right. And we don't have to say it exactly that bluntly, but that's the policy. that's the policy. If someone wants to bitch and moan about my car, they don't get to work here.

My car, it's got my name on the outside of the building. That ain't hard, you know? Move on, move on. And that's never happened, by the way, that I know of. Well, I hadn't fired anybody for that, so I don't know. But we just don't hire people like that, you know? And so I think you're, I think this is probably 80% in your head and 20% in the head of one of the seven,

guys and the other six guys were fine and don't give a rip about this whole conversation. Am I wrong? I think you're right. Yeah. No, you're right. It's probably 90% of my head. And this is a big deal for me because I'm only been in this position. It's kind of like a life-changing, you know, promotion I had.

I have no credentials for it. I just earned it. I feel through time. And I'm still getting used to that myself, I guess. You know what? And it's just the other thing you can do with some people, if they're good people, it sounds like these guys are good guys. They are.

You can just say out loud. hey, you know what? Sometimes I'm a little uncomfortable because I'm, you know, the leader here, but I'm younger than you guys. And sometimes when I, you know, I get to the benefit of some of the money that I've got, it makes me feel weird because I don't want to be weird with you guys. I love you and I want you to win and I don't want you to feel like I'm putting you down because I'm not. But sometimes I just need, if you just say it out loud, you know what, the bugs run to the corners. Yeah. Bugs won't stay in the light.

And, you know, sometimes if you get in a situation where you're just really feeling weird about, just say it out loud. And go, you know, once I say it out loud, it loses its power. But just go, you know, because you're not being arrogant about it. You're being very humble. If you're being arrogant, I'd call you out, man. But, you know, you're going, I'm concerned about this because I care about these guys. I'm concerned about this because I don't want to be a jerk.

I'm concerned about this. And, you know, if you just say that out loud of these guys, I think they would really appreciate it. You don't have to do it every day, but if you're, if you hit a high, you know, a peak moment where you're really feeling uncomfortable and awkward, well, maybe just let the air out and just go, guys, I'm feeling really uncomfortable and awkward about this. And, you know, you may not be thinking this, but I'm worried that you're thinking this. Yeah. You know, I get it. And you know what? That'll run off a whole bunch of it. But don't ever get in a position that don't, where you're rubbing your success in someone's face.

for the purpose of being the big dog and never get in a position where you apologize for your success and hide it. Instead, let it be a beacon, let it be the fact that I'm proud that we have won because it tells other people that they can win. That's why I share how much revenue we bring in here. I used to be afraid to say out loud what Ramsey's revenue was

because I was afraid somebody would think, oh, we're too big a deal. And, you know, we're a big deal, but we're not too big a deal. you know, but then I got saying, you know what, we started this freaking thing on a card table. This is a great American dream. If we tell people that you can start it on a card table and have a $300 million top line, you know, or $300 million company, that's dadgum impressive. And you can do it too.

And, you know, we did it all by helping people, so you can do that too. And so I started realizing I need to do that as an inspiration for other entrepreneurs, young and old beginners and old dogs both. And so, yeah, you're a light in that sense. share your success without rubbing people's nose in it. And then if you're awkward, just say, I feel awkward. This feels weird. First time I bought a nice car after I went bankrupt, I felt weird.

And I had to just tell people, I feel weird. And it helped a lot. And now I don't feel weird at all. I couldn't give a rip less. So I kind of got over that part. Hey, guys, if you want to help us out, Uh, consider following the show. Click the follow button or the subscribe button on YouTube or on the podcast.

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Let people know we're here. You are our only marketing. Hey, guys, remember, better a weary warrior than a quivering critic. Leaders serve. Leaders are active, not pass. leaders act on principle, not appearances. This world needs more high-quality leaders, so choose to lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast.