EntreLeadership - Leadership Can Be Uncomfortable

Episode Date: July 10, 2023

Today, we’ll hear about: •       How to coach an employee who needs to improve in their job performance •       The best way to pass your business to family without financially screwing them •       How to know when you should buy new or used equipment for your business •       What to do when family members work for you but are continually misbehaving   Links mentioned in this episode: •       The EntreLeadership Podcast •       Necessary Endings by Dr. Henry Cloud •       EntreLeadership Elite •       Boundaries by Dr. Henry Cloud •       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 •       Staples 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 at any stage of business and leadership. I'm Dave Ramsey, your host, with over 30 years of experience right here in the trenches. I'm a guy that does this stuff every day. We make decisions around here and marketing plans and campaigns and hire people and set people free. And we do all kinds of stuff around here every day. and we're here to help you move your business along through the five stages of business. If you got a question and you want to be part of the program, you can leave us your question. We'll get back with you and make you a schedule you to be a caller at ontarioleadership.com slash ask or leave a voicemail at 844-944-4-1070.

Starting today's podcast off, Matt is going to be with us in Charleston, South. Carolina, welcome to the Entry Leadership Podcast, Matt. Hey, Dave, how are you? Better than I deserve. What's up? Not much, man. I'm a business owner of a candy business that has two part-time employees, and I recently hired my first full-time employee.

How do I help this employee learn the importance of production speed and develop a sense of urgency? What are we producing the candy? Yes. So it's a production assistant. She's helping me produce and bag candy. It's a freeze-drag candy business. It involves stocking up for farmers markets, setting up and putting farmers markets down.

Obviously, she's slow. Why is she slow? She comes from a background of working in offices. people do stuff fast in offices They could Yes I think there's two sides of aisle For any industry I guess Fast pace or slow pace

She's been with me for about three months And I've had her 90 day review And we've kind of discussed this But I still haven't seen any Improvement And I've also kind of noticed More or less that she's on her phone not all the time, but there still isn't like a sense of urgency.

How old is she? She's 38. Okay. Well, she's too old to be acting like a 16-year-old. I agree. Who plays on their freaking phone at work that's 38 when it's a two-person operation and your boss is standing beside you? Good Lord.

Yeah. Seriously. I mean, she may be just dumb. I mean, golly. That's hard to believe. I mean, yeah, I mean, I, I, the difference is I'm going to, we don't have to have 90-day reviews. We can have nine second reviews. Like, hey, get off your phone.

We've got to get this done. That's a review. I mean, I'm not going to embarrass her in front of somebody else. I'm not going to be mean to her, but I can course correct this stuff in the moment and have just, look, this is what we've got to do. This is a small business. It's you and me. When you're not getting your stuff done, we're not getting it done. And so that's why you're here.

If you don't want to do this, it's okay, just let me know. But this is how we get, we got to go. We got to get it. We got to get it. Yeah. Initially, what I was doing was production sheets with like time, like estimated times on there. And, you know, based off of- Aren't you standing there?

Yes, yes, I am. Okay. And I, there are moments where I have to like be very abrasive, like, hey, listen, it's going on 11 o'clock. You should have been done by now. we need to move on the next project, and they're still kind of like, you know, that, you know, okay. But if she's scheduled till four, she'll work till four, 30 or five sometimes

and work slow, whereas I told her, I was like, I don't want you to have to do that. I want you to be able to, you know, leave it four because you're scheduled till four. I'll leave the three because you got it all done. Oh, my God. You know, we're self-employed here. So, all right. Henry Cloud says in his book

Necessary Endings that you have to bring an ending to something when you've lost hope I haven't been in this conversation for very long and I don't have a lot of hope. I mean everything I've heard sounds like this person is not trainable. Now she might be and so we out of an effort of kindness

and clarity and since you might not have been clear because you did use the word kinda I don't like the word kinda around having these conversations. It needs to be very clear crystal clear like this is a deal breaker clear so you need to have a what we call an emotional firing and where we sit down and say okay here's what's going on there's just two people here and um you being on your phone and not getting the candy bagged and getting stuff done very very very quickly like i do

is not going to work for me and if you can't do that then we're not going to be able to do this thing together you're going to have to work somewhere else and i you know i don't want to be mean to you But I want to be very, very clear that here's the exact expectation. And if you're not going to be able or want to do that, I understand. I'm okay with that. But let's just decide right now. We'll call it. But if you want to give it a shot, then you're going to have to do this because we're not going to,

I'm not going to talk to you about this every two weeks for the next five years. Okay. You're an adult. I'm not your parent. And I want to give you the dignity of making your own. choices, but you're going to choose to do this as a part, as a condition of further employment. That makes sense? No, I understand.

Yeah. I don't think you've been blunt with her. I think you're more frustrated in your head than your mouth. I would probably say so. Yeah. Because I got to tell you, this is where it was exactly this stage of treadmill, moving from treadmill up into Pathfinder, that I had the experience, because I've talked about, and I've told this before and you may have heard it, Matt, so bear with me. I'm sorry, old men tell stories

over and over, but I, you know, I reached the point that I realized, okay, I'm Southern, which means I have to be nice to everyone while I'm pissed off inside and I say stuff like, bless your heart, which may mean I'm going to slit your throat, right? And so, you know, and so I thought I was being nice by not addressing these things directly, and I finally figured out that it wasn't fair to them because they didn't know how close they were to leaving. that's unfair and so we've developed a saying around here we say all the time and that is to be unclear is to ultimately be unkind you're going to be unkind if you don't tell them it's not fair to her and so you've got to love her enough you've got to care enough about her as a person to give her the

dignity to know where she stands in this situation and again we're not yelling and screaming cussing and we're not being abrasive but we need to be very direct sit down direct uncomfortable eye contact. Everything else is quiet. There's not another person around, so there was not an embarrassing thing. But we're going to say, listen, this has really reached a serious point. And this is a difficult conversation. And this is, for the next few minutes, this is going to be uncomfortable for you. It's going to be uncomfortable for me. But I owe you clarity. And I want to give you some clarity. I can't keep you here on our team if we don't improve in these three specific areas.

We've talked about them in general. If I've been unclear, I apologize for that. I'm going to make up for it today with crystal clarity. Today we're saying, this is what it is. And I'm not going to beg you to do this. This is what it takes for you to continue to be here. When you do all of that, she's either going to walk out the door or you're going to have to fire her three weeks from now because she's not going to do it.

I don't think. but I think you owe her the chance to turn it around. Occasionally someone surprises you and goes, oh, I had no idea. And they become a candy bagging fool, man. I mean, they can get it done all of a sudden, right? But she might just find another gear in there and just thought, well, I don't know. But so many people work at, they work at quarter speed at other places. And then when they come to work for a small business, they find out we work at one in a quarter speed.

and so 125% of get them, right? And so they just don't, they can't keep up. I mean, I've had folks come to work here, and they can't even keep up with me while I'm walking through the airport. I mean, come on, we're going, let's go. We all don't stand around back there. We're shopping in the airport. The food's not that good.

Let's go. Come on. And, you know, stand around on stuff. So, yeah. And but we're going to have, and then on the spot, we're going to, you know, maybe have one more conversation and go, okay, look, remember we talked about this? and then after that I'm going to just call it.

I'm just going to tap out and you got to start again. And then what you're hiring for is a high energy person. You know, and you don't, you can't hire a sloth. They move slow. You know, you got to hire a, you know, hyper because you remove lots of little pieces of candy in little bags really, really fast. You know, it's a da-da-da-da-da-da-da. And there's got to be a thing that goes with that.

And some things you do want to hire somebody who moves a little slower. and with some wisdom and pace. But this is like, pack the freaking candy, do it, you know? So, and you kind of know that about you and maybe in the interview process. So, but I thought, I was so dumb when I first started, I thought if you hired people that they would just work. Well, that was dumb. Okay.

But I thought they'd show up on time. That was dumb. I thought they would care. They don't. Now, some do. I got a building full of folk that do. But we've been through a, you know, a few hundred. that didn't.

I was a mistake. I'm so sorry. We made a mistake. You made a mistake. You can't be here anymore. That's how this works. So, yeah. So, Matt, some of this is on you as a young leader.

You're trying to be nice. And ultimately, you're not being nice. You're being unkind by being unclear. Crystal, surgical, clarity. Scalple, clarity. Razor sharp. Clarity. You owe her that.

you're being unfair if you're unclear. This is the Entree Leadership Podcast. Thank you for joining us here on the Entree Leadership Podcast. I'm your host Dave Ramsey, hands-on practical help from people who do hands-on practical things every day. That's me, and we're here with you. And you can call in and be part of the program. Call us at 844-944-1070.

Mark is in Kansas City. Hey, Mark, what's up? Hey, Dave. It's an honor to speak with you today. You too, sir. How can we help? Long-time caller, and I just want to appreciate everything you've listened to her for years and put into business practices. A little short background about us. So we are a general contracting firm in Kansas City, started in 2002, and I've survived the great recession and COVID. And last year, we grossed just over $17 million, which was great. Wow.

I am curious on a couple fronts. One, we continue to grow over the years, and we've actually broken our company into two now. So we have a general contracting construction firm and a real estate holding the firm that we hold on the side that we've amassed almost $6 million of real estate that we hold as rentals and investment properties and stuff like that. I am currently 48 years old and my daughter will graduate from K-State in a couple years and it's interested in coming to work for us. And I'm looking at long term. She seems to really like it and just the best way to, I don't know, turn the company over. I mean, we're talking probably 20 years down the road. I mean, who knows what's going to happen.

But just as we do continue to grow and, you know, hold. hopefully keep killing it. What's the best way to bring her in without putting her into debt and other things to get money out of the real estate company that I'll eventually have to have to retire? Because most of the money that we make, we put back into the real estate company to pay debt off. We have a small debt still left to pay on it. But of the $6 million, we only owe about $300,000 left right now. Why can't you just keep the real estate as your retirement?

I could. And you could give her the construction company. I could if she wanted to do that. But it's still, you know, how do you buy into that? Because I do, I have a business partner that we're 50-50 partners with. So for me to get money out, I will have to at least get some money out of it. Why do you need to get money out of it? If you've got all the real estate and if you got all the real estate and it's paid for, can you live on that?

I mean. I could. Okay. But again, I split the profits with my business partner or everything. I understand. But you're 50% owner in the construction company, and you would be leaving her the 50% of your ownership? Yes, in both companies, I'm 50% owner,

and the real estate company and the construction company. Oh, crap. Okay. That's so messy. Okay. I know, but that's the only started off, and it's been very successful. So, I mean, it's been, we are good business partners. I know you always say the only shift it doesn't sell to partnership,

but this one's actually worked out pretty good. still floating, yeah. All right. But now we run into the problem with the succession. So what's he going to do with his half? Tough to say. I don't know if he'd want to. You got buy-sell agreements with,

and you got buy-sell agreements in the event of death with insurance on both of them? We do, yes. Okay, so he dies. You become the owner vis-a-vis life insurance, right? Yes. Or vice versa. Yes.

So we've set all that up. Well, you need an estate planning attorney to help you walk through this, and you've got to make some decisions on how you're going to do this. If she's going to buy you out, that's different than you leaving her the business. No, that's complete. You're correct on that. And we do have trust in place and I've set all that up in terms of, you know, God forbid, I die or something.

That's all taken care of. My question is more, you know, hopefully I'll live for another 50. years and get to enjoy the fruits of my labor and everything. But I don't want to, you know, I do have to pull some money out of it, and I don't want to put her into debt to do that. Because you can't just take, you know, someone coming up and go, okay, well, I'm going to sell my $6 million or $3 million for me. You know, she can't just do that right away.

What I was challenging is that I'm not sure that she has to, that for you to exist and retirement. I'm not sure she has to buy you out of both. So let me get, here's, here's my point. Okay. Ramsey is 99% owned by the Ramsey Children's Trust. It's already transferred to my kids. Didn't, didn't charge them a dime because I don't own it. I manage it for God. I want them to not own it, but manage it for God, and it was transferred to them. I've got plenty of money outside of Ramsey. that I can live on. And that's where I kept, my head kept going with this, separating the real estate from the construction company. The complication is, A, whether you need money beyond the real, but beyond the thing, to be able to do that,

you'd have to be able to pull that off. Now, the 1% that I own, by the way, is the only voting stock. So I own 100% control of what happens at Ramsey's Solutions still. And I'll transfer that last at my retirement or at my death. But I'm not charging the next generation a dime for this, and I want them to manage it for the kingdom of God and for the future of our family and so on as a ministry, as a stewardship saying for God. So that's how we're viewing it. That's not necessarily indicting someone that charges the next generation. If you're going to charge the next generation, an easy way to do that is simply have them buy it out, pay you the lion's share of the profits until you get your number. So they're going to

to pay you 80% of profits until you hit your number from the time that they become the owner and it's a owner finance deal you're not going to get it out in one fell swoop but you're going to get it out in a few years what were your profits last year as an example net profit taxable income oh and both companies is about two and a half no just the construction the construction the construction company was over two million profit profit yeah and so your part was a million correct and if you sold it to her today, which you're not going to, your half is your half of that construction company you think is worth what? I mean, depending on how you value it, I mean, if you hit normal four to five times net profits

of four to five million. Yeah, exactly. Somewhere in there. So you get 80% of the profits until you hit the four million number, which is going to take, what, three, four years? Something like that. Yeah. So basically just if she grows it, if she grows it, she might do it even faster, right?

but somewhere in there. But I mean, if we did the transaction today, that could be how it was, and you get your money out over a three, four, five year period of time out of the 80% of the profits. And she gets paid and runs the business, her half of the business for that. And the buy-sell transfers to her and is on her life, not yours, and on your partner's and your partner transfers to her. So if he dies, she gets his half by buying out his widow with the life insurance proceeds, like you do now, right? So you transfer all that over at the time you transfer ownership.

Now, if you gift it to them, this year you can have up to a $12.9 million, you have a $12.9 million valuation, I'm sorry, a federal estate plan exemption. And so you can go ahead and start moving stock, which is what we did before many, many, many years ago, we started moving the Ramsey stock into the children's trust, the LLC shares into the children's trust, before the company's value had increased so much. And that way we were able to do that under gift tax laws under the exemptions. So I had a $12 million exemption. My wife had a $12 million exemption, so we were able to move $24 million worth of value over into the kids' names. And so there's zero tax. And it went into a trust, children's trust, so there's going to be zero tax generationally

on the estate. Otherwise, a stinking estate gets taxed at 55%. So you've got a $15 million, you've got a $55 million tax bill that we avoided if you said it was a $100 million business and it's more than that now. But so that's the beauty of starting to think about this now. So you can begin to transfer shares, but you've got to have a detailed plan with the partner because if 40% of the shares are transferred four years from now and you don't, You still got 60% of your half. This really gets convoluted as crud. You follow me?

No, I do, yeah. You really got to comb the hair on this thing and get the tangles out. And everybody knows what happens in every little freaking corner of this thing. And so you're going to drop some coin on estate planning to do this right and to avoid her getting her butt taxed off by inheriting this thing at full value. If you just leave it to her at full value and she hasn't bought any of it, or it hadn't been transferred before your death under the exemptions, she's going to get hammered on taxes.

Because a family that grows a successful $50 million business gets destroyed in our current tax code. So it would be best to start looking at some of that stuff to start transferring some stuff over. Maybe. But when you transfer it over, how do you still maintain control, I guess? I got 100% control and I only own 1%.

I got the only voting stock. They have powerless stock. I can sell the whole thing for a dollar and they're screwed. I'm in control. That makes sense? So, I mean, I can make all the decisions. Now, the weird thing is I actually still don't make all the decisions. I involve everybody else.

So I'm pretty democratic, so to speak, about the decision-making process around here with our leaders and with our family too. So, but if I actually legally, technically hold the Trump card that I can play whenever I want. So that's what I'm saying. So all of this is to say, if she's going to move into the business and if she's going to take your half, you've got to figure out how this is going to unwind with the partner, how the real estate's going to sand separately. You need to quit treating those as one transaction. There are two different transactions. And you've got a third element of you've got to deal with the partner.

And all of that inside of your current today, 2023 is 12.92. If you're married, that's times two on your federal exemption, $12,920,000. only the government could come up with a number like that. But it's actually inflation indexed is what happened. But, yeah, so if you're a couple, you can move 24 million at death or prior to death with no income tax. But if you got 50 million, it's a problem. You're going to get hammered if you hadn't already moved it before your $20 million company became a $50 million company in terms of actual valuation. And you're going to have to get outside valuation firms to do the valuation, but you and I are pretty close on the numbers we just ran.

in here. So you've got a little time because your business is not going to be out. Your half is not going to be outside those exemptions very soon, but you want to, you know, you want to be five years ahead of the curve on it, minimum. So you can start moving it gradually and keep control and make sure you dodge those exemption numbers. So get with an estate planning attorney and you're going to have to reopen the partnership discussion and say, tell your partner, this is how my half is going to be. acting and oh by the way i'd love to know how your half is going to be acting what are you planning to do with that because you and i working together has been fine you may not want to work with my daughter

um or your your son may not want to work with my daughter i don't know but how how are we going to do this or do you want us to buy you out at some point uh you may want to start the discussions on that i don't know you can play that through the real estate is a standalone thing that's a little easier because you can just liquidate the crud out of that turned into money and everybody take their part so that's a lot easier thing to do in that process too so man that's a that's a fun question so the beautiful thing about transferring ownership if you'll get ahead of it like you are like she's just coming out of college so you're thinking about it that's very wise oftentimes I'm talking to somebody the son or the daughter's 50 and they're 70 and they're just now thinking about it well you're done

screwed this up son you waited too late you need to get with it early like like like this guy. Way to go, Mark. You're a hero. This is the Entree Leadership Podcast. Thanks for joining us here on the Entree Leadership Podcast. As business owners, do you ever feel like you're hurting cats trying to nail Jello to a tree? Yeah, you know the metaphors. Coach a five-year-old hockey team. Would you please stay on that side of the ice? Please, stay in position. They don't even know. Chase. Everybody chase the puck. It's like a little magnet. Yeah, everybody's running around doing their own thing. Nobody's aligned. You ever feel that way? I've been there. Sounds like you might be at the Pathfinder stage of Entree Leadership in the five stages.

This is the second stage, and Chaos can be winning, but you can beat chaos back with a stick. You can make chaos leave the room. We can get the ducks in a row. Boy, we got a lot of metaphors in this. Hey, with a digital membership to Entree Leadership Elite, you'll get a customized action plan to help you solve the key challenges you face in the Pathfinder stage. I remember this stage. And I am a, believe it or not, I'm such a big nerd that I cannot stand chaos. And so I did not enjoy the chaotic stage of business.

It is not, and Pathfinder is definitely that. Everything's working, but it's all just a badgum salad all the time, man. It's just stuff going everywhere. Man, there's a lot of way out of force in this. But salad, hockey teams. I mean, there's everything here. But it's just anything that represents chaos, we can do that, right? So don't worry if you're not in the Pathfinder stage.

Elite can also help you whatever stage you're in. Maybe you're in the legacy builder stage. Like Mark, he's starting to think about legacy. He's starting to think of that last caller. He's thinking about his succession plan. Sign up for a free 30-day trial to Entree Leadership Elite. Did I mention it's free? You can cancel any time.

It's free for 30 days. No hassle. We've got a feeling once you try it. You're going to stick around most do. So if you've got a business from five people to about 200 people, if you're just dreaming and thinking of a business, you probably don't want to do elite. It's not really for you.

It's designed for people that are actually doing a business today, and I have the actual today problems of their stage, and we can help them level up and go to the next stage. So check out entreleadership.com slash elite. Entreleadership.com slash elite. Alex is with us in Raleigh, North Carolina. Alex, welcome to the Entree Leadership Podcast. Hey, Dave, how are you?

Better than I deserve. How can I help? Good. Thanks for taking my call. We are a construction company, like you said, in Raleigh, North Carolina with about 35 employees. We've been in business for over 25 years. Our work requires four to five pieces, different pieces of equipment for each of our construction teams on every job. the cost of each piece of equipment ranges from $70,000 to $700,000 brand new.

My question for you, what I wanted to talk to you about was, what are the key things I should be thinking about to determine if I should keep repairing our old equipment or scrap it, sell it, and buy something new? We've got some equipment that's 10 plus to 20 years old, and, you know, the environment we work in, we do have to make repairs and maintain equipment. So just trying to get some ideas on when should we stop putting maybe good money into something that's not worth it. Well, I mean, there's a financial analysis to do, and there's a couple things that enter into it. Number one, when you say 700,000 with the numbers you gave me, you're going to be repairing that.

you're not going to be buying that. That's not your budget. You don't make enough money to buy five of those. Right, right. That would be ridiculous. Okay, so we're not on that brand new scale. Now, if you told me you made $350 million and you wanted to spend $700,000, I mean, we can just go do that. Okay.

So, because that's a ratio to your profits. If it's a small percentage of your company or of your profits of your company, your gross or your net, either one, your gross revs or your profits, then I've got a less tolerance factor for anything breaking, and I'm probably buying brand new and forget it. Like, I don't buy, I run a $300 million company. We don't buy used computers, okay? They're not that expensive as a ratio. Right.

But if I were buying something that was $100 million, I might buy something used, you know, and so that's the ratio you're dealing with. So the thing one is the rate, how big a deal is this? and 700 out of you said what, seven, what did you say the total gross was 35? We have, no,

we actually have 35 employees, our gross revenues, a little over $9 million a year. Yeah, okay. So, yeah, so if you bought two $700,000

piece of equipment, that chokes the whole place. You can't, you can't breathe, right? Right. And in cash, and of course,

I'm going to tell you, never borrow money. So that's not an option. So this is a big enough purchase in ratio to your revenues that it's going to demand more used equipment and more repairs be tolerated. Now, then the other end of the equation is obviously the equipment has to be reliable. If you're down 50% of the time, you can get your dad gum work done.

Well, now it's the same as not having it. That's right. And so that's ridiculous. So you can't do that. down on the other end of the equation is you've got to keep it operable. But what happens is, and there's a few people that are exceptions, but I'm not an exception,

and you might be, but I doubt you are. If I'm in that situation, my, I, I, I'm going to tend towards buying nicer stuff because I'm a boy and I like toys. Okay?

My natural tendency is to buy the nicer thing, the newer thing, and not have to screw with it. Okay? That's my natural. And I think that's true of most of us. We're like, I would just rather have a better one, screw it, you know? And that kind of thing. And I don't want the hassle either. And I get, in other words, I'm emotional about it rather than mathematical.

Now, and so if I know that about myself, then I have to force myself to doing an actual math analysis on this and saying, okay, here's the thing. Now here's an example of that. All right. Let's say in a personal situation, you were driving a $2,000 car, a hoopty, right? And the truth is versus buying a $10,000 car, that $8,000 more you would spend on that car, you would never spend that in 100 years on that $2,000 car in repairs. So you can never mathematically justify moving from a $2,000. car to an $8,000 car based on repairs. Because you can you can't, you can rebuild that car six times for $5,000 and still not have

spent the $8,000 to move up. You know what I'm saying? And so you can do that type of analysis here. And for instance, I've got a friend that has a heavy equipment operation. And they're running, you know, like cat dozers and the off-road dump trucks, the massive stuff, right? It's a massive opportunity. He's got a lot of money in equipment. But he runs old stuff because you can repair that cat stuff the rest of your life versus moving from 20, instead of for $25,000, it's worth 25 today to buy that older, you know, antique almost dozer. But the stupid

things will run 50 years if you keep them repaired. And he cannot justify a 250,000, upgrade from a $50,000 dozer. He can't come out on it ever, and he can't justify it. He'll never make that repairs in a million years. So the only reason he can make a jump up is just the equipment lays down and won't get back up. But it's really not due to, I've spent so much on repairs. This car is killing me. No, it's not killing you $8,000 worth of two, you know, and that's the ratio kind of thing you're

looking at. So I don't know the equipment or the details and you do on your stuff, But so I'm telling you, avoid, develop a couple principles out of my meandering, yacking here. Principle number one is if it's a large portion of your overall gross revenues or net profits, which yours is, you cannot be flippant about it. You cannot just go, I'll buy new and screw it because that'll sink you, okay? So that means I'm going to be working with you stuff. Now, the second rule is it's got to keep running.

I got to keep it running or the jobs don't. move, that's a problem, or I got to move up out of it, because that means the equipment has just become completely unreliable, and I'm going to have to move up some versus repairing it. The third thing is, you probably can never justify the move up based on the cost of repairs versus the increased cost to move up in number of years. It's a luxury to move up. It's very seldom a mathematical necessity, and I think those three principles will walk you through it. And that'll take some of the, and I guess all the while we're remembering my little

boy emotions of, I just want a better one, screw it. And I can't let that run make my business decisions because wise business people buy the cheapest thing that gets the job done. Gets the job done means it's reliable and it doesn't lay down all the time. I don't really care about the sex appeal of your bulldozer. Seriously. You know, I just don't, that's dumb. But people do. They're like, I got me a new one. You know, Oh my God. What are you dumb? I mean, you just took all this money and, no, don't do that. But man, I can do it. I can do it in a heartbeat. I have to watch around here. And I got guys on our team, the technical guys, they like toys too. And we have a phrase around here called MF minimal

functional. Yeah, that's what that stands for. Don't come in here with a freaking Bentley of radio equipment stuff. And it's no, it's a dadgum microphone. Talk into it makes noise. That's what has to do. This is the Entree Leadership Podcast. Thanks for joining us, America. This is the Entree Leadership Podcast. I'm your host, Dave, Ramsey. Mo is next in Detroit. Hi, Mo. Welcome to the Entree Leadership podcast. How can I help? Hey, Dave. Thanks for having me on. It's really an honor. You changed my wife's life and I with your financial peace. And the Entra leadership has just been an awesome, godly, you know, blessing to our business. So thank you. Thank you very much.

How can we help today? Yeah. Yeah, so I'm the owner of a young residential tree service. Last year, we cleared a little bit over 300,000 in revenue, and this year we're looking on track to do about 750, and including my wife and I, we have five employees total. And so the situation is, everything is great. You know, we've been very blessed.

Yeah, you doubled. That's pretty cool. Way to go. Yeah. Thank you. We're excited. And... What's not a double every year?

That'd be neat. Man, if you were doubling every year, holy cow. Yeah, really? Only two cows, yeah. All right. All right, Dave. So basically, my brother is one of the employees. And when it's good, it's great, and when it's not, it's not.

And we're working really hard to develop a culture that's, you know, rooted in my faith. And I'm in this challenging position of having him... have, you know, behaviors that are kind of consistent and they're antagonistic to the culture, but then my higher calling and priority is, you know, that I witness and reflect my actual beliefs, you know, and that I actually, you know, extend grace and mercy. So I'm in that challenging position, and I'm just curious what you would do, and if you have any opinions on that. Um, allowing someone that we love to misbehave is not grace and mercy.

It's cowardice. Okay. That's not that grace and mercy is kindness and loving someone enough to say, hey, man, I love you so much. I mean, I'll do anything for you. But, you know, I'm growing a company that's, we're going to act this way at this company. and if you don't want to act this way, you can't be here because it's not good for you because the guys don't look up to you. And so it's, and it may not be for you.

And we'll still be brothers and I'll still love you and I'll still help you in other ways. But if you're going to be here, the folks that work here do it this way. And that's the net, net, net. And, I mean, you can get there in gradual conversations, but if I have a good friend, which I don't at the moment, so this is a false example, okay, but I have had this happen, that is addicted to cocaine. He's not working for me, but let's just say I've got a good friend. If I just wink at him and go, well, I'm a person of grace and mercy. and so I'm not going to address that. I'm just going to smile and pat him on the back,

and we're all going to go on our way because I'm kind and I'm graceful and I'm full of mercy. That's not really mercy. That's just cowardice. I'm not really loving him by letting him kill himself. He's my friend. I'm supposed to love him enough to say, hey, dude, man, you're killing yourself.

Your wife's going to leave. You're going to lose everything. Your kids aren't going to respect you. You're going to ruin your career. I mean, man, I love you. Come on, I'll go with you. Let's go down here and sign you into rehab and I'll pay for it. Let's go down here and let's do something. I mean, dude, you're not going to do cocaine in front of me and me be okay with it. I don't think that's cute. I think that's a drug addiction. I think it's going to ruin your life. And I love you too much to participate in any way with a tacit endorsement, meaning standing by and watching it happen and saying nothing. So that's an extreme example. But now let's take that over into the company. and with your brother. And so if Rachel Cruz, my daughter, Ramsey personality,

decides that she's going to cuss everybody out in the control room, well, we're not going to do that. By the way, that wouldn't even occur to her. But it's a bizarre example. But, I mean, I would just be sitting down with her and going, hey, that's not going to get you where you want to go, you know. It's not good for you. I love you too much to allow that kind of behavior to go on as my daughter, as a team member.

Even if you're a grown-up, I'm going to stand in here and say, hey, that's bad. Don't do that. It's not me being a daddy. That's just me being a loving friend that says, I'm not going to participate in things that are not good for you. And that's your brother. So he's swearing, he's out drinking, he's carrying on, he's not reliable. He's antagonistic to you behind your back, probably. And the guys don't look up to him, and he stands out like a sore thumb because he's very different from everybody else there.

Is that what I heard? Yeah, I mean, it sounds like you heard even more than I said. I mean, he's, yeah. Well, I've just done this a while. Yeah. Yeah. He's great in a lot of ways. I mean, I'm not saying he's a bad dude.

I'm just saying his mouth is filthy and he's antagonistic to the process. Yeah. And he thinks he thinks he's got to get out of jail free card. Yes, yes. It's like, so I'm going to sit down with him and go, I'm revoking your get out of jail free card as an act of love. You know, I'm really, I'm going to sit down and go, hey man, I love you so much. And I got to tell you, man, me living my life, the way I live it now is the best thing

that's ever happened for me. I would love for that for you. and the people that work on this team, all of them are going to be walking. We're going to have a level of kindness with each other, with our customers. We're going to have a level of reliability. We're not going to run around here with filthy mouths

because that indicates, that low vocabulary indicates a lack of intelligence, a lack of personal growth, and I'm just not going to do that. And so, you know, I'll walk with you, and you could slip up. It's not like you can never make a mistake, but I got to see you trying to join me in this walk. And if you don't want to do that and you want to work somewhere else, I understand because you think I'm a,

if he thinks you're some kind of holier than now person or something and you're too stuck up or, you know, you're too much of a Bible thumper or whatever it is. And I don't want to do all that stuff. Well, then you don't want to work here because it's not going to be fun for you. you have to go hang out with people like you you know and this is people like me here and so like I've got relatives that are that way and I still love them and we still have relationships I'm not mad at them but that I'm not going to hang with that every day I don't want that stuff in my life and I certainly don't want it in my company okay so as that makes sense I mean it's you're not

extending grace you're just not don't address it yeah it because it's not helping him. Right. I'm thinking about him. I'm trying to help him. And the net net is it helps you and it helps other people on the team when we help him. But, you know, him, no matter where he is until he stops doing that, he's not going to have his best life. Agreed? Agreed. Yeah. So we're not helping him by allowing him to. Now, again, if he says, hey, I'll work on it. I'm, okay, okay. And then the next week he slips up. Well, that's fine. I'll give him. So I give him a pass. it's not like 100% you got to be perfect day one but we got to be heading that way versus you know my goal in life is screw everything around here up no thank you you know because he kind of got

this weird thing going like you can get away with it because he's the brother you know and that's that's the problem with family business the other thing you can keep in mind from this point forward with family business we talk about it on here all the time is the hats thing have you heard me talk about that actually i don't think so Okay. Henry Cloud tells a story of a dad that had his kid working for him, and the kid was goofing off, and he was mistreating people inside the business. And the guy bought two hats, boss and dad.

And he called the kid up, and they had worked with him and tried to get him to straighten up, tried to get him to treat people right, tried to get him to be nice. This was an ongoing conversation for two years. And finally it reached the end. He saw him down on the factory floor cussing a guy, and he knocked on the window, called him up to his office. He called him up. He put on his boss hat, and he said,

we've worked with you and worked with you and tried to get you to be nice to people. I'm not going to have people treating people that way inside my business. You're fired. He took his boss hat off and put his dad hat on and he said, son, I heard you just lost your job. How can I help you? Okay.

So the beautiful part about that story is there's two roles here. At work, Mo, you're the owner of the business. Everyone that works there should treat you with the respect and kindness that is due the owner of the business. And you should treat everyone that works in the business with dignity and serve them and help them be their best selves, right? You're wearing the boss hat.

You're wearing the leader hat, the owner hat. And while I'm at work, brother, I'm the CEO and you're a worker. And I'm going to treat you like I would treat my other workers with dignity. I'm going to pay you fair. I'm going to be kind to you. and I'm going to tell you the truth, and we're going to go make some bunch of money together. And I'm going to treat you like I'd treat everybody else that works here,

and you're going to treat me like I'm your boss, because I am. And then when we leave work and we go to Thanksgiving dinner, I'll put on my brother hat, you put on your brother hat, and we'll tell brother jokes and cut up and carry on like two brothers at Thanksgiving dinner. But at Thanksgiving dinner, we're two brothers. That's different roles. So the Ramsies do it that way. We talk about hats at Thanksgiving dinner because a bunch of us work here.

And at Thanksgiving dinner, there's people there that don't work here. And they don't want us all talking business the whole time. So we don't, we wear, I only wear my Papa Dave hat when I'm with the grandkids. I don't wear CEO Dave Ramsey hat. You follow me? Yeah. And, but when I'm CEO, I mean, Rachel Cruz, Daniel Ramsey. Willie Robertson was with us at Entree Leadership Summit last week.

And Daniel was telling me at breakfast this morning, And Willie asked him, hey, why do you call your dad Dave? Because at work, he's Dave. Everybody here calls me Dave. No one here calls me Daddy. Right? But at home, I'm Papa Dave with a grandkid on my knee, right? And so you change roles.

And so that's a family business thing. You're setting up this idea of at work, this is who we are. And what happens as you go, well, I can't do that to my brother. oh yeah you absolutely better do you better love your brother more than you love anybody else that works there so much that you're not going to tolerate him's crap and his misbehavior for his own good mo so have courage kindly gently but very strong we're going to have a very strong conversation and we're going to start moving in this direction or we're going to start moving out one of the two we got to move in this direction.

It's good stuff. Really, really good question. We appreciate you joining us. 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 lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast.