EntreLeadership - Making $10,000,000 and I’m Completely Stressed Out

Episode Date: January 13, 2025

Today we’ll hear about:  A young owner looking for help establishing processes in his fast- growing business  A woman looking to fire an employee who won’t see it coming  Dave Ramsey���s take on Home Depot requiring corporate employees to work in retail stores  A business owner looking for advice on profit sharing with her team    Next Steps  📞 Have a question for the show? Call 844-944-1070 or send us a message: https://ter.li/ask-us  📚 Learn about the EntreLeadership System: https://ter.li/system-p  💻 Get EntreLeadership Elite for your business: https://ter.li/elite-p  ✉️ Sign up to receive tactical tools, advice and resources in your inbox every week: https://ter.li/enl  🏢 Attend EntreLeadership Summit: https://ter.li/summit   🎤 Attend EntreLeadership Master Series: https://ter.li/masterseries     Offers From Today's Sponsors  💼 Go to Belay Solutions or text ENTRE to 55123 for their free resource!  💻 Visit NetSuite today to learn more  🧾 Visit Payority for a free consultation!  📝 Use code entre15 to get 15% off your first year of Trainual    Listen to More From Ramsey Network  🎙️ The Ramsey Show  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💰 George Kamel  💼 The Ken Coleman Show    Learn More About Your Ad Choices   Ramsey Solutions 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 leading in the trenches right alongside you. I'm the CEO of Ramsey Solutions. I do this every day, and I'm here to help you do it. And I've been doing it since I started on a card table in my living room. and we're here to help you take your business wherever you are to the next stage. That's what we do. If you got a question, you want to ask, well, you fill out the form at entreleadership.com

slash ask, and we'll call you and put you on the show as a caller, or you can call and talk to us at 844-944-1070. 844-944-1070. Ross is starting this episode. hour off in Louisville, Kentucky. Hey, Ross, welcome to the Entree Leadership Podcast. Hey, Dave, how are you? Better than I deserve, sir. What's up? Well, so I'm 27 years old. I started an electric company, and we have grown drastically. And I called in last year about taxes because I got hit with a big tax bill.

and didn't know about quarterly taxes and this kind of stuff. So I'm just trying to kind of figure it out. But now our business has grown so much that we now are up to 65 team members, and this year will clock just right over $10 million. Good for you. Well, done, sir. Well, I appreciate that. But the issue I'm having is obviously never ran a business before,

and I haven't, I've only been open for, this will be my fourth year, but I haven't expected to grow this fast. And I'm kind of lost trying to figure out how to get standard operating procedures. Or with the size we are now, you know, there's four or five people in accounting. And, you know, there's all these kind of, there's a lot of people here, there and everywhere doing a whole lot of things. And I don't really have operating procedures. or, you know, and so I'm kind of lost and how do you, I guess, back up and get all this in place

and kind of maybe how you did it or, you know, I'm just, I'm kind of lost with it. That's perfect. Yeah, that takes you from Pathfinder up into Trailblazer, which you probably would be in except you need these repeatable processes. Systems and processes are necessary to run a business to go from, you know, to go from 10 million to 50 million in your situation. So good for you, Good question. So give me an example of something that is chaotic that needs a new system. I guess one example is so I've got two offices. So I've got one in another city about an hour away. And so the people, I guess, will just say accounting, they're the way they're putting invoices and putting together profit and loss statements, it just completely contradicts here. And it feels like we have meeting after meeting.

like, no, this is the way we need to do it. And then, you know, four or five hands touch it. And it's like, no, this is not, you know, this is not correct. So you should have a leader of accounting overall. What do you call that person? I guess we really don't have. I mean, we have, I guess who would kind of be the head of it, but we don't really have, like, what's that person's title?

Okay. All right. Cool. All right. I guess I've never really set up job titles or that kind of. Well, that's okay. I just don't want, you know, you got four people in each location are all eight reporting directly to you? Yes.

Currently everybody reports to me. So I'm kind of pulling my hair out. There's your problem. Yes. Okay. You don't need to be running a bunch of accountants, dude. You need to be running a $10 million dollar business. And so we need to choose someone within that group that that group

respects and that has some people skills and that has some a lot of accounting skills. And then we're going to call everyone together, appoint that person in charge of that, and say they're deputized to make both places systems be identical. Okay. So break it up in the smaller bites then. Yeah, both place has to have systems into, but you need someone else running it because The problem is you get all these herded, you hurt all these cats into one room, then you open the door and they all run out.

Correct. They go back to doing their old crap. That's what you said. Mm-hmm. But if you got a guy that's his only job is to look over all the accounting and make sure it conforms to the same system at both locations, that's his job, is to make sure that this works. And anytime you're implementing a new system like that,

people aren't going to like it because they prefer doing things their own way because that's what's always worked, right? Correct. And so for them, but it's not working. So what we have to do, anytime we put in a system, we have to tell everybody why the system is better than the chaos. That makes sense.

Okay, I'll give you an example. We've got 12 different departments, divisions, profit centers inside Ramsey. At one point, a decade ago, they all were running their own creative. And so the entree leadership colors, brand, all the stuff you saw on it looked way different than everything else in Ramsey.

There was no connection visually. So we put a system in place for all of our creative to get on the same page. So that when you saw one Ramsey brand, you recognize it as a Ramsey brand under the umbrella. You follow me? But that's a system. We're putting all the creatives are dancing to the same song

rather than everybody's freelancing out here in the middle of a dad-gum thing, and I'm paying them to screw it up. And that's what I was doing. You know, you call that governance. We started governing across the whole company. They had to meet certain standards in the creative. In your case, you're saying they have to meet certain standards

and conform to an accounting process to where both locations have an identical thing. Why did we do that? We did that because the customers were getting confused as to whether or not they were actually dealing with Ramsey. Why are you doing it? Because it's very inefficient for us to have two different accounting systems. And the boss, the owner, me, I can't tell what the flips going on.

So it's necessary for everybody to get using the same system. it's going to be much more efficient, much more enjoyable for everyone involved, and I'm going to be happy. That's why we're doing it. And you tell the whole team, that's why we're doing it. And I've just appointed George here. He's the new controller, and George is going to control by God. That's his title.

We're going to conform to this. I'm not going to send you back out, and then you go back to doing it the way you used to do it. No, we're not doing that anymore. And then, you know, you hold them accountable to doing that. And if you got somebody continually getting off the reservation, you dial them back in, you dial them back in, and then you fire them if they won't come back in. Okay. You're going to do it this way if you want to stay.

Yeah. Okay. So how do you pick, I guess, or how do you pick that person? Do you just pick the best person that does that role? They need to be the best at accounting and at people skills. Because now we're asking them. to lead, or not asking them to just do accounting. If they're horrible with people, they're not going to be able to herd these cats.

Okay. But if they're horrible accounting, they're not going to be able to hurt these cats because these are accounting cats and they won't respect them. Think about, okay, think about if you've got a crew in the field and, you know, you've got a three-man team going in to do electrician work, right? And you've got a senior guy on that, right? Well, he's got to know his, he's got to know his, he's got to, know how to wire the house so he doesn't burn it down or wire the building so he doesn't

burn it down. The other guys aren't going to respect him if he doesn't know his technical knowledge, but he also can't be a butt. Yeah. He's got to have people skills to lead the crew. Same thing here, only we're not wiring a house, we're wiring a spreadsheet. Okay. Same exact process. But tell the team why. Otherwise it sounds very corporate and bureaucratic. We're just handing down paperwork for you people to do. You don't want them thinking that. That's not what you're asking. All I want is efficiency and conformity for the sake of the guy that owns it. You guys are driving me crazy. I'm pulling my hair out.

We got to be on the same page, and that's what we said to our creatives. This is not random, like we're just dropping bombs on you from corporate. That's not what we're doing. We're going, the deal is we need this stuff to communicate to the customer. That's good for everybody because we make more profit. The customer has a clue they're dealing with a Ramsey brand based on the way the creative is done. and it's plugged in.

There's a consistency to the fonts. There's a consistency to the color schemes. There's a consistency to the spacing and the way we use stuff. And, you know, we put basic creative governance guidelines in place, gave them a set of boundaries that they could play in the sandbox between those boundaries. And that's how we went through the thing. So really, really good question. Ross, I'm proud of you, man.

You're killing it. Keep it up. Keep it up. And you call anytime I can help. I love helping guys like you. That's why we're here. This is the Entree Leadership podcast. In a typical small business, you spend more money on payroll than any other expense.

Your team is your largest investment. And investments should get an ROI, a return on investment. That's where Entry Leadership Elite can help. Elite is the online platform that aligns your team so that you can scale your business. You're going to use integrated tools to get your whole team dancing from the same sheet of music. Our proven trainings will help you become the kind of leader people want to follow. Plus, Elit's community of business owners will have you back even when things get tough.

My leaders use Elite every week to unify over 1,000 members at Ramsey Solutions, and now you can use Elite to align your team too. To grow your business with Elite, go to Entreeleadership.com slash Elite, or just click the link in the description if you're listening on YouTube or on a podcast. Lauren is with us in Kansas City. Hi, Lauren, welcome to the Entry Leadership Podcast. Thank you. Hop right into it.

My husband and I, we own a residential painting company. We typically keep about four team members on board at a time, and we grow up about 625. I'm wondering how do we let someone go that should have gone a long time ago, like a long, long time ago, but has become family. And there's not really an opportunity to come back. This is not one of those. If you don't get better, then you're coming back. This is a farewell. Why?

What have they done? Kind of conversation. Well, he was our first hire about 10 years ago when we first started, and he was 52 at the time. J.H. doesn't have a lot to do with it, but over the years, he's just become more negative in crotchety. It's just not a good attitude. And over the years, he's also become less and less useful as far as, you know, job responsibilities go, climbing ladders, et cetera. And just less enjoyable to be around. My husband's not on site regularly to witness all, you know, any issues immediately. So they kind of snowballed over time. Why didn't you address this long time ago? Yeah, it's just difficult conversation, but more so I think it's always, not always, but a lot of times just been feeling like, well, what happens if we do, are we going to get behind?

And we know we're not going to get behind and nobody's going to miss him. It's just been with us. Why didn't you correct his behavior before it became fatal? This wasn't, we just didn't, we weren't good at that part, something that we need to get better at. And so unfortunately, now we're here. And that won't happen again. But, yeah, I mean, he's, you know, he's a good person, but he's not who we want on the team anymore.

And, you know, it's just, it has gone on for so long. So that's the difficulty, you know. Conflict delayed is conflict magnified, basically how it's gone. So become a really big lens, really big lens over time. And to make it, and over the time, we can, you know, continuously or continued to give him raises, really when they weren't even deserved just because, you know, it was the end of the year, kind of fell into that pattern. And I think sometimes we felt guilty or greedy like we were being unfair by not increasing his wages.

You know, obviously that should be based on performance. But it wasn't, and here we are. So I guess just, you know, how do you have that conversation? conversation, how do you deliver that news to the team, get them energized for the future? Again, nobody's going to miss them in two weeks. Well, the problem is you've done this so poorly that there's not a good way to do it. Yeah, yep. You've painted yourself in a corner, and that's a bad metaphor.

But I mean, really, you know, because here's the thing, no one should ever be surprised, and this guy's going to be surprised. It's not fair to him. Right. You're going to catch him off guard. And guess what? Then the team's going to see that you just came out of left field all of a sudden and took his head off. And then they're going to worry that they're next.

Yeah, they've each individually over time brought up things here on there. No, no, no, nope, nope, nope, nope, nope, nope. They're going to know that he did not see it coming. And so they're going to worry that they don't see it coming. by the fact that you're surprising him, they're going to worry that they're going to get surprised. They're not surprised about him, but they know he doesn't think this is coming.

He's going to be surprised. And so you've not only set yourself up to where you're being, you know, this is a horrible situation because you've not only set yourself up that it's going to be very uncomfortable with him, he's going to be pissed off, he's going to be hurt, because he got no warning, no one ever told the poor guy that his job was on the line

before you just walk in and fire him and then the other guys are going to look at that and they're going, crap, they may do that to me. This is a problem. Yeah. It's a real problem. And that's where you come in, so what do we do? I don't have a good solution.

I think you're going to fire him and I think you're going to suffer the consequence of your poor leadership. I think your team is, I think your team is going to look at you with suspicion for a while. It's going to take a while to rebuild trust with them. And then you're going to have to start being real clear with your team on every little thing that they do that's not right.

No more weakness. You've been dodging the, you know, dodging the conflict. And by dodging the conflict, like you said, it's now magnified. And it's at an explosive level. So you're going to sit down and fire with the guy. You've made that decision, and he's not going to see it coming, and he's going to be hurt, and he's going to, you know, this is not going to be a relationship that's going to last. He's not going to like y'all anymore.

That's what's going to happen. I don't know any other thing else you can do because you're not going to give him another chance. You've already made that decision. Right. So he's just going to be pissed and hurt. And you can give him some nice severance pay, and you should. Yeah, we fully intend on that, and I guess that was a follow-up question. That's not going to keep the feelings down, though.

Oh, no, I know it's not. I know it's not, but it'll help them get through the holidays, and we're not going to be, you know, it'll be overly generous, but I don't know, you know, what is a, I know that you're going to say, there is no appropriate severance, but what is, in this situation, what would be the best thing that you would? We typically run about a month per year. Okay.

Okay. So he's been with you 10 years, I mean, 10 months. You know, that's a lot. In an operation your size, that's a lot. So I might not go that high in this case. But that's a whole lot more than anybody else does out there in the real world, by the way. But we're overly generous in severance situations. Now, I have been in situations where I've confronted people

and I really couldn't put my finger on the problem, and I finally came to the end of it. and that was highly uncomfortable, but they weren't just completely caught off guard. We'd had discussions about problems, but we couldn't say, these are three things you have to do to stay. I couldn't put my finger on it that clearly,

and I didn't even like those discussions because I felt like I was still surprising the people, and I don't want to be in that position. So the thing you've got to do is go, this is the last time this ever happens. As a leader, your job is to have uncomfortable, conversations as often as is necessary for people to hear how you feel about them. Positive and negative. You need to sit down and be very clear. And your job is to not give

raises to people because they keep taking up space. Your job is to give, you know, and that's an uncomfortable conversation. Your performance has not changed. Our revenue is not changed. I don't have a raise in here for you this year. If you were doing more work or carrying more weight, there'd be a raise for you, but you're not doing that. That's an uncomfortable, awkward thing to say, but it's less awkward than giving somebody money out of guilt because you didn't deal with them. So you guys are going to have to stand up and be stronger and kinder and more clear and have lots more discussions with these people, or you're going to lose them all because they're going to come to know they can't trust you because you just look up one day and you've had enough

and you throw them in the street. And that's how it's going to feel to them. So it's going to take you a little time to rebuild that trust with the new team after that. But at least if you're going to go through the pain of this, at least learn your lesson, and you guys fix the cause of it, which was not him. The cause of this mess is you. And so I would jump in there and fix that as a part of my commitment. And then, you know, you're just going to have, he's going to have a really bad day. You're going to have a really bad day.

And you're going to be out some money. And that's going to be over. And then you've lost a relationship because he probably won't speak to. rest of his life. Wouldn't be unusual at all. People don't like to be surprised, man. It's so simple. And, you know, bopping along thinking everything they're doing is okay. And then all of a sudden they just walk in and get fired. So, you know, that's going to be bad. It's going to be a bad day. But then just commit to yourselves to never be those kinds of leaders again. Don't be that kind of person because you're not going to be able to attract and keep good talent if they can't trust you

to tell them when they're doing good and when they're doing bad. They have to be able to trust you in that. Hey, thanks for the call. Sorry to be rough on you, but that's where you are. It's the reality. And it's what you presented to me. So this is the Entree Leadership Podcast. I'm Dave Ramsey, your host.

This is the Entree Leadership Podcast. You guys know I pick on Corporate America all the time. I can't stand to Corporate America. And just as a reminder, corporate America is not the size of a company, and it's not the fact that they're publicly traded or not, although that sometimes does influence it. Corporate America is a mindset,

and it can be in a small business or a large business, and big businesses can be led well and run well, and then they don't fall under what I call corporate America, because corporate America, for me, is an insult I am laying out there towards some company. You got me? But there's companies that do very, very, very cool things like I love that Amazon called their people back to work.

And what that CEO did was very cool. That was the way he handled that. And the memos that he put out and the whining that he endured and the negative articles he endured from the lefties. Oh, they're making people work from work. Oh, my God. So we defended him. And even though Amazon's obviously a huge company.

Here's another huge company that this is pretty cool. Home Depot, this is from Forbes, is implementing a new policy aimed at bridging the gap between corporate and retail operations. Starting in the fourth quarter of 2024, all corporate employees, including senior management and remote workers, will be required to complete an eight-hour shift at one of the company's retail stores every quarter. you have to work four days a year in the store to inform you how things work. Listen, this is cool. Bloomberg has reported this, citing an internal memo from Home Depot CEO Ted Decker.

Way to go, Ted! This decision aims to bridge the gap between the corporate office and the retail floor. The intention is to ensure that all employees, regardless of their position, understand the challenges and daily operations faced by store workers, thereby fostering empathy, better decision-making, and a more cohesive company culture. Brilliant! We need to stay connected to the core of our business

so we can truly understand the challenges of opportunities of our store associates face every day. Decker said in a note to the staff. Because people, when people sit in the ivory tower and never come out and visit the real people, they lose their soul. they become bureaucrats, the worst word you could ever call anyone. And then corporate starts coming up with really assinine ideas

for the real people out there that are doing the real work. And they look at corporate with this sideways German shepherd look like you people are morons. Because corporate has become disconnected from what's, known as the customer, which is where corporate gets paid from, by the way. I love this. This is me injecting into Ted Decker's operation, but I'm just saying, way to go. Way to go.

Thumbs up right here. I like it. We need to stay connected to the core of our business, which is, by the way, the retail store has nothing to do with corporate. Corporate is there to actually support the retail store. Ha ha ha ha ha ha ha ha ha ha. Oh, this is real leadership. Home Depot, one of the largest retailers in the United States with over 150 billion in annual revenue.

450,000 employees is reviving this practice after it was suspended during the pandemic due to safety concerns. For white collar workers, this move serves as an opportunity to gain firsthand insight into customer interactions, operational challenges, and the physical demands of retail work, potentially enhancing their managerial and strategic. decisions. However, this mandate is considered an unconventional step for the retail industry, particularly in light of growing labor activism and a recent decline in sales after a surge in consumer spending during the pandemic. How this policy could backfire. This success of this initiative largely depends on its implementation. Well, no. Kidding, Sherlock. Wow. Oh, you know, okay. DoorDash previously introduced a program called WeDash, requiring all employees in the U.S. and Canada and Australia from engineers to the CEO to complete a food delivery once a month.

This initiative aims to provide staff with a deeper understanding of their product, offer insights into how their decisions affect dashers and customers. See, it's a really good idea for everyone in the company to remember where money comes from. Money comes from the customer, not your bureaucratic book crap. coming from a disconnected corporate culture. This is brilliant. Way to go, Tad Decker. Entree leadership salutes you.

It's just well done. Like you care, you probably don't care. But it's just, I'm telling you, man. This is the kind of stuff. So when we were smaller, when you came on board, one of the things you had to do, we used to do about 40 live events a year. And there were like arena events and theater events, anywhere from five to 12,000 people.

And we would go around, we spent half their life on the dead gum road, going on, setting up all this stuff and doing all this. And it required a tractor-trailer loads of books on the back table at the breaks and, you know, all the setup of the live events and, you know, getting all those people's tickets, getting them into their seats, helping them do all that stuff. So we would take, we have a live events team, but we would also require all new team members.

in the first six months that they worked here, to volunteer, they were voluntled, to, you were going on the road with us, and you're going to set up stuff, and you're going to sweat, load in the truck, and you're going to help us, and you're going to hand out tickets, and you're going to talk to the actual customer that's had their life changed by what we do, and the customer that's giving us money to come and learn from us, and the customer that's having an experience at one of our events that was properly run or there was a problem at it and you got to watch the customer at that. So new team members was part of your onboarding in those days. Our growth rate has been so high that we didn't need 200 volunteers doing that and we don't

do as many of those type of events anymore. So we quit doing it. But that was our way of doing what they're doing here to make sure our team was plugged in. And of course we now have the Ramsey event center here on campus and we do events. here and when the events are here we vol untold people that you know from all through the company to go up there and sit and watch and watch the consumer's reaction to our speakers our teachers watch how they interact with our products talk to them hear their stories serve them with issues that they have and it changes everything guys it gets everybody okay the accounting team now suddenly

knows where money comes from the customer the software engineers all the sudden nowhere, while they're writing all these lines of code for the customer. You know, it's just brilliant. I mean, golly, this is so cool. Most small businesses that have 20 people, it's mandated. Just by the way the business functions, you're with the customer all the time anyway. So you've got this close interaction. But the bigger you get, and I can't even imagine having 450,000 employees, that just

below, I don't even want a tenth of that. Oh, wow, I got 1100. It's all I need. I can tell you that. Wow. This is, I mean, this is just good stuff. So great lesson for those of us in smaller businesses from the great people over at Home Depot. It's a good idea for your team members to be in the weeds.

Get them out, get them out from behind the cube. Put them out there in the weeds. shopping, seeing where money comes from, comes from the customer, teach them how to love the customer, how to super serve the customer, how to surprise and delight the customer. Yeah. And then when you go back to your desk to do your normal job, you have a different perspective. This is just, man, that's really, really good leadership. Again, we salute you guys. Proud of you. We know you probably never hear this and don't care, but just the same. That's where we are.

This is the Entree Leadership podcast. Hey, guys, if you want to send us a question, you can do that at Entreeleadership.com slash asker. You can call me at 844-944-1070. Now, I love you enough to tell you the truth, so be ready, because I will tell you that. Hey, if you want to help the show out, we would appreciate it. You can do that by clicking the old follow button, the subscribe button. Leave a nice five-star review.

Mama said, if you ain't got nothing nice to say, don't say. say nothing at all. Click the share button or clip the link out and send it to somebody and go, hey, listen to this show. If you spread the word about this show, we would appreciate it very much. You are our only marketing program. If we fail, it'll be your fault. No, I'm kidding. Thanks.

Thanks for helping us. We know you're sharing it. We know you're telling people about it because our numbers are growing. There were two of you out there and now there's four. So it's getting better every day. Do call me, though. We'd love to have you at 844-9-4-1070. Connie is in New York. Hey, Connie, how are you? I'm doing well, Dave. How are you?

Better than I deserve. What's up? Well, thank you for taking my call. It's an honor to speak with you. Sure. I own a special inspections and material testing company in New York. We have about 75 team members, and we're on schedule to make about 10 million a revenue this year. Way to go! Yeah, we're killing it. It's great. We've implemented profit sharing based off of reading the Entree Leadership book, and I found it's been helping our management team stay motivated in the game. We do the profit sharing on an accrual basis.

On a what basis? On an accrual basis. Okay. And we do our taxes on a cash basis. So I'm just curious if I should be taking into account the taxes that I have to put aside, when I'm implementing the profit sharing. Should I, like, take some out if that makes sense? If you need to to cover the tax bill,

you can still do cash basis for tax at your size for now. Here's the question that popped into my head, and it really wasn't what you're asking. But my personal experience is the more, the closer the profit is sharing is tied to the actual production of the profit time-wise? Like if you make a profit, like if you make a commission

and you don't get paid for six months, that's not as motivating as if you make a commission and you get paid Friday. Yes. And it sounds like you're delaying your profit sharing with the accrual. I'm not.

The cash flow is good so that I still have the money. So we're only three months behind on the profit sharing. Why? Why are you doing that? Why don't you just do it one month? Why don't you close March by April 15 and pay it on April 15?

That's what we do. I'm just curious. There may be a good reason. I'm not saying you're wrong, but I want to get it closer to the actual month. We do concrete sampling. When we go through winter, we go through a slower period. And I just want to make sure. So I do it on a cruel basis for a quarter.

Oh, you only pay it once a quarter. I pay it once a quarter just in case there are some slow months. If they're not meeting their numbers, there's a deduction in that month. and it just keeps the cash flow moving. I don't want to promise people money if I don't have that cash flow. You know what I mean? Okay. If you made a profit in March and you're on a cash basis,

why would you not have the money to pay the profit sharing from March 15 days later on April 15th? The profit is on an accrual basis as opposed to a cash basis. We work in government contracts, so we're not paid. 30. Yeah, but if you're running the business on a cash basis, then you can calculate profit on a cash basis, can't you? I can, yes. And pay your profit sharing on the cash basis.

In other words, if that contract, you know, you sign a contract on accrual, the stupid thing goes on the books, but you don't get your money for six months is what you're talking about. Yeah, I just wanted, I was doing... Pay them only when you get the money. But I was only doing it on. on an accrual basis to see if the company at that month was being profitable in all the actions that they were taking.

But if you're running the business on a cash basis and the actual cash that came in versus the actual expenses that came in created a profit, then you know you're profitable. Am I missing something? Well, if a client decides to pay, you know, $300,000 with the invoices in one month and then I don't get any cash flow from other clients the next month. That's a different problem. That's a different problem. If the management team is actually working well in being profitable.

Okay. But you can, if you don't, we don't disclose our percentage. I don't either. That we're distributing. And so this is just a discussion. This is not me correcting you. Let me make sure you understand that, okay? Because here's what we're doing.

And we're just comparing notes, okay? Because I run into some stuff, too, where we have some really low money. for instance, summer around here is really slow. December's huge for retail, book sales and that kind of stuff, but like live events is low, some of the other stuff is low, right? So we will use, we will hold, if we have like a banner month, a bonus month, a bonanza month, like you're talking about 300K or something, and then there's nothing the next month, we will hold some of that profit.

We won't distribute at all. so that we have something to distribute the next month. We do smooth it, but we do all of this on a cash base that's not accrual because I want them to, I want to be able to put up there. March was great, great, and our profits were up, and so your profit sharing is up, and I want to do that quickly. And I want to do it monthly, too, for that reason. When we were doing it on a quarterly basis,

we weren't getting the emotional lift that we were expecting to get. from the actual thing. Now, you're getting some lift emotionally. You told me that. The management team's appreciating it. But my contention is my challenge for you to consider. And again, I'm not correcting you. I'm just interested in how you're doing it.

We've chosen to do it on a cash basis because we want the monthly frequency. And if we have a bonanza month followed by a down month and we know that's coming, we're going to hold the bonanza month some of it back, so there is something in the down month. And we create smoothing that way rather than by using accrual to do it. So something to think about there, but you're doing really good work.

I love what you're doing. I love how you're handling it. And yeah, if you continue to handle it that way and the tax issue is going to throw you, then yes, you do need to pull the taxes back out of it and lower it by that because taxes are part of profitability in your situation. situation. And so you can't get bid on that. So the profit sharing is net of taxes. And because people like you and me, we run our lives on a real cash basis. We don't run it on EBITA or on accrual or anything else. We're actually going to see money in the account. And that's how we know if we're going

to be open or not, because that's old school. And that's why I love cash basis accounting when you can use it. So anyway, I get what you're doing. I would not pay on profits that the cash has not been received. So if you have a government contract that's going to pay out in six months and it's going on the books and it's showing you profitable because of that contract and you don't have the money from that contract yet, I would not have a profit sharing program that paid on that. That'll create a cash flow bond. Big time. You can really get in a pinch on that. So salespeople that sign up, you know, I tell our salespeople all the time, when you get a contract signed, you haven't made a sale yet.

When we get the check, now you've made a sale. We even had a ridiculous, funny thing we would do with new salespeople. We would take the check out of the envelope and put a piece of tape on it and let them wear it around on their forehead when they got their first check in. So they proved they made a sale. And that was like a right of passage like we were hazing there. or something. But because when you get actual money in here is when we count it. I grew up in the real estate business and having a property under contract does not, you don't get paid for that. You get paid at the closing. When the buyer gives the seller money and the seller gives the

buyer a deed and the agent gets paid that day, you don't get paid for a wish. And so I don't want you to get into that business either. It doesn't sound like you are, but in your particular case, you're doing really, really good, good, Connie. It's good to talk to you. Thanks for let me have that discussion with you. I enjoyed that. Folks, remember better a weary warrior than a quivering credit. This world needs more high-quality leaders. So take courage and lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast.