EntreLeadership - My Team Doesn’t Trust Me Because I’m Young

Episode Date: May 20, 2024

Today we’ll hear about: A business owner who doesn’t feel respected by his older team members A caller whose dad hasn’t worked in years but still takes $20,000 a month A business owner who’s making $4.5 million with seven team members How to know if you’re making enough profit to keep your business open Next Steps 🗳️ Submit your question for a chance to be on the show with Dave Ramsey: https://ter.li/askus 👣 Find out what Stage of Business You’re In: https://ter.li/axd39b ✉️ Sign up to receive tactical tools, advice and resources in your inbox every week: https://ter.li/y8qdo7   🏢 Attend EntreLeadership Summit: https://ter.li/fcazl2   🎤 Attend EntreLeadership Master Series: https://ter.li/wcjhpu ☎️ Learn more about EntreLeadership Coaching: https://ter.li/ycznhl 💵 Learn more about Ramsey SmartDollar: https://ter.li/4imot0   🗳️ Help us make the show better! Please fill out the quick survey form. https://ramsey.qualtrics.com/jfe/form/SV_01hjJ6UN8mnQPNI   Offers from Today's Sponsors NetSuite: https://ter.li/x1t20q BELAY:  https://ter.li/yohiu6 Payority:  https://ter.li/fh2oau Trainual:  https://ter.li/a8zexl Found:  https://ter.li/ggwmrv Listen to more from Ramsey Network 💼 The Ken Coleman Show 🎙️ The Ramsey Show   🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💰 George Kamel 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show Ramsey Solutions Privacy Policy https://www.ramseysolutions.com/compa… Learn more about your ad choices. Visit megaphone.fm/adchoices

From the headquarters of Ramsey Solutions, this is the Entree Leadership Podcast, where I take calls from leaders like you about what it takes to win at any stage of business or leadership. I'm Dave Ramsey, your host with over 35 years of experience leading in the trenches right alongside you, just like you. I grew this thing from a card table in my living room to where it is today, a major national brand, and about 1100 team members, about 300 million and growth. roast revs annually, and that's what we do around here. And I do this every day. I'm the CEO, and so I'm dealing with the same problems that you're dealing with, sometimes with more zeros, but, and sometimes I'm dealing with new problems that you haven't gotten to yet.

So we're here to help you with all of it. If you got a question, give me a call at entreleadership.com slash ask and, or go to the website there and leave your question or call us on leave a voicemail at 844-944-1070. Keaton is with us in Metropolis. Illinois. Hi, Katen. How are you? Hey, Dave. Thanks for having me on the show. Sure. What's up? So, yeah, a little bit of background. I own a custom woodworking business. We specialize in dining room table sets primarily, and I have four employees, including myself. And last year, we did about $300,000 in overall revenue. Excellent. And my question is, I've hired employees

older than me, and I'm kind of struggling with a dynamic between the age range. I'm trying to kind of gain respect and trust with some of my older employees. How old are you? 23. Okay. And how old are they? A range from anywhere from late 20s to early 50s. But you own the business, and when they came to work there, you owned the business, and they knew that?

Yes. Okay. All right. And so where would they be losing respect? Because they had enough respect to sign up. Yeah, and it has a lot to do with just like, I don't want to say taking orders, but just overall, just me kind of telling what to do. I don't think they kind of trust me whenever I tell them, like, hey, you know, let's stand a table this way or, hey, let's apply and finish this way. I think to kind of have a lack of confidence in myself because I have been doing this. I'm only 23, but I have been building furnishing out for about seven years.

Okay, so if you tell me, I'm 63, you tell me how to sand a table one way, and you own the business, why would I question that? Are you saying you don't have confidence? I'm saying I don't think a lot of them have confidence in myself. Oh, okay. like leading them on the actual production process? Yes, yeah. Okay, all right.

And some of these guys have, you know, former experience, not necessarily like what we do, but different carpentry skills and stuff like that. So they've been around the trade somewhat. Yeah, okay. Well, I think, you know, what you've got to establish here is not, number one, that you're competent.

and you can always, anytime you're leading, whether it's leading older or younger, it never hurts to be curious, it never hurts to ask questions, it never hurts to draw them in and pull them rather than push them. Bossing someone around doesn't work with any dynamic.

Bosses push, leaders pull. We say that all the time around here. And so whether you're leading someone older or not, and so, you know, my son, son Daniel is the president of Ramsey, and there's quite a few people older than him that report to him. And so in some cases, they do know something technically that he doesn't know. Or some of the people, they report to me. They know all the people that do web coding know something technically that I don't know.

All the people whose computer works know something that I don't know because mine never works. So, you know, I can be pretty humble instantly about those things and say, okay, you have a, knowledge base that I don't have and I want to be curious about it. I want to learn how this works. I want to learn how your brain works while you're thinking through this. And so, for instance, if you sit down and say, okay, the way we're going to sand a table at this company, because I've been doing it a long time, and people trust me and this I'm very comfortable with is this way. This is the way we're going to do the sanding on the table. Now, if you've got some input on something like that and you want to tell me, that's cool. I'll try to learn from you, but you also need to know that I've got a way of doing things that got us to this point.

And so I do know how to do this thing. Okay. And now I can learn something more. You know, I got a lot of years to learn yet. And maybe you can teach me something from your former place. Or maybe you can just do it the way we're supposed to do it. Because this is what we all said we're going to do. Because the customers that are coming in here, they're coming in here because of my previous work, not yours. they're expecting the quality that I produce, and the way I produced that quality was using this process of sanding or this process of staining or whatever it is.

And so that's what they're expecting. Now, if you can help me see there's a more efficient way to get there or something, I'll learn from you. But in the meantime, we're going to do it that way because that's what the customers have been giving me money for that gave me money to give you money. And, you know, we could just talk about that. And you can be, you know, I would start out,

curious, asking questions, very gentle in these conversations, but then I would turn it up. Now, anytime you really need turn it up hot, you need to pull them to the side, not be in earshot or eye range of the other team. So don't rebuke an old-timer in front of everybody else. You'll lose them forever. So all rebukes are done in private. All harsh correction or tough correction wouldn't be harsh, but tough correction is done in private. Otherwise, you'll lose them forever, particularly a craftsman because they don't put up with that crap. They don't put up of being embarrassed or are called out in front of their peers and that kind of stuff.

But you go, okay, look, you know, you may have done this a better way, a different way. I'll learn all that, but you need to understand I'm really comfortable with doing it this way. And if we're going to do it another way, I've got to really know why because the customer has been expecting the quality that I've been putting out before you came here. and that's just you leaning back into your competency and your confidence and then they can either join up for that because you're kind of saying this is the way we do it here if you want to be a we see we send the table this way you may not want to be a we you may want to be somewhere else but if you're going to be here unless you show me a better way that i believe in but i'm really

comfortable with this is the way we need to do this and so anyway that's the process I would use if I were in your shoes is ask a lot of questions, be curious, lean back on, the customer has an expectation, the company has an expectation of quality. Quality is produced by A plus B. And I'm really good at A plus B. Now, let's work from there. This is the Entree Leadership podcast. Well, today I've got the privilege to announce that Summit 2025, wow, is going to be in Denver, Colorado next year. May 18th through the 21st and we've got an incredible lineup for you. Leadership expert and bestselling author, my good friend, the granddaddy of leadership for no question about it, John Maxwell. He'll be taking the summit stage, bestselling author of about

80 different books, 21 irrefutable laws of leadership, probably the best known. Crowd favorite and bestselling author of the five disfunctions of a team, Pat Lincione is going to be with us again. Dr. John Deloney will be with us again. Ken Coleman will be with us again. with it again. Many other big names yet to be announced and we'll be unfolding those as we go along. You'll leave Summit with the insight you need to build a unified team and transform the future of your business. And if you purchase your tickets now, you'll secure better seats for you and your team because for the first time ever we're doing reserved seating for the whole room. No land grab. No Texas land grab where we open the doors and the covered wagons run over

each other trying to get to the gold rush. No, we're just going to reserve your seats and based on when you buy your ticket is going to put you the furthest forward and the best or better seat. So go to Entreeleadership.com slash summit and get your seats right now for 2025. Gary is with us in Seattle. Hi, Gary. How are you? Hey, Dave, I'm doing well. Good. What's up? So I own a dewatering company, which is a specialty contracting business and have about 12 employees and I'm the 49% owner and my father owns 51%. Okay. Okay.

We do about $3 million annually and this is a 15 year old success story. We started from Ashes in 2009 and here we are and we're just, we're doing really well. But my problem is, is that over the last five years, in 2019, I tried to buy my dad out and it didn't work. And we've been very successful since then. However, my dad doesn't participate in the business. He just rakes in all the money. So he takes about 20,000 bucks a month, and so do I. And then we split it at the end of the year if we have any profits. The problem is, is I've come to the end of my rope on allowing him to continue to take, take, take when I feel like I can't grow my business because all of my profits, or a lot of them, are going to my father.

who doesn't participate. Okay. There's two or three elements to this process. The first thing is, is we need to break apart the idea of ownership and working at the company. You can be an owner of a company and not work there. Okay. That's perfectly fine. There's nothing wrong with that.

You can be a member of the family and not work. work there and not be an owner. So in family business, the famous family business guy that wrote probably some of the books, the longest to go is a guy named John Ward out of, I believe it's Minnesota, if I remember. Anyway, John put together the Venn diagram that a lot of people use, and it's got three circles. One circle is family, one is owner, and one is team member or employee, okay? You can be all three of those, which would be where the three circles interact, intersect on the Venn diagram, if you can see that in your mind.

Or you could be two of those. You can be a family member, an owner, but not an employee. You can be, in your case, you're all three, okay? And your dad is just an owner and a family member, but not an employee. So when you break that apart, then you go, okay, owners get distributions. of profit. So where Eurole's model is broken is that Gary is not being paid a salary for being the CEO. You should be getting on a $3 million business, a couple hundred thousand dollar of your salary

before we talk about splitting up profits. And I do get that, but he also gets it too. Well, he doesn't get a salary. He doesn't work there. Right, right now he does, though. My point is that's the problem. That has to stop. That has to stop.

We're not going to pay someone a salary that doesn't work in the business. Now, they can get distribution of profits after the salaries are paid. So he should get, so let's say, what is you, do you have a salary plus the $20,000 a month? No, uh-uh. We just call it a overdraft. That's what I'm talking about. You just call it. You've completely screwed this up.

So that's where the problem's coming in. So you need to get on the payroll. of the company as the CEO and president of the company, and the payroll needs to pay you a quarter million dollars a year. Yeah. Okay? Then what is left after the CEO is paid is called profit. And the profit can be distributed not to the employees,

but to the owners of which your dad would get 51% of the profits that are distributed, and you would get 49% after the CEO is paid. That's how this should be set up. I agree. Now, once it's set up that way, then you could still have the complaint that your dad won't let you buy you out, and that's another discussion. As a matter of fact, I just got the business evaluated. I haven't got the number yet, but that is my next move,

is to get him to the table and buy him out and tell him that I've been awful nice letting him basically, you know. No, that's not going to be good at all. Your dad doesn't feel like you've been awful nice. And you're saying that is not going to do anything but rile him up, dude. Okay. It makes you feel better, but it's not going to, what are you trying to accomplish here? Rile him up or are you trying to get the deal done?

I want the deal done. All right, then quit riling him up. Quit whining. All right. So sit down with him and just say, look, you're an incredible business. businessman, you and I built this thing from the ashes, and now you want to be at home, and I have to, for the sake of my manhood, for the sake of my dignity, I have to be running this thing now, and I have to work out something to buy you out. I can't do it this way anymore. I want to honor you.

You're one of the founders. You know, you helped me get here. You taught me what I know, and I want to be, I want to honor you, but I can't go forward with this. see more dads. So help me figure out a way that I can buy you out in a way that makes you smile and that is not, that does not violate me in the process. And let's sit down and talk about that and not go, you know, I've been doing you a big favor. It's over. You know, that doesn't work, man. Understood. Now, I have hired an M&A attorney. It wouldn't work with you if I did it to you. Right. I agree. Now, I went to hire an M&A attorney, but this time, compared to last time, five years ago. This time, we hired them together. See, and I think that's the key to me buying

them out is there is no Gary's attorney or David's attorney. It's our attorney, and he's got our best interest to get across the line. We need a cup of coffee. We don't need an attorney. You can have an attorney teach you how to put it together, but if you've got to have an attorney do the negotiation, you really, you're already screwed. Yeah. The two of you ought to be able to sit down father and son man to man and say, this is how this is going to happen. And then you call. call the attorney and tell him what to do. Attorneys are employees. They don't drive the bus.

Y'all got to drive the bus on this. Now, the good news is you don't have two different attorneys, to your point, talking at each other, trying to represent you two who should have sat down over a cup of coffee and battled this out. Dad, look, here's the thing. We've got to look at this. Now, how you want to work this through? We've got to work this through.

And then we're going to tell this attorney how to put it together, all right? and if he can advise you on some possible structures, well, that's okay. I don't mind that. But this attorney's not in charge. You and your dad are. Mm-hmm. And believe me, some of them think they're in charge.

So we've got to get rid of that problem too. But, yeah, I think it's a good sign. I agree with you that you both agreed on someone to look at a merger or an acquisition. But, you know, it's a $3 million company. We don't need to spend a ton of money on, attorney fees to transfer this thing. It should not be that complicated or that difficult. But y'all sit down and work on it together and just, you know,

I can't go forward this way. But for those of you out there listening, the way you don't get to this point is you do two things in your succession and transition plans when you're in the legacy phase, when you're in the legacy phase of your business, the last phase, which is where Gary's dad is. okay number one you lay out a clear succession plan transition plan and here's how it's going to go down and here's who's going to end up for it with it here's how it's going to be paid for here's how it's

not going to work here's how it is going to work and then two you have to do what we talked about there with a Venn diagram you keep the ownership portion of the business separate from the employment of the business now that you know so for instance my son Daniel works here we mentioned that a minute to go, he is paid as the president. His sister Rachel works here as a personality. She is paid like the other Ramsey personalities. The same percentage on book sales, the same percentage on speaking fees, and so on. So she gets paid there.

However, both of them are owners of this company. They also get money as owners from the profits. It has nothing to do with them working here. That's a separate issue. So owners can be absentee owners or they can be on-site owners. Both are owners. You know, stockholders in publicly traded companies, none of them are on site. You want a share of Home Depot. You don't work for Home Depot, but you're going to be distributed some of the profits in the form of dividends. Assuming Home Depot did a dividend distribution. But anyway, that's how that works. So that's what Gary is

running into. So you start with that and you start with a succession plan, a transition plan, and then you don't get all the way up to, I've had it, I'm sick of this guy, I'm milking the business. And this guy is my dad, you know, and you keep from getting there by laying this out in a much smoother, gentler grade on the transition. And that's how we do that stuff. So really, really good question, Gary. And what you're facing is fairly normal among small businesses.

So you're doing a good job. You've obviously grown it to great revenues. Now we've just got to work this through so your dad feels honored. It's always good idea to honor the founder. As much as you can honor the founder, it'll help the conversation. Shaming them usually won't get you anywhere. This is the Entry Leadership Podcast. I'm Dave Ramsey, your host.

This is the Entry Leadership Podcast. Thanks for being with us, America. We're glad you're here. If you want to help us on this show, we would appreciate the help. How do you help us? Well, you share the show. you follow or subscribe to the show, and you leave us a nice five-star review. Those things make a big difference in the podcast and YouTube world,

and we greatly appreciate you doing that for us. And it moves this show along. It lets other people know that we're here. And thank you, thank you, thank you for doing that. Steve is with us in Fort Lauderdale. Hey, Steve, what's up? Hey, Dave, I was just giving you a call. I am an electrical contractor out of Fort Lauderdale.

I have seven employees, and last year's revenue was $4.5 million. Goodness. Yes. What in the world are you wiring? Electric vehicle charging stations. Oh. So it's a little bit of everything. Like, we have to know the tech, we have to know the engineering and everything.

And my wife and I run in the business. And we ran it debt-free. We kind of follow your principles. And just a huge thanks. Wow. So you've been hanging out with the Entry Leadership Gang during this growth period? Yes, yes. I started out of the contractor in 2019.

And I was familiar with all your guys' programs. Just my never finished college and I was homeschooled my entire life. And my mom had me follow all your steps. Wow. Wow. And then you got it. And then it's the business crew. you got into entree leadership is what you're saying.

Yes, yes. Wow. Yeah. Seven team members and four and a half million top line, and you did that in how many years? Five years. Wow. Good for you, man.

We only have seven members. Good for you. Yeah, seven team members, four and a half million, right? Seven. Yes. Seven million or seven team members? Oh, seven team members. Yeah, that's what I was saying.

Yeah, 17 members and 4.5 million in revenue. Way to go, man. Way to go. Congratulations. How old are you? I am 39 years old. Man, you are a rock star. You're the backbone of American business.

This is how it works. Small business people running $5 million businesses, 7, 8, 10 team members. This is exactly right. This is how you do it right here, man. So it sounds like you're having fun and making some serious bank. Yes, it's been a blast. It's the first time I work. with my wife and as a team

we're complete opposites and it works really well and we've been able to do it and cash flow everything ourselves and it was a grind in the first three and a half years and the last year and a half we started seeing some fruits for our labor

Wow and I'm guessing with this low payroll and the specialization in the charging station thing that your margins must be astronomical they are quite They are quite nice. I think we had 1.5 million in profits, but we actually...

It's actually higher because a lot of our terms, it takes almost a year to get paid, and we had another almost million dollars in accounts receivable. Wow. Way to go, man. Way to go. I'm so proud of you. You got to feel great. Well, congratulations.

I appreciate you calling in with a brag call. like to do those here. Man, that's pretty amazing stuff. Occasionally, we, by the way, if you didn't know what that was, we invite you to do that. If you're running a small business and you're doing the entree leadership stuff, call us at 844-9-4-1070. We'll put you on, just let you brag a minute. Because, hey, man, there's very few people you can brag when you're killing it like that. They think you're some kind of, you know, dork if you're bragging, but we don't. We think you're amazing. We think you're a stud, Steve. This is the Entree Leadership podcast. Thanks for hanging out with us, America.

I'm Dave Ramsey, your host. This is the Entree Leadership Podcast, where we talk to businesses that are small businesses, 54% of the gross domestic product, the GDP in America. The production of all goods and services is represented by companies that have less than 500 team members. These are largely privately held family-owned and operated companies that treat their team members well. They care deeply about the customer. And you guys are the backbone of America, and the beautiful thing is Washington, D.C. can't control you.

They tax your brains out, but they can't control you. Because you're renegades. You build stuff in your garage. You build stuff on your laptop. And you serve people and find unique ways and twists in the market like nobody else. You are the reason America is great. And we are one of you. and we're here to serve you and help you.

It's what we do. The phone number if you want to participate here is 844-944-1070 or go to Entreeleadership.com slash ask and leave your question. We'll get you on the air. Ben's in Asheville, North Carolina. Hi, Ben. How are you? Hey, Dave.

Thanks so much for having me. Sure. What's up? So I run a mobile barbecue business, all wood-fired at that, in the Asheville area, a greater Asheville area in western North Carolina. Why is my mouth watering? We're within a drive distance of Franklin, Tennessee. Yeah, about 10 hours, yeah.

It wouldn't be worth it. We did about a half a million dollars in gross revenue last year. We did have a negative year last year. We're still in the growing phases. Quit the corporate America job. I used to work for the fire department in the Asheville area as well. quit in December, went into my business full time in January. Kind of where we're at, we're in a local hospital in the area, and there's a lot of volume there.

They take 21% of our sales. So what we're running into is we've had one of our key players move away from the area, so we're a little short on staff. And where I'm at right now is I either need to focus on one or the other. we're at a 15% profit margin for the bricks and sticks, if you will, in the hospital location, and we're about 50% profit margin in the mobile trailer. And kind of where I'm at is I'm doing both right now, and we're just kind of sustaining. So I kind of feel like I need to focus on one if we're going to stay at the same employee number

or hire more team members and try to do both. We've been kind of unsuccessful with hiring team members that are very well versed in the industry. So that's why I'm kind of faulting to keeping the staff works at and growing one or the other side of the business because I'm killed. So the 21% is your rent? That's correct.

Okay. Does that come out? to what you would pay and rent if you rented a building somewhere? Probably a little bit more. It comes out to about $8,000 a month right now. We're projected to do... A lot more. Yeah, approximately $435,000 in sales there this year

because we expanded January after we got out of a kind of a bad situation at a local brewery as well. Okay. So maybe what we're learning is if you're going to do a freestanding it needs to be freestanding, not hospital or brewery. That's kind of what I'm hearing. So one rule that I've had to learn, and I have to repeat this to myself

and to my leadership team occasionally, is that we do not design the company around individual people. We design the company, and then we put the individual people in the seat. gotcha and so i don't design the company over over a shortage of this guy that was helping you leaving gotcha he that that that that that vacancy should not cause your company design what should cause your company design is what you want to do and then you staff it or and uh what should cause your decision about whether to stay at the hospital is whether it's a good deal and it sounds like is a really questionable deal, just on the surface.

It sounds like you, you know, so it could be that you say, okay, we're going to shut down and, you know, this is our reason, our time to exit, and this guy leaving highlighted the fact that this was a questionable deal. Gotcha. Okay, then, so we're going to go all in for now until we can restaff, and we can't really do another brick and mortar location,

standalone that's not a truck. not a food truck or trailer, until we get one that is not dependent upon another landlord, like a brewery or a hospital. I just want to get a building that we can operate a restaurant in and pay rent, which is a lot less than, probably a lot less than $8,000 a month, I guess. I mean, I would suppose. There's a lot of action around Asheville with breweries for sure. And it's a popular place right now.

and it's a beautiful town, and so there's a lot of, you know, a lot of activities. So the rent in certain locations could be outrageous, just to rent the shell, you know. But anyway, so what I would probably do is if you're going to pull back, pull back with the idea that the next time I'm going to take two learnings into the next deal, and that is I need to be standalone, and I don't need someone, I don't need to take on a partner because I'm using their location, which is what the last two deals were. Right, right.

I just need to be a landlord and pay them rent, and then I'm going to make my money. And then the second takeaway, the second learning is that I've always got to build the business and then fill the seats, not arrange the seats around who's here. Okay. Because I've done that a couple times. I almost create an unusual arc chart because there's this talented person, and then like a year later, they leave. and now I've got this weird org chart. And so what happened was,

was the wrong thing was determining the direction of the business and the way the business functioned. And it was, now, the people do need to cause it to happen, but we don't, you know, say, well, we're going to have a position X over here just because this person can do that. No, no, no, no. We have position X because we need position X done.

And then we find the person, oh, wait, There's one here. Good. We can put them into that. But that's how we go at that. And I guess the third leaning is, learning is, you talked about the shortage of help and people that know how to do proper North Carolina barbecue, which means you need to constantly be working on your bench depth. Okay. You need some people riding each end of the bench, some ready to go in the game and some working their way up to get ready to go in the game. And so when somebody steps off, you got your next player step up.

Okay. It's the Nick Saban thing when he was coaching Alabama. You know, we just reload. Gotcha. They leave, we reload. Because he had bench so much bench depth, and that's how you had so many successful teams in succession for so many years. And it was just, they just reload, reload, reload, reload.

and so, you know, you want to be a goof off as a quarterback or you want to take off early and go into the draft as a quarterback? I hate that, but I got six sitting here behind you waiting to go, you know, and that changes your attitude about this whole thing. Because I don't want you shutting something down because somebody left. Right. But not, it's not enough that is fun. It's not. I hate crossing the threshold of the door. Ah, there you go.

There you go. And part of the reason you and I do this kind of thing is we should, we own it so we should actually like it when we show up. Right, right. Hey, man, you're killing it. I can smell the barbecue from here. It's amazing. Well done, sir. Well done.

That's a good series of questions and a good learning for our audience as well in the process. That's how that goes down. So very, very well done. Hey, folks, remember better a weary warrior than a quivering critic. 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.