EntreLeadership - Our Business Growth Is Creating a Major Problem

Episode Date: February 17, 2025

Today we’ll hear about:  A business owner who’s concerned about outgrowing his current space  A man looking for advice on structuring a partnership  The reason why Dave Ramsey believes the customer isn’t always right  A CEO looking to attract new customers    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.  📖  Build A Business You Love Pre-order: https://ter.li/4zfr52    Offers From Today's Sponsors  NetSuite: https://netsuite.com/Ramsey  BELAY: https://www.belaysolutions.com/entreleadership  Payority: https://www.payority.com/entreleadership  Trainual: https://trainual.com/entre    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. If you want to submit a question, email us at Entreeleadership.com slash ask. And just go to that portion of the website, rather, and we can, of course, get you signed up there. You can leave us a voicemail at 844-944-1070. That's 844-9-4-1070.

Mike's with us in Dallas, Texas. Hey, Mike. Welcome to the Entree Leadership Podcast. Hey, Dave. It's a pleasure to meet with you or speak with you today. You too, sir. What's up? Well, I own a commercial Christmas decor business

that leases those big mega-Christmas trees and all the big decor that goes with it and we do the big airports and casinos, hospitals, town centers. You've probably seen a lot of that stuff. But we have five full-time employees, and we ramp it up to about 50 during the holidays. Last year, we did 1.3 in revenue, and this year we're on track for about 1.8. And we currently have no debt on the business. But what we do have is very little space, and we are busting at the scene, because when all that stuff comes down, we have to store it, we're running out of space.

currently lease three different warehouses, but it's really inefficient because of the locations. And we're wanting to build our own, but we don't want to go in debt to do it. And we're kind of looking for a little guidance on that aspect. Okay. Well, here's the thing. The business is profitable. You're also considering going into the real estate business for no apparent reason. It's not necessary to run your business that you own the land.

It's just always appealing to own real estate for most of us. I like real estate. And there's no requirement, though, that you own property to be successful in business. The business can lease throughout the perpetuation of operating. So the first thing I would do is don't get yourself in a real estate transaction that cramps your style, that the real estate starts telling the business what to do is to the business telling the real estate what to do. An example would be, let's say you bought a warehouse today

and you had the cash and you paid cash for it, did it properly, that would house everything you have today, but no more. Well, the first time you get ready to grow, you're going to have to go lease something in addition to what you already own. Sure. Because you'd be full. even if you bought something that was a little bit bigger, when you fill it up, you're going to outgrow it eventually,

or you're not growing. And so you're going to end up at some point, either, you know, making so much profit that you can just buy real estate and not think about it, or you're going to have real estate starting to, the ownership start to constrict the proper operation of the business. I'll give you another example that's not in your industry, but where I see it a lot with entree leadership folks.

The restaurant business. A person will have a good restaurant operation. They'll buy a building in the proper place, a good location, and 15 years later, it's no longer a good location. But they refuse to move to the good location for the good of the restaurant because they own this piece of dirt and bricks and mortar. So the real estate begins to tell the business it doesn't need to move

when it does need to move. So this is the kind of things you can get into when you mix real estate ownership with a small business operation. Not saying don't do it, I'm just saying be aware. So all of that speech to say, what would I do in your situation? Ah, there we go. Now, what I would do in your situation is I would find a good, large warehouse. that is exactly what you want where you want it, and I would lease it.

And I would try to find a good large warehouse, larger than what you need, and lease it with the option to purchase it sometime in the next five years. That particular scenario seems to be really tough in this area. It's tough everywhere. Yeah. You have to find an owner who wants to lease, but is also willing to. to sell. Usually they want to do one or the other. I found it many years ago when I bought the original building we moved into the first time I did this. I leased a building for five years.

I closed on the building at the end of that. But I had to talk that owner. He had an empty building. And we were only going to take half of it as a tenant. But I talked him into it because of the, you know, I just kept shopping until I found somebody that was a motivated seller. And actually, what he was really looking for was a tenant. But in order to get the tenant, I had to twist his arm and go, I have to have an option to purchase. I don't have the money or I would just offer you to money today. So you don't have to worry about my option right now because I can't do it. Boy, by the time that five years went by, though, I scratched every nickel together and closed on the deal because it was a great deal.

And then that building, we outgrew it. And I got constricted like I was talking about earlier. So I've been through what I was warning you against. So, listen, I would rather you rent the right thing at the right place and then just move every five or 10 years to the right size and always be a renter than going to debt and buy something and be trapped in it. Sure. So it's just more flexibility for the business. The business gets to do what it's supposed to do. And rent is not your problem.

You've got other problems that are opportunities for profit much more than doing away with the rent of the warehouse space. Right now, what you've got, you just got a bad configuration of everything you're renting. It's in bad spots, and it's split up all over the place, and it's inefficient. If it was just all in one lump and you were renting it, you probably wouldn't even have bothered with this discussion. Well, probably wouldn't. You're right. Yes, sir. Yeah. So that's what I'm going to do. First, I'm going to find the right thing to rent. Then second, I'm going to keep shopping and shopping and shopping. and I'm going to propose absurd things to the owner.

Now, if one of the owners, if the owner, a lot of warehouses these days have been bought up by reits, and you're not going to get an option to buy with a reed. They're not going to do that, not to get a tenant. They just want a tenant. But if you can shop around, oh, it's got to be is safe and dry. It doesn't have to where it is, other than proximity to your main customers,

doesn't matter. So you don't have to be in like, the rodeo drive of warehouses, you just got to, you could be in a dumpy into town as long as it's safe and it's dry and it doesn't flood. You know, I mean, it's basic stuff. And it could be an old warehouse. It could be something you have to put some money into because the guy that owns it doesn't have any money. And I did that. I put 300,000 intended improvements into that other building. I got reduced rent for that and I got an option to purchase. Because he didn't, have the 300k to put into it, or he was too tight to do it, one of the two.

Probably the second one with him, but he's a good guy, but man, wow. So anyway, that's the thing. That's how I would look at this and a really, really, really, really good question, sir. Very well done, Mike. Congratulations on all your success. I'm Dave Ramsey, your host. Do you own your own business or is it owning you? What if I told you we have a proven system that helps you get back the freedom

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Ben is in Fargo, North Dakota. Hi, Ben. Welcome to the Entree Leadership Podcast. What's up? Thank you, Dave. I am the owner of a civil engineering firm up here, and I have seven full-time employees. Last fiscal year, we did $2 million in gross. Way to go.

And thank you, sir. About a year ago, just a little over a year ago, the current CEO of the company passed away, and I was a 10% shareholder at the time, and I was the VP. He was the only other shareholder. and I became the only shareholder in the company and took on leadership. I'm at the point where I have a coworker who's been with the company about seven, eight years, and I'd like to bring him on as a partner in the company. Why?

But I'm sure for legacy for keeping the company going in the future. How old are you? I am 41. So why do you need a partner to keep the company going? it's also to keep him in the company being a professional firm he's he's pretty easy for him to step out and start his own firm or to join another firm as a partner and it's a way we keep skilled engineers who are at the top of their game and keep them in the company all right so you bought out the family when the other guy died yes sir. And you own 100% and you're going to gift or sell a portion of your ownership to this one person who's been with you seven years? Yes, sir. Okay. And how much? What percentage are they going to get? 10%. And what are they paying for that? That was a part we're working on right now. And that's part of why I'm

calling. Previously, the amount of shares in the company and the value of those shares has not changed since the late 70s. And that share is what we have for retained earnings, which has become an issue for having working capital in the company. And that's where I'm trying to change that moving forward. Today you own 100% of the shares. you can change the valuation to whatever you want to be.

Yes, sir. And the retained earnings is yours 100%. So why do you not have access to it? I do have access to it. Okay. So why is it an issue? The retained earnings are not an issue. You have access to them.

And the valuation of the stock price is not an issue. You can change your share price. Just recalculate it. Recast it with your CPA. It's not hard. No. It comes into handling retained earnings. under a partnership.

And my question comes in as to whether to have that as shares or have it sitting as cash. And I was seeing an issue with cash, it can be an issue as we get down the road. Retained earnings by definition is cash. It's not shares. Correct. You can't have retained earnings and shares. The shares end up putting the money into the business would end up being working capital for the company.

Oh, you're saying when he buys into the business to buy his shares that money. Is that what we're talking about? Right. And, yeah, just dealing with that in the future, and especially when we do profit sharing distributions and needing to increase working capital. Okay. How much in retained earnings do you have today? Currently, it's the last fiscal year's revenue, which is about.

about $400,000. So you're sitting on $400,000 cash in the business? Correct. Good for you. Okay. Then if he were to buy into the business, you're going to charge him for $10,000, $40,000 cash for his share of retained earnings. And you're going to charge him for his shares in addition to that.

Correct. Okay. So then he owns $10,000. percent of retained earnings from that point forward. Correct. And distribution of profits will be 10% to him, 90% to you. Yes. So what's your question?

We're looking at increasing that retained earnings in the future and using the profit from the company to do that. Yeah, that would be normal. And if you did that, that would be 90% on your back and 10% on his back. So if you make $100,000 to the bottom line and you say, we're going to put all of that into retained earnings. Effectively, he's putting in 10 and you're putting in 100 because you didn't distribute it. Or you're putting it 90, he's putting in 10 because you didn't distribute it, right? Yes, sir. So it's all just divvied up by the percentages. Okay. Yeah, and I was just looking at

just making sure I was looking at different options on how to make it make sense for any partner that was in the company for understanding how that retain earnings. Well, each person that buys in would buy into, at the percentage that they're buying in, would buy into the percentage of the then retained earnings. Two years from now, you might have $600,000. And if another person wanted to buy $10,000, it's going to cost them $60,000 plus share price, right? Yeah, that makes sense.

Yeah, it was just a different way to approach the issue. I just was trying to get your thoughts, because I'm sure this was something you had considered. No, I don't have partners. I don't have any partners. at all. I've not considered it for five seconds, but it's just a math equation. And what you're talking about in a professional organization, like a doctor, a law firm, a medical firm, NES engineering architects do this a lot too. It is a professional partnership.

It's not that unusual. Now, here's the thing. You need to find a template, Ben, for, and you can probably find one with some of your, some of the, find some of the, find some best practices template for the partnership agreement with some other engineering firms. But here's the things you have to make sure your partnership agreement covers. We call them all the Ds, okay? Death, what happens if he dies? Well, you've experienced that. You've got to buy the guy out, right?

But we need to spell that out. Disability, what happens if he's not able to work? Can he remain a partner? No. he gets bought out probably in your scenario, but let's find a template and be an agreement to that. Drug use. I'm going to fire his butt.

He's doing cocaine. Now how do we get him out of here? And what does that cost us? Default. He won't do his part. He doesn't show up at work anymore, but he still wants to be an owner. I just don't like disinterest.

I want work-life balance. I don't want to work anymore. Or some kind of bull crap, right? And so what are you going to do in that event? divorce you get a divorce what happens to his shares in the divorce you need to state in there that it only can be owned by a working member of the firm thus the ex-wife doesn't end up being your partner god help you right so you need to cover all of these eventualities in the partnership agreement otherwise they're going to happen and you're going to have a problem

But if it's already spelled out exactly what the buyout formula is or what the process is, how the calculation is done, and it won't be on 1972 share price either. You need to update your share price annually. You go back and recast and recalculate your share prices and reset them for purposes of executing one of the problems in the partnership agreement. He decides he just wants to leave. You want him to leave. what's the calculation? I don't want a negotiation at that point. I want to preset math formula

based on a percentage of retained earnings and based on share price at the time with the agreement to reset the share price every 24 months or whatever the number is. And so he knows exactly in the eventuality that he needs to leave or dies or is disabled or whatever. Here's how it's going to be calculated and you know. No surprises, no negotiation. I'm not negotiating with the divorce attorney. No thank you. No thank you. It's a bad thing. Now, the valuation of his shares may come up in the divorce, but we're going to lay out exactly what can occur here, what can't occur, who can end up being an owner and who can't. I have a friend who is a partner in a large architectural firm, went through a divorce, and he was very happy

that he's a partner. He's a big firm. that he was very happy that they had a very clear set of documentation of who could do what in the event of a divorce. And so it was never in play that his ex-wife was going to end up with his shares of his decades of service to that professional organization. Now, the valuation did come up and enter into the split when they split the goodies up. But he didn't lose his partnership position in that. So anyway, all that to say, you need to do all that stuff, and then you just need to lay out a math formula,

with or without retained earnings, but it is fair for them to buy into the retained earnings. They shouldn't get 10% just for share price of your $400,000. And if you try to say, okay, everything after this you get 10% of, then you've constantly got this other $400,000 hanging on to the math formula along the bottom, I mean, it's always recalculating and shuffling, and you're always dodging the bullet around that. So I would just have him buy into it if it was me.

That's how I would lay it out. So interesting discussion, Ben. And I would avoid this as long as I can. Put it off as long as I can. I wouldn't just automatically assume this is how business has to be done. Because as you can tell from our short discussion, this is a freaking barrel of fish hooks, dude. This is the Entree Leadership podcast.

If you want to help us out, we would appreciate it. Click follow on this show. Subscribe, share. Leave me a nice five-star review. All those things help the algorithms and push things along. A bunch of you have been doing that, and we really, really, really appreciate it. Our next question comes in by video.

Let's check it out. Melissa Johnson, Midwest Insurance Corporation in Nevada, Iowa. And how long have you been in business? We've been in business for 41 years. How many team members? We have 15 team members. And what's your annual top line revenue? We are $2 million in our top line revenue.

Do you know which stage of business you're in? We're in the peak performer stage of business. Living the values is a big part of what we do with our culture. And our team's getting beat up day after day. And so for four years now, we've had the issues. And so if you think about your home and auto, a lot of people think insurance is just a given. Like you have to have it on your auto.

You have to have it on your home. So how can people not provide you with that coverage? How can they pull out of the state? And so they're getting beat up every day and, you know, really taking the brunt of it when they're just the messenger. And so trying to have that conversation and be empathetic, but also be like, I still need you to live the values. And I need you to treat every single interaction as a new interaction that, you know, they don't know that you've heard this seven times today. And the last four people yelled at you. So how do you handle that?

And how do you kind of help them with the tools so that they can respond appropriately? Lance? Well, we have a rule at Ramsey. We work with people, especially in the money space, many of which are struggling and they're frustrated. And having money problems is a huge stress point, obviously. And so sometimes folks don't control their emotions and get confused that they can direct those at us. So we, you know, some customer service, departments in some companies, that's Greek for you get abused all day long. Nobody wants that job. And we've got, you know, Ramsey Concierre where people call in and talk to us about

almost anything. And we try to help them with our different ways of serving someone that's struggling. Maybe they've got a foreclosure. They're scared. They're afraid they're bankrupt. They're looking at a repossession or they're just fighting with their spouse about money. In all of those cases, they're angry, but not at us. And so we've trained our team, and it's been very, very good for morale.

First, we want to be kind and we want to be calm. The louder they get, the quieter you get. And at some point in the conversation, wherever you decide that you're starting to be abused personally by this frustrated, angry person, you have to stop them and say, okay, at Ramsey, we don't do this. If you want to be frustrated, I understand, but I'm a person over here, and I'm trying to help you. I did not personally cause your situation.

Ramsey didn't personally cause your situation, and we'll try to help you, but you don't get to yell or scream or cuss, and if you do, we're going to. to end the call. Now, how can I actually walk through this with you as two friends working on a problem? And if they resume the screaming and cussing, just hang up. I don't have to talk to them. And your people don't have to talk to them. You say, you know, I tell you what, you call me back when you can get control of your emotions and hang up. That's simple. No one does that in corporate America, they just put up with the public's bull crap and the public is out of control. We call them two percenters.

Two percent of Americans should be institutionalized. They're nutty. Out of control. Need coaching. Need counseling. And we're not, you know, spend the money you were going to spend with us on counseling. You have a rage problem. We're not going to, I don't care if you're my customer if you're going to be a butt.

And so hang up. And you can do that. well i don't know it's zone zone listen no one anywhere requires you to create a toxic environment where abuse is their job all day long that's a ridiculous scenario and so i would if i'm you i'm going to look at my team and say i love you so much i'm not going to require you to do that now i don't want you to be mean to them and you don't cuss back at them and yell back at them that's not the point we're not going to we're going to matter of fact we're going to de-escalate like i said louder they get, the quieter we're going to get, ma'am, we're going to have to end the call

if you can't get control of yourself because I'm here to help you, but I'm not your pounding board. I'm not your whipping boy. So if I can help you, let's do that. Otherwise, I'm going to have to just end the call. Do you hear the dial tone? There it is. And I discovered a long, long time ago, and I discovered what it did to the morale of our company accidentally just because I'm a redneck hillbilly. So I was walking through the lobby where we had at that time an old-fashioned receptionist desk, and we had these things on the receptionist desk called telephones in those days. And she would pick up the telephone and talk on it with a headset. And the young lady that was our receptionist, she'd only been there about four months,

was crying talking to this guy and tears are running down her face. And I'm like, what? I said, just, whoa, whoa, whoa, whoa, wait my head. Just put that person on hold. What's going on? Are you okay? You know, this is the third time this guy's called. He just yells and screams and he just calls us names and he says,

Ramsey's awful and I just can't take it. And I said, oh, okay, hold on. And I just picked up the handset and I said, hey, bud, here's a deal. You're fired. This is Dave and you're fired. He goes, what do you mean I'm fired? I said, you're fired as a customer. Whatever business you were doing with us, take that money and go by counseling.

Don't ever call here again. I don't want you in my database. I don't want anything to do with you. I want you to stay completely away from our people. You don't call here and abuse people anymore. Do you understand? He said, you're kidding. I said, do I sound like I'm kidding?

Don't call here anymore and be a butt. And I hung up. And she looked at me with these wide, like I had invented fire. You know, I didn't know you could do that. I said, well, I own it. I definitely can do it, and I've just deputized you. You can do that too.

You do not take abuse on the front desk. It is not your job. It's not like chief abuse acceptor is not your job title. That's ridiculous. Somebody's calling in, sweet little receptionist lady sitting there just chewing her butt out

because he has an emotional problem. Well, give me a break. I'm sorry. Go get your root canal somewhere else, buddy. So, and you know what? The weirdest thing, I did that, that's the only time I've ever done it in 30 years of run this company.

But that idea that you are deputized to retain your dignity spread like wildfire through our company. And our people are not mean to our customers. We're kind to them. We love them. We want to help them. But we're not going to engage in a toxic out of control, freakazoid relationship with a customer.

we hang up on them and the morale oh wait a minute Dave values us more than he does somebody that's out of control we would we'd rather forfeit the money than put up with that that's what I would do and I think you're going to see your morale sore and just you know and then you've got the ability to just be kind and sweet to the calls you take because you're going to take some bad calls in your world right now I don't disagree with that it's the environment you're in and we take some bad calls that's fine we're that's part of what comes in here. Some of them are sad, some of them are angry, some of them just rip your heart out, you know, and go through all that stuff. That's part of, you know, dealing with folks. You're solving a problem for them. So sometimes they're emotional when they've

got that problem. So be kind, but at the end of the day, we're going to get to a certain point and say, you know what, if we can't get your volume and your language under control, we're not going to be able to have a conversation here and I'm not going to be able to help you. I sure hope we can do that, please. So you want to take a minute or you want to take a minute and call me back after you have a minute to calm down? Because we don't, we have a rule here at Ramsey. We don't, we don't do abuse and you're being abusive. You know, and just, and if they just keep on it, they think they have the right to because people are entitled twerps out there, some of them. So just hit the old hang-up button. And it just solves all kinds of. It's like this immense.

power that you suddenly have. And with that power comes dignity and morale shoots up. I know a guy that works on automobiles and he's kind of a, he really should be a little bit nicer, but he's really good at fixing cars. And he's got a great reputation and he's not mean to people, not unkind to people, but he really doesn't suffer fools. He's got a little auto repair shop, does a great job. And I was laughing with him one day. He started telling me what he was doing. He said, I have a stack of my competitor across town's business cards and the other

auto shop. And he said, when I get one of these two percenters, when I get one of these people that's out of control, Ray Jollic, I don't want to deal with them. I just say, you know what? I think this guy here can help you. And he said, I send all those nasty customers to my competitor. That's mean. But it's also funny.

I don't care who you are. So that falls in the same category, Melissa. I'm sorry you guys are facing a tough time in your industry. We've been watching it. We work with P&C and we know what you're dealing with. And it's kind of ridiculous out there, honestly. I agree. And I agree with the frustration of the customer.

But that doesn't mean they have the right to abuse your team and destroy their morale and take their dignity. We're not going to do that. This is the Entry Leadership Podcast. Well, thanks for hanging out with me today. I'm Dave Ramsey. This is the Entry Leadership podcast. If you're looking for theory, you're in the wrong place.

I make payroll. In order to do that, we have to deal with actual tactical things that work. We get up, leave the cave, kill something, and drag it home. This is not a theoretical discussion. I don't mind having a theoretical discussion with you, but I'm a guy that gets it done and has for 35 years. That's how we got where we are at Ramsey. and we're here to help you.

If you want to be a caller on this show, call 844-944-1070. Leave us a note in the voicemail. Team will holler back at you and get you set up to be a caller just like Shea in Charleston, South Carolina. Hi, Shay, how are you? Hi, Dave, how's it going? Better than I deserve. What's up? Not much. I got a question for you.

Let me give you a little background of my business first. We do managed IT services and managed cybersecurity services, so kind of outsourcing those functionalities for different companies. I'm the CEO. We have about 11 employees, and our revenue from this past year is about $1.7 million. Good for you. How long have you been open? Just about three years, a little over three years now. Way to go, man. Congratulations.

Thank you. I appreciate it. So my question is about sales, really. So we've been doing, you know, obviously pretty well, but most of that stems from either people coming to us or networking, word of mouth, that type of stuff. We've tried different outbound sales services and some on our own as well, like reaching out via email campaigns and stuff like that. You know, I've tried learning as much as I can about it,

but so far we've been fairly unsuccessful. Most recently we're doing a search engine optimization campaign as well as a cold calling service. And those actually seem to be doing a little bit better, but still no actual conversions into business. And so I'm just trying to figure out how do we make a repeatable, reliable sales process that we can really put our pedal to the metal on. Very good question. I love it. Okay, so you come into a firm. What's your typical customer look like? What size of a firm is it?

It bears, it say, from like 50 to 300 users, like technology users. It could be more employees, but people who are actually, you know, laptops and what have you. Where are they located physically? In the Charleston, South Carolina area, or what? Actually, so we have probably about 30% of our customers here and the rest are kind of United Stateswide. Okay, so you do a lot of remote work? Yes, yeah. You're not physically traveling all over the United States to work on people's IT and cybersecurity, right?

No, we do occasionally fly out, but not very often. Right, only when big relationship or retain one or something like that. But, I mean, to do in the actual day-to-day wrench turning, you can do that remote. guys can check the security, they can log into their server or their cloud or whatever it is and make sure everything is going. I got it. Okay. And so you have, in the 1.7 about how many customers do you have? Probably maybe 10 to 12, something like that. So these folk are paying you a couple hundred thousand bucks a year? Yeah, you got it. Okay. So they're big sales. Yeah, that's not necessarily an SEO thing. All right.

SEO is much better for consumer stuff. It is B2B. You can get some stuff B2B, but that's a big ticket item. So, okay, so you have, let's call it six or seven customers at 200 to 300K. And what I'm developing here is what we call in marketing a persona. what is the demographic look of the customer? And so it's a customer with 50 to 300 team members anywhere in the United States, one third of the time they've been in our immediate area, but we can service them adequately and excellently anywhere in the U.S. And they're paying us to 250,000.

So that means that they're either have a lot of profit, margin or they've got a lot more team members than the 50 or 300 that are non-technical. Because, I mean, if they're paying you 250,000 and they're still profitable, and they only got 50 team members total, that means they have a highly, a huge margin on whatever they're selling. Does that make sense? Yeah, can I throw one thing in there? Sure, help me. Yeah.

So on that revenue, I'd say, you know, maybe 40% of that, maybe 50% even is projects. And those customers do span much large organizations. Ah, okay. So it's not necessarily all ongoing contracts, maintenance contracts. Exactly, yeah. I thought you had maintenance contracts on the IT and on the cyber that were ongoing. Instead, you've got some one-off projects. and what percentage of your 1.7 is one-offs?

I'd say probably close to 50% of it. Oh, okay. Oh, that does change the numbers then. Okay. Yeah, sorry about that. That's okay. What is it you're wanting to sell, projects or ongoing service? That's the thing. We really want to do more of the ongoing service

because it gives us kind of that... It's recurring revenue. It's like a subscription. It's brilliant. Software as a service in a sense, yeah. Yeah. Yeah, much better for you. You don't have to go and get a new customer every morning.

You got it, man. Yeah, I like that. I'm with you. All right, I love subscription recurring revenue when we can make it work. Number one, let's say out loud, these are two very different products with two very different goals. The project-driven product is the goal is short-term revenue until we can get so much subscription revenue that we don't want to do those anymore. So that you probably can SEO into a lot easier than you can into a subscription. The subscription stuff is probably going to come more from referral.

So I would go to my existing customers and regularly have a system to ask the existing customers how to find more people like them, the subscription ones, okay? The ones buying the ongoing service. And, you know, who else in the business? can you refer me to? I need some referrals. I'm small guy. I'm trying to grow this thing. Would you help me out? You know, I'm not going to pester them.

I just, you know, if you'll just introduce me to two people, it would be a huge favor. We would really, really, really appreciate it. If you have one that ends up giving you three or four customers, send him and his wife on a cruise. Yeah. For sure, because it'll make you a zillion times more than the cruise costs. So say thank you if you get somebody that enthusiastically does that. but sometimes they'll just kind of go, yeah, you know, I never thinking about it,

but thanks for bringing it up because I was just talking to my buddy at lunch, and he was griping about it. He got hacked, and you go, wow, you need to call Shay. Okay. And increase the word of mouth by making it top of mind and by asking for the referrals. That's a sales system that I would lean into

first and foremost, because your best advertisement is a satisfied customer. It's much better than a banner ad. It's much better than a, a random email, a system or a follow-up or whatever else. Okay, that's the first thing. The second thing I would do, and I would use SEO for this, and I think you'll get a good ROAS on it.

I think your return on it will be sufficient, especially if you do it carefully. I would do some Facebook, but more importantly, I'd probably do some keyword Google purchases that help me fish exactly, in the pond where this size fish is. I'm not trying to get companies that have 15,000 employees. That's not your target.

And I'm not trying to get solopreneurs that are working in their living room and don't have any employees. That's not your target. So you're very specific with your keyword buys and don't try to sell your service with these keyword buys. instead use a lead magnet. And that is a free downloadable PDF the top 10 things mistakes people make when it comes to their cybersecurity. Or the four myths that cost companies

millions of dollars in cybersecurity. Or the customer is interested in this and is going to download this thing that gives them some information, but it also tells you they are a white-hot lead because they are concerned about the subject. And so, like for instance, in the real estate business, residential real estate business a thousand years ago, when the Internet was first started,

we taught real estate agents to do a lead magnet that was like 10 things to do to get your home ready to sell. And if you download that PDF, you're probably thinking about selling your house. Hello. So that's a white-hot lead then. That's not a warm lead. That's like, you know, who downloads how to get your house ready to sell? Not me. I'm not selling mine.

So it's got to be somebody's thinking about it. So the same thing in your thing. Somebody's got a cybersecurity problem. They've been hacked. Top four things to do immediately when you've been hacked or whatever. If you got a fishing scam going, here's what we're going to do. Or anything that's a buzzword in the cybersecurity world or in the IT breakdown world, you know, what happens when this is a business. you know, I don't know, whatever the common problem is that this size firm would face with an IT

problem that you can service instantly. And you go, okay, here's three things you can do immediately that relieve some of the pain and then call the doctor now that you stop the bleeding or the doctor. And also, in order to get the free download, of course, they're dropping you their email. That's what it costs them. And then you've got the ability to follow up. And obviously they have to have spam opt out and all the things to be legal on all that. But, yeah, that kind of thing. You need to be fishing in the pool with something and giving away something that is in the area.

We're not giving away candy bars. That's not the business we're in. We're giving away something having to do with that subject. Here's another one. Five things to look for when you're selecting your outsourced IT firm. or outsourced cybersecurity firm. And if you look for these five things, you'll get a good one. By the way, you fill all of those five things.

So, you know, you already found one. But, you know, how to properly... We do it with like six things you ought to consider when you're interviewing your financial advisor. And we'll put stuff like that out there, and, man, it just lights it up, you know? And so lead magnets with SEO that way, but you've got to be very careful with where you're fishing

or you won't get a ROAS on it, you won't get a return on it. And so, and it occurs to me in your world is probably not Facebook. Facebook, very consumer-driven. We run some Facebook ads on some of these things, but they're direct-to-consumer issues. And you may want to try to, you know, LinkedIn might be a place to land some of this stuff.

Actually, it is a place to land some of it. If you can figure out a way to run some of it in that. but that's the type of thing we're always looking to do it. So develop a persona. This is the target. And where do I find these people and how do these people shop for this service? And the first place you go is to your existing satisfied customers. And then after that, you go from there.

And I would build some testimonial videos and put them on your website of going, man, we got hacked and we were so screwed. and Shays guys came in, and they not only cleaned up the mess, they locked all the doors, and the cybersecurity team was amazing. It took 48 hours to stop the bleeding, and it took another four weeks to get it in place, and then they stay on top of it.

They're our internet cops, and we love them. And, you know, have somebody like me that doesn't know squat about what they're talking about, say that stuff to the camera, and then just post a bunch of those on your website, and, you know, that's another place, another way to get started in that. So, I don't know, it's just some ideas off the top of my head. Maybe not all good ones, but you can pick and choose as you want, and that's what we're here for. So very, very cool stuff.

Love what you're doing, man. It's a great business. Congratulations. Really, really like it. Very cool. Hey, folks, remember better a wary 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.