EntreLeadership - Should I Leverage Debt to Speed My Business Growth?

Episode Date: April 21, 2025

Today we’ll hear about:  An owner looking to leverage debt to rapidly expand his business  A businesswoman who’s trying to avoid bankruptcy after a costly mistake  How customer service defines company success  A father hoping to bring his kids into the family business     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   📖 Order Dave’s new book, Build a Business You Love: https://ter.li/b4kru2    Connect With Our 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!  📈 Grab ⁠Sales Gravy's⁠ free resource to help you hire and lead better. 📝 Use code ENTRE15 to get 15% off your first year of Trainual.    Listen to More From Ramsey Network:  🪑 Front Row Seat with Ken Coleman  🎙️ The Ramsey Show  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💰 George Kamel    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, go to Entreeleadership.com slash ask or leave us a voicemail at 844-944-1070. And we'll make you a caller on the show. That's 844-9-44-1070. Joe is with us and Joe's in Chicago. Hi, Joe. Welcome to the show.

Hey, Dave. I am such a huge entree leadership fan of everything you guys do. So thank you to you and your team for rocking it out. Thanks for having me on the show. Honored, sir. Thanks for being with us. How can we help? So my name's Joe.

I'm in Chicago. In 2017, I started a small chicken sandwich shop with a bucket of paint. We did it very modestly with $63,000. And fast forward to today, we've got nine restaurants, I have 158 employees, and we just finished last year at $12.9 million. Good for you. Wow. Congratulations.

Thank you so much. So my question is, and it's around my audacious goal, to open up 75 restaurants in the next 10 years. and what I've learned, and we've just keep dumping all of our cash back into the business, reinvesting it. Our cash flow only allows us right now to open up about one to two stores a year. And I know that will... Wait, you've got 15 since 2017. We have nine stores.

I'm working on my 10th one right now. Oh, oh, no, it's 158 team members. I'm sorry, I got it. Yeah, 1508. So you have nine stores now? Yep, that's correct. Okay. operating 70s week. We're working on our 10th one right now. I'm actually sitting in it on a vacant

restaurant. But our cash flow really only us allows us to open about two restaurants a year. We've tried to leverage a good relationship with our bank, our local bank, to do some bank debt to kind of use some line of credits. We've kind of realized, like with the restaurant business, not having a lot of assets that we cannot use bank debt. They just won't let us grow. So my question is how and what vehicle should we use to open up these 75 restaurants to hit my audacious goal for the next 10 years. Okay. Are you buying the real estate in each location? So we own four of the buildings right now.

So yes and no. Well, I mean, when you say you're cash flowing two a year, does that include the purchase of real estate or just doing lease whole build out? So preferably it will be leasehold build out, but we do own four of the buildings now. So we have done it. I mean, your plan going forward are you mainly going to be leasehold buildout? Yeah, the plan going forward is going to be leasehold. You have $13 million in revenue and you can only afford to do two buildouts a year? You don't have any margin?

We're about 10%, 12% profitable last year. So we do have some cash. What's it take to build out one? We're at about $300 to $500,000 a year. I mean, I'm sorry, $300 to $500,000 to open one. Okay, so, yeah, all right. Well, obviously, the more of them you have open, the more the cash you have coming in,

assuming they're all profitable. And so, I mean, if you had 18 open instead of nine open, you would be able to open four instead of two, correct? Sure, yeah. So in other words, it snowballs in your favor as it gets bigger. So you would borrow money to do the buildouts and accelerate beyond your cash capacity, accelerate your growth. That's the idea. Yeah, that is the idea.

Okay. Well, yeah, banks are not, the problem is that the leasehold improvements have no value in terms of collateral. So it does make sense that they're not willing to do that. And we have no answer. I don't, you know, you probably already know, I don't borrow money. Yeah. And so I don't teach people to borrow money. I'm trying to get my head around exactly what all you're considering here.

to try to come up with some kind of an alternative. So the goal that you have is beyond your cash. And so it might as well, instead of 75 restaurants, it might as well be 750. Yes, correct. I mean, it's the same thing. If it works for 75, it'll work for 750. And if borrowing into it will work for 75,

it'll work for 750. So my point is, is you pulled this number of 75 out of your ear. It didn't come from any thing other than it just sounded like a great thing to do. Well, a part of it was really around the 25 million EBITA mark. And at 25 million EBITDA, I really feel like we have a huge asset on our hands that is sellable, that we can really take care of our team. And then I started working backwards. I'm like, well, how do we get to 25 million EBDA?

And then I started looking at, okay, if we had 75 stores and we were 15% profitable. Are you, is your end goal then to sell it? Our end goal is to sell it, yeah. Okay. And chicken restaurants don't sell until you get to 25 million EBDA. Well, we would have a, at 5 million EBITDA, we would have a line of people. But I feel like when you get to 25 million at a line of, allows for the company to go public. It allows, there's just so many more options for us to

kind of, you know, go to the moon and back with that. A big part of our business, too, is I really want to grow our companies. We can grow our people. And there's a key, you know, it's been seven, eight years now, and there's been a few key players that have helped me get here. And I would love to set up retirement for them and get them, you know, cashed out. So a dream come true is when, if we are able to sell the company one day, is I can, you know, really take care of our team with, you know, life-changing checks, essentially. Kind of a light at the end of the tunnel for all of us.

Here's the equation that's bothering me. And so I'm learning from you. I appreciate the numbers, and you didn't pull it out of your ear. I retract my statement. You actually had a plan, so I stand corrected. The thing that's bothering me is, the more debt you have, the more risk you have, and risk equals that I don't get to finish the game.

Risk equals the thing hits the wall and the car is destroyed and you don't finish the race. That's risk. And the more debt you take, the higher that probability. Sustainability is increased dramatically sitting where you're sitting right now with zero debt. And so what I'm more, I'm more concerned with you living your dream slower and your dream completing than I am.

You living your dream faster and less lower the probability of a completion and getting across the finish line. And so, you know, it might be that it takes a little time, a little bit more time than you initially anticipated to get there. but by cash flowing it, the difference in our operation is it's not for sale under any circumstances. It's a generational operation. And so it changes the games. My friend Simon Seneca wrote a book called The Infinite Game.

And when you're playing a game that has a set set of rules with a set ending, which is what yours is, you play the game differently than you play if there's no end. Hours is running in perpetuation. And so the debt-free idea becomes way more important in my situation than it is in yours. You follow me? Oh, yeah. Because you're playing a finite game.

You've got a very specific end to this, not necessarily a time frame, but a set of numbers. And we have an exit planned already. And so it's somewhere between 5 and 25 EBITDA. and, you know, we might get more bang for our buck if we run it on up, but we might also get out while the getting's good at 12. So, you know, and you might make a huge pile of money and have still hit all of your wildest dreams. But, you know, so the thing that you're not considering,

in the language that you're using, it doesn't sound like you're considering, that the more debt you add, the more risk you add. it feels like you feel like that there's no downside to borrowing up to my eyeballs to run these 75 up well the way i was thinking about it is really each restaurant could be responsible for its own debt so we take 300 000 because they're not going to loan that restaurant money yeah totally yeah and uh and even even a jv or somebody comes in they're not going to do that they're going to package it because they're not big enough businesses to stand alone they're not credit worthy

as an individual store. And so, again, you're not going to be able to bank that. But even if you could, I'm kind of urge you to just slow down, do this a little bit slower and let it cash flow. You'll be amazed about how quickly you get there if you're not giving the bank some of your cash. Because, you know, we started from nothing on a card table in my living room 32 years ago.

I'm sitting in a building of $650 million. I paid cash for it. Wow. But, you know, it's 30 freaking years. I mean, I'm not, this is not 30 months, okay? And so it's, and they're, you know, but when COVID hit, I was not worried about my landlord or my bank foreclosing. Because I'm both. And I'm fairly friendly to me.

So, you know, so I always urge entree leaders when I was speaking to them to have their face on the cover of Slow Company magazine. not Fast Company magazine. It's not sexy, but you do get to finish the race. And I would rather finish the race with a bronze medal than come up limping and not finish at all. And so I'm more willing to go slow and steady and be the tortoise, not the hair. And I don't think you're going to do that,

but I just, I'm not wired to answer your question well because I don't believe it's what's best for you. So I'm going to beg you to cash flow this. And I'll grow it as you can, as fast as you can. And I'm fine living on beans and rice and throwing it all back into the restaurant. I've done that. I cash flowed every bit of this, and that means the money didn't go home. So, you know, that's the angle I'm going to take on the thing.

So, hey, thank you, sir. Give you some things to think about. You just taught me some things about the chicken business I didn't know. This is the Entree Leadership Podcast. If you want to grow your business in 2025, then you've got to grow as a leader. That's why almost 3,000 small business leaders have already RSVP to attend the Entree Leadership Summit. This May, 18 through 21, the Leadership Conference is the place leaders like you come to learn how to scale from the world's top business experts. We are running out of seats.

There's just a couple left. Platinum tickets are already gone. Preferer seats are gone. The standard section is filling up fast. If you're ready to scale your business with us, you need to get your tickets now. Come on over and join us at the Summit in Denver, Colorado this spring, or go to Entreeleadership.com slash summit,

and that'll get your tickets for you. That's the way to do it. And if you're listening on YouTube or podcast, just click the show notes. We'll get you going. Cherise is with us in Los Angeles. Hi, Sheree. Welcome to the Entree podcast.

Hi, thank you so much for having me. Sure. What's up? So I am a child care owner. Currently, I have about eight employees. Last year, our revenue was about $580,000. I was in the process of expanding, opening up my second location. Unfortunately, I ran out of money and created quite a bit of debt for myself. And my question is, how can I save my business without filing for bankruptcy?

So the other location is not open because you weren't able to complete it. What happened? Well, I pretty much just ran out of money. The building, I had to do a CUP on the building. Unfortunately, it took over a year to complete. In the midst of that, when I started renovations, the city did not release the permit on time. Started renovations, did demo. The contractor stole about $30,000.

thousand dollars from me. The new bids came in at a little over half a million dollars, which initially I budgeted 250, but at that point of having the permits released, I was already at 200,000. So I was already quite a bit over my budget. And I decided that I... So your budget was unrealistic? It was. Well, because I'm, it was a new area for me also. And my first location, I never did a build-out. It was already a child care center, so I was able to just go in and do minor renovations, spending maybe like 40 to 50,000. Where did the 250,000 cash come from? You borrowed it? I did. From the SBA. Lord. Okay. And I assume they have a lien on your home? No, there's no liens. I mean, I'm paying on them every month.

Is there any way we can scratch and claw and finish the other location and get it open? There is no way for me to open it. I am also in the process. I told the landlord, unfortunately, because I can't get any additional money, any more lending. So I reached out to the landlord and let them know that unfortunately I'm going to have to walk away from the lease. And so I'm currently negotiating that with a lawyer trying to break the lease, but they do not want to let me out of the lease until he can find a new renter. And the building is in disarray, I assume.

Yes, it's one is a historical building, and it needed quite a bit of work. We had to do plumbing, adding bathrooms, kitchens, the full playground. It's pretty intense. And so the other location is. What kind of money does it make? So last year we bought in about $580. You do know, you should. It's pretty consistent.

The reason that I was trying to expand is because I can't have any more kids. I'm maxed out at that location. Yeah, what's the profit on your $580? It's about $230,000. And so you pay taxes on $230,000 on that location. Yes. And the SBA is personally guaranteed. Yes.

So what do you live on? What does it take you to live? What's the minimum your household budget can exist on? About $10,000 a month. You're single? Yes, I am. And you need $120,000 to live? My mortgage is pretty high here in California, so yes.

What are you owe on your home? Um, actually I just bought it. So I owe about 600 still. What would it bring? What do you mean? If you sold it, what would it bring? Um, right now it's only showing the value of about 48,000, so nothing. It's, it's, it's in a new development. The development is not closed out yet. No, that's not what I asked. You're living in it, right?

Yes. If you put a sign in the yard, how much would the price be? about seven probably about 750 so only and you owe and you owe what 600 it's a little over 600 yeah sell it use the money and settle with the SBA and keep your life but it's not a lot of value in the home yet if you sell it for 750 and you owe 600 that's 150 000 minus expenses you're going to put 100,000 in your pocket. And you use 100,000 and you go to the SBA and go, you people are screwed, I'm getting ready to file bankruptcy, I'll give you 100.

Okay. And you start working a settlement with them and or you throw the money at the SBA loan and then you use your $250,000 income while you go rinse yourself with one-bedroom apartment and you get this thing cleared up and don't lose your business. This business you currently have, the first one, is very valuable. Don't lose that to you. your stubborn pride over a freaking house. Okay.

It's a very valuable asset. You're a single lady that has a $580,000 gross. It's netting or $250. You can rebuild with those numbers, kiddo. You can do a lot of things over five years with those numbers, but you've got to get this monkey off your back, and it's a freaking gorilla. So how would I file bankruptcy without?

You don't file bankruptcy. Oh, okay. You sell your house. You take the $100,000. and your cash flow, and you negotiate something with the SBA and get rid of them, and now you're sitting free and clear in a one-bedroom apartment, and you make $250,000 a year, and you rebuild your life, and you go, oh, next time I get ready to expand, I probably won't.

Okay. And I certainly won't do it with that again, will we? Oh, absolutely not. Never. Worst decision ever. Yeah, you've learned your lesson. You stepped out, you got way out over your skis, and the SBA pushed you over. Right.

If you'd done this with cash, it would suck, but you'd be okay. But instead, now you've got the mistake and now you've got to write payments checks for the mistake. Ouch, it really hurts. I'm hurting for you. I've been where you are. It's no fun. But you got out over your skis. You bit off more than you can chew, as they say, right?

Absolutely. Yeah, you were way past your competency, past your knowledge base when you ran into this, and the SBA financed that. and that's why the SBA sucks. People all stay away from them. They're idiots. And so this loan should have never been made. You weren't bankable. They should not have made this loan because you weren't competent to do what you're trying to do.

And they should have sniffed that out if they were good bankers. And I'm not picking on you. I'm not competent to do a lot of things. But you don't finance stuff I'm not competent to do. So that doubles down on the pain. So, yeah, you dump your house and you restart and you use that money and your wonderful cash flow out of your other business to survive and turn the corner on this. And you negotiate your way out of this lease in the process. Yeah, continue to work on that.

Okay. Yeah, because I think that's your two things hovering over your head. The two knife over your head is the SBA and the lease. But you get those things done and you use some of the cash from the house to do that. Oh, by the way, we also got rid of the high payment that you can't afford right now because you're broke. right yeah and so this is painful kid i'm sorry i'm sorry to tell you all this mean stuff but i love you and i want you to turn the corner on this because filing bankruptcy you're gonna i don't know what your um homestead exemption is in california but you're probably going to lose the house anyway

because you probably got enough equity that they're going to pull it um and you have to talk to your chapter seven a bankruptcy attorney to find that or you can look it up online what's the homestead exemption in california i don't know off the top of my head but and they're probably you're probably going to lose the business, which make, you know, they're not going to let you keep something that makes $250,000 a year and them not get paid. That's not how bankruptcy works. All the assets go to the middle of the table. They offset the liabilities and whatever doesn't clear, they get zero on, but you also walk out with zero. And so this is a very complicated, I mean, you can put it in a chapter 11, but it's not going to solve your problem because you

still got this crap hanging over your head. You're trying to hang on to too many different things. If I'm you, I'm cutting bait on the house, and then I'm going to play hardball with the landlord and just go, I'm not paying you. So good luck with that. And call me. And we'll talk about how I'm not going to pay you. And because I can't pay you. I don't have any money. And then call the SBA and go, okay, what can we settle for, pennies on the dollar? Because this whole thing went belly up. because you guys made a loan that you should have never made in the first place, and you just about bankrupted me. If I hadn't had my house, you would have bankrupted me and clear it,

and just bust them in the nose, too. Gosh, honey, I'm sorry. This breaks my heart for you. You work so hard to get there, and then this one thing flipped you on your head, and it's going to take you like 36 months to recover from it. But the good news is the lessons are thorough. I remember them.

I learn mine, and I don't borrow money. and I got no use for the SBA in the process. You can tell that, so that's how this works. I wish I had a magic wand away for you, but mine's a little short on batteries. That's the best I can do to help you. This is the Entree podcast. Hey, guys, welcome back to the Entree Leadership podcast.

I am joined in studio with one of our speakers at this year's Summit event. We're going to be up in Denver, Colorado, and it's going to be incredible May 18th through the 21st. If you haven't gotten your tickets, I'm sorry, you should have. You're not going to get to come. Maybe there might be a few left. Get in touch with us, and we'll try to set it up. One of our speakers is Elizabeth Dixon, and she's the CEO of Trillet Foundation,

and the founder and president of slumber sleepwear, and was a leader in the hospitality and service at Chick-fil-A. She's written two books, The Power of the Customer Experience, and the Strength of Purpose. She's going to be talking to Summit about the power of, the customer experience, how important it is for the folks on the front line, among others, just to get the idea that the customer not only needs to do a transaction, but have an experience, right? Welcome. Thank you. So good to have you. It's great to be here. So how long were you at Chick-fil-A?

20 years. Oh, wow. Okay. So you were right in the thick of it as they were actually building what is, you know, an iconic customer experience, for sure, to where all of us that look in from the outside and of course we've got at ramsie a bunch of connections to the internal group there as well but just looking in from the outside it's pretty impressive and so how did you guys build that and and what did you see is the the key elements to create that because it's not only did you build it but it's replicatable yes where every store that i go in i get that experience consistency well it started before my time in hospitality at chick flay mark mortacus was the gentleman who is task to really create what we called hospitality. And Dan, who's now chairman and then Truett, who

was our founder, they really thought it was in 2008 when it was a really hard time. They really thought it could be a moment to differentiate. And Hort Schulte, who was a great friend of Chick-fil-A, had said, you know, you guys need to elevate yourselves. He had told Dan at the time, you guys are the best of a lousy lot, basically, queen of the pigs. And so it was a chance to say, what if we could could use what actually makes us special, which is our people, and differentiate ourselves in this quick service fast food space. So it was before my time. I came once a lot of it was established. So you were, but you were still the implementation, because we've got 140,000 team members, and you're trying to get them to create a customer experience. What's the magic sauce to doing that?

Well, a lot of the magic comes down to the operator who's running the restaurant. Like, that, is the magic. We would have so many companies come and say, what's your training program? Can you just give us the training module? It's like, no. I mean, we can't. But it starts way further back with mindset, with culture, with knowing how you truly want to be differentiated. So for Chick-fil-A, the local operator model is a huge piece because that operator is setting the culture for that restaurant. So for the small business person listening to us right now, they, the owner, the leader of the organization, it starts with them. 100%. And it's not simply buy three books on customer service, make all the people on the front line read them.

Or watch this video on customer service, all the people on the front line. No, you've got to get it inside of you. And then it becomes almost a demand of excellence all the way out to the front. Yes. Because you get what you model, create, and allow. Like you will get in the culture, the things that you model, the things that you intentionally design, incentivize, prioritize, and what you allow. The things you allow to happen, everyone's going to believe are okay.

Yeah, and under the allow bucket, there's two things. There's things we're not going to allow. That's right. And, you know, if you do that, you don't get to stay. Right. Because that's not who we are. We always say around here, if you want to be a we, this is what we allow. Yes.

And so that's accountability. I guess. Yes. And then, but there's also the thing that you guys did a great job of, and I've watched it and I've heard about it as well, that you gave permission for people to freelance a little bit on the positive side. Yes. And a lot of that came from Horst also.

So when he started the Ritz Carlton, he allowed $2,000 per employee, or $2,000 per customer, really, per day, that they could spend to make something right. And he's been a mentor of mine for years, and I said, horse, what's the most that was spent? Because I was thinking it'd be like $2,065, like someone broke it, you know?

He said, no, the most that was ever spent was $800. I say, why did you make it so high? And he said, two reasons. One, lifetime value of the customer. And he rattled off in the moment. I know my average age of my customers, 40. They're going to travel with me until they're 80. They spend this much per year.

He knew the lifetime value. And then he said, we had to make the limit high enough so that the employees didn't feel like they were going to get in trouble. And so I knew that that would give them plenty of freedom. I said, what happened with the $800? He said it was at one of their locations. A couple was on their honeymoon. The husband lost his wedding band in the sand or somewhere.

They thought it might be the sand. And they're at dinner and they're bawling crying. and the server is probably thinking like, what do I do in this moment? This couple is crying at dinner. And finally the server asked, and they said, you know, we lost our wedding band. We were on the beach all day.

And that server went out with a few others. They bought two more metal detectors to add to the ones that they had, scoured the beach, found the ring. No way. And presented it at breakfast the next morning. That was the most that was ever spent. But it was a high enough limit.

That makes you, my eyes. I mean, that's powerful. It's powerful. There's a lot of rich stories that are great. That's a great one. Because he created a culture where everyone knew that it was okay. They were allowed to invest money to make things right. Whether the hotel caused the problem in this story, they didn't cause that problem. But they owned it. You know, when we can own the wrong, we actually create a bond with people and we can make it right. Yeah, it doesn't. And a lot of times it's,

the actual cost is very low. Yeah, but the value. You give away a couple of free sandwiches at Chick-fil-A. Actual cost of goods sold is not a big deal. That's right. But the customer impression is 8x or 10-X what the actual cost is, that you do something to make it right.

100%. But as you know, it starts with a mindset to be able to have that kind of generosity. and it starts with the owner. Yes. So what are the top mistakes companies make, particularly small businesses, if we can address those in your mind,

with customer service? What's the absolute no-no thing? Well, I think a big mistake that's often made is not selecting for customer experience, like not thinking about the selection of people and the team for what kind of experience they want to create.

So don't put Eeyore on the front. front line. Correct. Yeah, okay. Exactly. But I think a lot of times, especially in smaller businesses, we can get into the season where it's like we just need a warm, semi-friendly person who can do a decent job quickly, the urgency overtake. So I think selection is a big piece. I also think onboarding. It's often missed that onboarding the first, you know, eight hours of someone's new career is focused on here's how you clock in and out and here's where the restrooms are and all of these tasks. But that's the greatest opportunity to align people to vision and mission and purpose, the stuff that's actually going to ignite their heart. So I think that's an easy thing to do.

And then another thing is you have to constantly evolve, evolve your experience because the experience is the people. It's the process. It's the place. It's the product. It's really all of that intertwined. And so specifically around the process, how often are the leadership and business owners going through their own process, ordering their own product, registering, and seeing where the pain points are so that they can remove those pain points. And that's just a game of moving the bottleneck. You know, you're constantly kind of shifting it. But if you just set it and forget it and you rest on the design you did five years ago or maybe even, and five months ago, then there's probably some pain in the process that your customer is experiencing

and you could make it better. That's something as simple as go to your own website and try to order something and see how frustrating it is. 100%. Do it every six months. Yeah, that's just, I have a certain level of anger for that. I can't stand. We spend so much money on this and this is what it does.

Yes, but you have to get that detailed because excellent happens in the details. Like the more excellent that we want to become, we have to go deeper and deeper and deeper into the details. I'm interested to hear the answer to this. You said that you can tell if a restaurant is good when you walk in the door before you sit down. How? It starts in the parking lot if it's clean.

And that was a big thing for Truett. And that's where Dan picked up picking up trash. You know, I was 21 when I took my first trip with him and a group of others. and I watched him start picking up trash. I'm like, what's he doing? Why is happening? Why is he picking up trash? By the third restaurant visit, I was like,

I need to pick up trash first. Like, I need to get to that trash before he does. And I asked him, I said, why are you picking up trash? He said, my dad taught me it's my ticket into the restaurant. I need to find a piece of trash, throw it away, and that's my ticket to get in the restaurant. The details start outside of the restaurant. And then you can tell what's the hustle,

what's the feeling of the people, the more emotionally intuitive folks can kind of feel that in the space. What is the feeling of the team behind the counter? Are they hollering at each other? Are they encouraging each other? Like, what is that feeling? And, you know, let's see, Theodore Roosevelt said it's the handshake of the host

affects the taste of the roast. So you can sense that in the team dynamic, and that's going to impact how your food tastes, maybe perceptually or literally, because they have such a great team dynamic going on. behind the scenes. Will Goddair is a friend of mine. He wrote a book called Unreasonable Hospitality

or a world-class restaurant tour. And he always says the two most, the two biggest opportunities you have to mess up or to wow someone is from the moment they sit down at the table until something starts happening. Yeah, yeah. Water, food, apps, it's too slow. And from the time you're finished, leave.

You know, get, you know, don't rush people out, but be attentive at the end of the meal and give people options because how many times are we sitting in a sit-down restaurant waiting? Yes. On check. Yes. And if I have to ask for it, they're too late. That's good.

That's really good. Because I'm ready to go. Of course, that's my personality style too. But my wife's like, it's okay. No, it's time to go. It's okay. It's okay if I give them my money and now it's time to leave. It's okay.

And she's afraid somebody's going to be offended. but I'm not. So, you know, we need to, you know, the end of the meal and the beginning of the meal for him. Yes. He said the speed of that. The middle of the meal, most restaurants, they can get the food out at a sit-down in a situation.

Yes. They can get the food out to you and they'll check to make sure the water's full during that and all that kind of thing. They'll be attentive during that time, but there's something about the end in the beginning that most people in a sit-down mess up. And I think that's true in a lot of businesses.

I mean, if you're putting a heat and air system in someone's home, very attentive on the front end to make the sale. Yeah. Where's the follow-up at the end? Where's the phone call later? Yes. At the end of the meal.

Yes. Where's my check? Yes. You know, all of that. And I think that goes with is the parking lot clean to me. That kind of falls in the same bucket in my head. Yeah. Because those are open spaces that others, you know, competitors are not necessarily filling.

And so if you can do something that creates a relationship and a bond in those kind of open spaces. in blank spaces, you become more memorable than anybody else. How do you create the team alignment to create this customer service to cause this impact to happen? That seems like that is a Herculean lift. Like it must be a constant flow. Yeah. I think it starts on that first day of onboarding.

Like, what are we about? Like, what are we doing all of this for? And that's what captures hearts and minds. I think it was John Adams that said people don't relate to orders and direction. They relate to mission and objective. And when we can understand what the mission is that we're after, then suddenly all of the rest of the details start to make sense. But you have to repeat that.

Is it mist in the pulpit as a fog in the crowd? Like you have to repeat it and repeat it and repeat it so that everyone in the organization knows this is what is most important. And I think as leaders, it can be easy to, start to talk about all of the other things that need to be fixed and the tactical pieces. But if we're not constantly coming back to purpose and mission and vision, then the alignment just starts to sway and focus on maybe just what's important right today, not where we're going.

Well, I think it goes, I wonder if it doesn't go back to one of the other things you said earlier, what you allow, because if you sanction the opposite by just not addressing it, the opposite of what you're trying to create, then all of the sudden everything will be dumbed down to the slowest. Yes. To the wrong end of the bell curve. Everything will back all the way down to that. And it's because you've sanctioned this incompetence,

you've sanctioned this by not addressing it, by not holding people accountable to. Look, there's only one way to do it here, surprise and delight. If you're not doing that, you're E.R., and we don't do E.R. I mean, you've got to constantly, it sounds like, beat the drum. Yes. Otherwise, you get great people stuck behind a bad process. and they're constrained.

And you've probably been on those phone calls or with those people before and you're like, why do I have to do this right now? And I'm like, well, that's our process. Like, we have to, you have to fill that out again. You're like, what? Yeah. Why don't you just take care of this

and then I don't think about it? Yes, yes. Because I'm a thing called a customer, or at least I used to be. Yes, yes. And the customer has to be at the center. Yeah. Henry Ford always said, like,

it's not the employer that pays the wages. It's the customer that pays the wages. The employer just, you know, navigates the money in between. And if the customer's not at the center, if the customer doesn't have a seat, you know, a proverbial seat at the decision-making table of our organizations, then we're not designing with them in mind. And it's the customer-obsessed companies that create the company-obsessed customers. When we obsess about what they want, how to remove the bottlenecks, how to make it more seamless for them, you know, those then are the

customers that can't imagine their life without us. That's so good. And I like the budget idea, budgeting a surprise and delight and saying, you know, make them blow their mind. Your job is to blow their mind. I tell our folks all the time that, you know, we exist for the people that are not here. Your job is to make them, make them smile when we get up. I mean, we talk about that in staff meeting every week just about, to the point our folks are tired of hearing it. But they know it. Yes. It is what we do. And if you help enough people, you don't have to worry about money. And, you know, that's one of our core values. And so all those kinds of things that pour back into the same exact idea that the customer is, the customer is not always right, but they are always in need of service.

Yes. And so we don't tolerate people, the customer misbehaving towards us either. That's another thing. But that's not what we're talking about here. We're just talking about someone who innocently walks in trying to give you their money. For goodness sakes, love them well. Yes, exactly. Why is this hard? But it's an intentional act. It does not occur by default.

No, it doesn't. This is so good. Such good information. I love it. We're talking with Elizabeth Dixon. She was with Chick-Fle for many, many years in the customer service side. Strength of purpose is one book. The Power of the Customer Experience is another book. You can check them out. And if you are blessed to be one of the attendees at the upcoming Entree Leadership Summit in Denver, May 18 through 21, you'll get to hear more from Missa, Elizabeth. Well, I'm honored to get to meet you. I look forward to working with you in Denver and in a long future together. Thanks so much. Thanks for stopping by. Thank you. My pleasure. Hey, guys, this is the Entree Leadership Podcast. So Joe, that's going to borrow all the money to open some more chicken stands to get his EBITA up needs to meet Cherise, who figured out that

plan doesn't work well. It's almost like we plan to put those calls together. We didn't, God did, but it worked out well. And lesson, learned lesson intended. Wow. So, yeah, although to be very candid, Joe was not as far over his skis as she was. He's not, he's not reaching that far outside of his competency, and she was completely out of her zone. But one of the things we figured out about debt, and we tell entree leaders this all the time, debt magnifies our mistakes. And there's only, one thing I'm sure about business, you're going to make a lot of mistakes. The stupid things I have done in 30 years would fill a book, and it would be a humorous book. They weren't humorous at the time,

but were I to read about it from five or 10 years ago or 30 years ago, I laugh about it. There's very few of them that make me cry. They're just look at them and I just go, you are a dumb human being. How did you possibly think that was going to work? And there'd be chapter after chapter after a chapter of that. I'm firmly convinced that all of the success I've had in my life with Ramsey and the Ramsey brand has been on about 10% of our ideas. The other 90% sucked, and we survived them. You don't know us for them because they're deep in a grave somewhere where they belong. But actually, it's a huge pile of garbage is what it is. That's the gleaming mountain of success. It's all the mistakes you're standing on them instead of laying under them. And when you

borrow money, you magnify your errors. So if she had not borrowed money, she would have gone to a smaller, different location that was manageable, done a rehab instead of trying to do some historic crap, which is a nightmare. She'd have done it in an area where the permitting was more predictable instead of some nightmare county that's really hard to work with. There's plenty of those out there. and she would have stayed back within her competency. And even then, if she put $100,000 bucks of her own money in it, and it didn't work or got halfway through and failed, she wouldn't be looking at bankruptcy or losing her home to pay the thing off.

And so, you know, and the same thing happens with Joe with his chicken stands. And so if he goes out there and gets over his skis, the, you know, and you get just a little bit out of balance, then, you know, you're going to go down and you're going to roll and you're going to be a snowball and with little feet and hands and heads sticking out like one of those cartoons, right? And this is what it feels like, and it's no fun. It's no fun. It takes your dream of business ownership and turns it into a nightmare.

And it magnifies the mistakes. And you don't see the mistakes coming. if you did, you wouldn't do them. You know, the 90% of our bad ideas that we've survived at Ramsey, at the moment I had the idea or someone here had the idea on the walking trail, the running trail, you know, sitting on the back porch with a cup of coffee, wherever the idea occurred, at the moment you have the idea, you think it's awesome. You never have an idea and go, well, that sucks.

You always think it's awesome. And then you go try it, and then it falls on its face, and you go, oh, man, I'm dumber in a rock. I didn't see that coming. And if you borrow money into it, you get to pay payments on your stupidity. It's just hurt, y'all. So I know it's no shock to hear Dave Ramsey ranting the debt is bad. That's not an insight for any of you guys. But it's magnified and it shows up in business.

and in business we feel like our ideas are all smart, and I'm just here to remind you, it's not. The three rules of business always work. It's going to cost twice as much as you thought. It's going to take twice as long as you thought, and you're not the exception. Those are the three rules, and you just don't get away from them.

And so because you don't know what you don't know. It's just unconscious incompetence that we all have. All right, Mikhail is with us, in California as well. Hey, Michael, what's up in your world? Oh, we're doing well here. Thank you, Dave, for taking my call. Sure.

What's going on? How can I help? Well, I'd classify our business as being in Peak Performer. I run a residential construction company. We grossed about $4.5 million last year. Way to go. Yep, did well. We're enjoying that place.

but I'm in a place where, you know, and I have been thinking about it for a lot of years, but I really am looking for to build heritage. And I've got older kids, but to be honest with you, I reflect on where you're at, and I look at what you've accomplished with your family. And that's my question. It's like, how does that happen? It's certainly not magic, and there's certainly a lot of things that are in the background that I'd love to say, okay, that journey wasn't.

No, no. So I, you know. Never as smooth as it looks from the outside with the lights on. They want nothing to do with it, but I'd like to know what does it take to maybe encourage that. So what are some things that do with? Oh, they don't want anything to do with the construction business. Yeah, they're like construction, Dad. We don't want nothing to do with it.

And I try to explain to them, you know, Dad's not in a truck anymore. I don't, you know, that's not the way it works anymore. Yeah, so how many kids have you got? I have four. How old are they? 28, 26, 22, and we were foster care for a while, so I have a 12-year-old. Okay, and what do they do for a living? 28-year-old just got his master's degree in accounting.

He was in Virginia, and he liked where he's at. 26-year-old is a behavioral therapist down in Southern California. He's got a lot of aptitude and possibility. There's a lot of unique ability there, but he's not interested. 22-year-old, she's a rock star. She's just graduating from Biola with a degree in... Some communications. I'm blanking right now. That's okay.

She's a degree in communications, all right? What's she going to do with her life? She's actually wanting to go work for focus. And so we'll see. She may be able to do that. Okay. And I'm approaching the point where I'm going, okay, how much longer do I want to do this?

And I'm enjoying myself now, but as I listen to you and I realize succession doesn't happen overnight, you know, you're talking about 10, 15 years from now. And so I'll admit I have to deal with the anxiety of going, okay, should I get started, you know? Well, you don't have anyone that wants to run or own this business in the family. No. And so you can't manufacture that. And so if you take a behavioral therapist and an accountant and force them into the construction business on whatever manipulation or whatever,

if they just showed up and did it because you asked them to, they'll be miserable. True. They don't want to do it. So that's not succession. I mean, the kids that are involved here, they want to be here. It's like they enjoy what we do.

And, you know, Rachel enjoys being on the stage on the air. and, you know, is in her zone. It's in her gifts. And, you know, my son Daniels wired a lot like me, entrepreneurally. So he loves this. I mean, we had lunch today talking about how much he loves it. So, but you don't want to have them come in and be miserable.

No, that's not. So I think you're looking at some other type of exit to where a non-family member is your succession plan and buys you out as you head towards retirement. maybe one of your senior people or a couple of your senior people or something like that. Yeah. How old are you? I'm only 52. Okay.

I got plenty of time. Yeah. So I'm going to start watching for, because I think the best heritage feature is to hand it to somebody from within the business. Obviously, you could sell it to someone on the outside, and that would be usually a competitor would come in and would love to have your book of business, so to speak, and they'd probably be willing to pay a lot for it. At some point, you're not there today, but that can be, and that's a reasonable exit if you don't have any family members that want anything to do with it.

At what point in time did your kids connect with or did you connect with the ones that are involved in the business, that that's something that they wanted. something that they liked. Was it always that way or was there a turning point? Well, the first thing was if they were going to work around the business growing up in their teens and so forth, they had to work twice as hard as everybody else to be respected. And we told them that. So they were more like coaches' kids. They got the crud beat out of them. We made it hard. And then we said, do not come to work here unless you feel called to it. because it's too hard to do family business

if you're not called to it, if you're not excited about it. And so, you know, different ones, Daniel considered not coming. And there's a story behind that. And then as he's coming out of college, some of his other mentors, not me, he said, you'd be crazy not to look at this

because it does fit your skill set. It does fit your thing. And, I mean, it does fit your spiritual bent. And so he felt like, okay, all right, I think I can come in here and he overcame the things he had in his head that were blocking him. So anyway, but that's him coming straight out of college into here. Rachel came straight out of college into here. My oldest daughter runs our family foundation technically doesn't work here,

although her offices are out of here. And she worked for a different place for a long time. and when I asked her to come run a brand new that I was just forming Family Foundation about 15 years ago, she said no. She said she didn't want to. She enjoyed working where she was. And about a year later,

I'm still struggling along with the thing. And she said, I think I've changed my mind. I think God is releasing me from this other place, and I think I'm okay to come over there. So she initially didn't enter into that. And so, I don't know. I think you can say, what I would probably do it, yours are further along than ours were, in other words.

And so, number one, I don't want you to come if you're miserable. I don't want you to come to make me happy. But I do want you to realize there is an opportunity here, and this is a large, very profitable business. And before I sell it to someone outside the family, I would want to make sure that any of you that want it would consider it. and that would just be a Christmas time, you know, family discussion around the table and go, guys, I love you, whether you come here or not, whether you work here or not, and don't come

and make yourself miserable to make me happy. That's not going to make me happy. I don't want to curse my children. But I do have a really quality asset here, and I don't want to just, you know, hand off all of my hard work to someone outside my family when I have a really quality asset here. I don't want to just, you know, the first have the opportunity to bless my children if one of you wanted to come in and run this thing. But if all of you say no, I'm going to begin the process now of looking for the replacement and groom them over the next decade or so. And I'm going to go ahead and tell you that now. So I mean, you know, it's... I consider all of us have a mindset change. I don't know about you, but I've had multiple mindset changes as I've gotten older. And I look back and I go, I'm actually running

business and doing things I never thought I'd get to this place. And I just would hate for them to wake up a decade, 20 years later and go, man, I let dad sell that. What was they thinking? You know, I think you say that out loud. Yeah. And you say, you know, you may wake up and say, I want to run my own business and not be an accountant.

You may wake up and say, I'm going to use my psychological training to lead people and run a business. You may wake up and say that, and I don't want you, I don't, if you don't, I'm, it's fine. And if you never come, it's fine. Please don't come to just make me happy. But I also don't want to, and then just say what you just said, you know, lay it out there. I think some of these things, if you just, and I don't mind putting it in front of the whole group. You know, everybody's home for Christmas or Thanksgiving or whatever. And, you know, I just want to let you know, guys. This is not a. I'm not out here swinging a hammer.

I don't touch a saw, okay? This is what we're doing. I'm running a business, and the people that work for me do, and the thing makes a lot of money, and I would hate for you all to miss the opportunity if you thought you might, you know? And it's okay.

If you don't, you can just say, though, and it's not going to kill me. But I also, I want to say this out loud to get the air cleared on it because I don't want you to look back and have regrets, and I don't want to feel like I didn't give you every opportunity. So I'm giving you every opportunity now because I'm going to start in three weeks on a different plan if all of you tell me no. And that's fine.

You know, and that's, yeah, but at least you've done what you can do then. But I don't think you want to put any more pressure than that to bring them in. Because the people that I meet that are in a business to fulfill their daddy's dreams are miserable. I don't want that. I don't want that. Miserable and they suck at running the kids. thing. Yeah. They just

they can be a mess out of it and yeah. That would break my heart. Yeah and it makes a mess of their life. So it you hurt your business and you hurt them. And both two things that you cared about, you know, so you just don't go there. That's not a plan. But I, yeah, to answer your question about

our stuff, we started much earlier making those decisions. And so they were, the on-ramp was longer because we started earlier. And, but that's okay. It doesn't mean it can't be done. And, you know, one of them says, I got a 50% chance.

Okay, good. Let's, I want you to come over a visit, begin to understand what's going on, and to gather more information to decide if the 50% becomes 75 or if it becomes 25. And if they raise their hand partially, they don't have to raise, you know, and you can figure that out. And then at least you got a nibble. on the hook. Or if they just all give you a zero, then it's time to go a different direction, for sure. Hey, guys, that puts this particular hour in the books. 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 Entry Leadership Podcast.