EntreLeadership - The Best Way to Run a Family Business with Dave Ramsey

Episode Date: June 28, 2021

Growing a small business is tough on its own, and when you add family dynamics on top of normal day-to-day challenges, it can feel impossible. (If you run a family-owned business, you know what we mean.) But it doesn’t have to be that way! Listen in on our discussion with Dave Ramsey to learn how to successfully navigate complex family relationships in the workplace. In our first segment, Dave talks about the three phases of family business: family values, family operations and family succession. Then in our second segment, George Kamel sits down with Dave and Daniel Ramsey (Dave’s son and the executive vice president of EntreLeadership) to lay out how we do family business at Ramsey Solutions.   The EntreLeadership Podcast Ramsey Solutions’ website Learn more about EntreLeadership Elite Coaching. Download The 6 Major Mistakes That Will Destroy Your Family Business Schedule a call with Tim, our producer.   Learn more about the offers from our EntreLeadership Partners: BELAY | Gravy | Hite Digital   Want expert help with your business question? Call 844.944.1070 and leave a message, or send an email to [e-mail]. You could be featured on a future podcast episode! Learn more about your ad choices. Visit megaphone.fm/adchoices

Family and business. Two words that can be dangerous when put together, kind of like church and state. Owning a small business is hard. But when you add family to the mix, it gets even more challenging. And many of you know this, since a majority of American businesses are family owned or controlled. So how can you make a family business, a successful legacy, and not something that damages everything and everyone around you? From the Ramsey Network, this is the Entree Leadership podcast, where we have

help business leaders grow themselves, their teams, and their profits. I'm your host, George Camel, and in today's episode, we've got two interviews on the business driver of plan. You'll hear conversations on how to operate a successful family business and transition it to the next generation. First up, we've got Dave Ramsey. Dave is the CEO here at Ramsey Solutions, and he wrote the book Entree Leadership, which is our business and leadership playbook. Then our second interview, we have one of our leaders, Daniel Ramsey, and he's going to join Dave and I to talk about how we do family business here at Ramsey Solutions. First up, we've got our conversation with Dave. He talks about how family business can be a rich blessing, but it can also be a dysfunctional mess. Most people that run a business love what they do. That's why they started the business. And you get to share something that you love with your family. And so it can be very rich. The problem is the, the,

family business is only as functional as the family is functional. And lots of families put the fun and dysfunctional. So they, you know, so they bring their dysfunctional family into a business and expect the business somehow to solve that. And instead it magnifies it. So it sounds like there's a foundation that needs to be laid out. And you've really laid out three phases to family business. And you talked about this at our Entree Leadership Master Series. We did a whole day on family business. and people were going crazy for it because it turns out a lot of listeners are in family business. So I want you to walk through those phases kind of before you get into family business during and after, kind of the succession plan. So walk us through the first phase before you get into business.

What are the things you need in place? What are the conversations you need to have? What are the prerequisites you need to put in place? Well, one is that in a sense when you're raising your children, you're raising them to be great team members, great employees, wherever they go, teach them to be honest, to have good communication skills, to have great work ethic, and those kinds of things. So it's the ultimate training program for your employees, your home for your children, right? And so if you raise children that have those skills, that's your prep work. And so if you've got a 16-year-old that's an entitled brat,

then guess what they're going to be when they're a 26-year-old on your team? Entitled entitled brat, you know, and it's a problem. So you've got to kind of get the home life thing going, the parenting thing going way, way in advance. That's the ultimate pre-planning for family business. And so it starts when the child is born, three years old, and they're walking around. How are you going to allow them to behave, you know, and so forth? Because that's how they're going to behave wherever they work, whether it be at the family business or not. And then once they leave that and they become adults and they're going to consider whether to join the family business, I've had friends that had family businesses and friends that are second and third generation family businesses that they really weren't hardly given a choice.

They were just told. You're going to be working here. It's like part of what our family does. It was, and psychologically, that's really a bad idea. spiritually it's a bad idea because you can be really trying to put a square peg in a round hole and just because they have your name after them you can really do damage to the organization and to the person so we told our three kids don't come to work at ramsie don't unless god calls you because i'm called to what i do here god has a call on my life to help people learn biblical

principles in the business space, the leadership space, the money space, whatever it is to change their lives. I'm called to do that. If someone comes in here because it's convenient, because they can know they can get the job because they've got their dad owns it, then that's not going to work out if they come in here because they think it's going to be easy or because it's an act of loyalty. You know, that lasts for a little while, but it doesn't last like a call lasts. So you need to have a sense a call on your life to come here. And so that's manifested with each of our three in different ways, but we kind of said, don't come unless you're sure God is telling you to. How does that process work? Is there a certain point where you've had enough conversations where you

both say, yeah, I feel called and I believe you are. Let's make this happen. Yeah, I mean, I can kind of walk through a couple of hours. I mean, Rachel, she was on on stage at 16 years old, selling kids' books in front of 11,000 people at live events. So natural for her. So, I mean, that child came out of the womb with a cigar and a bottle of champagne. She's been a dancing poodle since she was born. So she was going to be on stage somewhere doing something. And she loved it and has always loved it.

And it's always very good at it. I mean, she's a natural in front of the camera in front of the microphone on the stage, a good communicator. And she was that little kid, you know. You were that little kid. You know, there's no question about it, you know. and so I was a bit. We're ham. We're hams, you know, so we like the spotlight.

We like doing that stuff. So we kind of knew more with her before we knew with the other two. And so she went and got a communications degree in college. And we kept talking about it, but we were kind of 70, 80, 90 percent sure she was probably coming on and was going to be a speaker in the future. And we didn't know how that was going to work. We didn't have it all figured out exactly the details of it. But we felt pretty good about God's hand on her life using her talents that way. Denise on the other hand, our oldest child came out of school, and she's our ministry-minded, big-hearted one, biggest heart.

And so she went to work for a ministry, a nonprofit, nothing to do with us, did not feel called. And years and years and years later, we decided, Sharon and I decided to move our charitable giving to a more formal, systematized process instead of just whatever we wanted to do off top of our head, you know, family foundation. And so I started studying family foundations, realized, needed a director of the foundation. I thought, well, my daughter's in a nonprofit. Maybe she could run the nonprofit. And I called her and we sat down and talked and she said, no, I don't feel released from the other place. So she did not come. And it was a year and a half later before she said, you know, if you haven't filled that still, I think I want to talk about it. I do feel released now. And so, you know, and it was, by the way, it was fine if she didn't. There was no pressure.

It was just, here's something I'm going to be doing. If you want to join up on this side, this ministry side of things and you run that, that's fine. So she came over that way. And of course, Daniel was the last to join the team, the youngest. Yeah. So once you've got the kids, they've decided, they feel called to it, now they're in it. And so this is a different situation. What are the things that you need to be thinking about once you're in the business, you're in the operation side, and you've got the day-to-day going? You know, we've learned a lot of different things from people running family businesses successfully and big ministries as well, where the family was involved, little things.

But a couple things that kind of mind immediately was that one lady said, don't call each other pet names from childhood or something. So you're not dad at work. And so if Rachel or Daniel Ramsey are in a meeting somewhere inside Ramsey with a thousand team members, they don't say dad, sis. They say Dave says. or this is what I think Dave would do. Or if I'm in the meeting with them, they call me Dave inside this building.

And we're not uber strict about it, but we're very careful because that resets everyone's mind that these are adults that are carrying their weight. And because if a 35-year-old son is sitting in a meeting and says, my dad says, or my daughter says, my daddy says, the room tilts without her intending it to. It tilts and everybody's like because there's all this confusion between childhood language and so forth. And the second one is what we call hats and it comes from an old Henry Cloud story that Henry tells the story of a manufacturing guy who was trying to train his son up to take over. And his son was just a jerk and he was horrible and really didn't do a good job. And he was always mean to the team, the manufacturer guys on the floor.

And they sent him off to, you know, different schools to try to learn people's skills. And he just was not working out. So the dad was sitting in his office looking down on the manufacturing floor, sees his son for the umpteenth time down ripping somebody shreds. So he bangs on the window, calls him up. And he had two hats printed up, one that says dad and one that says boss. And he put on his hat that says boss. And he said, we've been trying to train you to be nice to people for years.

I put my best people to help mentor you, and you will not learn it. I am not going to leave my business that I spent my life on to someone who's going to mistreat the team. I have staked my reputation on treating the team well, and you don't, and you're fired. And he took his boss hat off and put his dad hat on and said, son, I heard you just lost your job. How can I help? So we, you know, I don't know if it's true story, but it illustrates the point. We call it hats. And so when we're at work, I have on a hat that says CEO, owner, personality that grew Ramsey, deserving of respect for those. reasons and the way you would treat your CEO is the way you're going to treat me whether

you are my child or whether you're my team member. And I don't demand it. I mean, I expect you to argue with me. I expect you and I do that. Daniel Ramsey and I do that. Rachel certainly argues with me. It's like a sport. And, but that's fine. But that's how we treat the CEO here. The CEO doesn't demand formality or something, but you also don't. And I treat them like I would treat you or Christy or Ken Coleman or another senior VP or another operating board member. If they're out of line, I'm going to call them on it. If they did something good, I'm going to tell them they did good. I'm going to treat them as best I can in exactly the same way.

I don't use my dad voice on them. And so, but that's how I'm wearing that hat. They're wearing the hat of Rachel's wearing the hat of personality. Daniel Ramsey's wearing the hat of Executive Vice President of Entree leadership right now, an operating board member. And so that's the hat he wears. And so I've got other people who are executive vice presidents and operating board members in this organization. And I interact with them almost identically.

And they're paid the same. And everything else. So when we're at home at my house and my grandbabies come over, I take that hat off and I've got the Papa Dave hat, right? And I'm bouncing Rachel's babies on my knees. We're not talking about business there at the Thanksgiving table. I'm Papa Dave. I'm not the CEO. And you treat me that way.

And I treat Rachel's my daughter. And these are my grandbabies. And, you know, that's a whole different set of rules for relationships. And we operate within that paradigm. If someone wants to talk business at a family dinner for a minute, like usually it's Rachel. She heard something was happening. And Daniel Ramsey and I are in on it because we're on the board and executive committee. And she's not maybe wasn't in there when something was being discussed.

Hey, what's happening with so and so. So if you don't watch, the rest of the whole family is now carved out and this side-block conversation is going on. We don't do that. If we want to do that, she has to raise her hand and ask the whole family's permission for a short timeout for us to do a little bit of business so she can get caught up or whoever. But it could be Denise. It could be Daniel. But most of the time it's Rachel.

Yeah. Yeah, that makes sense. So on the operation side, you've got to treat them just like a team member. And you have the same expectations, if not higher expectations. And I've got to see that work ethic and that humility over the years working with Rachel and with Daniel and Denise. When they were working doing stuff around here with teenagers, we taught them. that. We taught them, because your name is Ramsey, you have to work twice as hard and be twice as good to even be respected. Because people are going to assume you're a schlep. They're going to assume that you're going to half-butt it and get away with it.

They're assuming you're going to be a trust fund baby, you know, kind of thing. And so in order to be respected, you have to be twice as good. Yeah, I love that. So as you kind of enter into the succession phase, this is kind of the after we're starting to transition things. what are the things, and I know we're kind of in that realm now, what are the things that people need to be thinking about as they hand things over and let go? Well, number one, the best succession plans are thoroughly laid out and very, very gradual. Too many people in family businesses grab their chest, having a heart attack as they fall back in the grave, toss the next generation the keys and go good luck, I'm dying. and it's like instantaneous. And they don't, they're like, I've never driven a car before.

I don't know how to drive a car. And that's dead. Now how do I drive a car? And so that's dumb. That's dumb. And so instead, you should take a 10-year period of time. And it's so gradual and so smooth that by the time the next generation takes over your customers, your suppliers and vendors, and especially your team members, when you make the announcement,

so-and-so is now officially the CEO. and I'm stepping aside completely, the other people look around and go, oh, I thought she already was. I thought he already was. Because they've moved up into that lane right in, you know, like a handoff with a relay racer,

an Olympic relay, that runner behind, the runner in front has to be running at the same speed as the runner behind, and then the handoff occurs, and only then does the runner behind break away. But, and if you,

And if you've ever watched an Olympic relay, the handoff is so smooth and so quick, you really have to watch to see the baton hand. It's so subtle because they're running at the same speed. You don't run up to somebody and hand it to them and then they take off. Yeah, you've got to be moving in progress. So I think a lot of people that are handing off businesses, there's this thing where they go, I can't let go control. Or I can't get them to do things the way I do. and until they do it exactly that way, I cannot let go of this business. How do you deal with that conflict that happens there?

Well, there's two parts to that. One is if you expect anyone who's leading inside your organization to do everything exactly the way you would do it, then you've got some growing to do as a leader because that's unhealthy. You want to have people to have different personalities. You want them to have a different way of doing it. Now, what's not negotiable are the principles, the why you do. it. Okay, we do this because this is who we are. That's not negotiable. And you don't need to hand off to the next generation until they've got that part. But once they've got that part,

then they can dance within their personality style, their makeup in the way they do things. And I've got that all through this building. I got, I got, you know, we've 178 leaders right now inside of our organization at varying levels. I've got, 16, 17 operating board members. And I got six direct reports out of those. Almost none of them are just like me, you know, very few of them. And most of them are a lot nicer than I am. I'm kidding. They're a lot less blunt or brusk. They're a little more polished than I am. But also, they've just got a different style of how they get at things. And I don't care how they do it. But the principle behind the decision has to be consistent or the whole thing's going to unravel and fall apart.

And that's why having core values are important. That's why having the vision and the mission outlined and everyone bought in. That's so key because the process, like you're saying, that can change. The way you get to a decision rate change. It's changed while I've been doing it. I mean, when I started this, the Internet hadn't been invented. You know, think about it. I mean, we didn't know we were going to.

Couldn't spell podcasts or any such thing. It was, you know, the first time the Internet came out, it was dial up. You know, 144, right? And floppy disks. And we thought, oh, well, that's kind of cute thing to have over in the corner. And then all of a sudden, the whole stupid world's run by computers, right? So, but, I mean, we never dreamed what we'd do on a smartphone. We didn't have any smartphones.

Our phones were dumb. And so, you know, all these things. So how we have done stuff has changed dramatically in 30 years. But the principles behind why we do it and that drive the decision making and the how are have not changed. Those are solid. So processes have to change, but principles don't change. And that's true inside your organization while you're there, and it needs to be true after you leave. Well, these three phases obviously key and some really important nuggets, some important conversations that listeners need to be having as they begin family business while they're in it and while they begin

to transition it to the next generation. Absolutely. As Dave talked about, family business can be a great blessing, but you have to get the three phases of family business right. There's a difference between knowing how you should run your family business versus actually doing it. We'll have a conversation about that right after this. In our second interview, Daniel Ramsey joins Dave and I to talk about how we do family business here at Ramsey Solutions. You might recognize that name. He's Dave's son, and he's also an operating board member and EVP of Entree leadership. And from a young age, Daniel was fascinated with watching his dad run the business. Growing up really like most sons,

like my dad was my hero. I looked at him and I wanted to be that. I wanted to be a part of that. And growing up, I loved coming home when my dad came home and asking how about work, getting to hear the details of what happened, the conversations he was a part of, the deals he was thinking about,

different things of that nature. And he was really good at protecting family time and not going into the business too much. But for me, I always wanted to pull it out of him. And so I was always really interested in it. He was a little entrepreneur. I can tell a very business minded. Yeah. Yeah. And so a lot of great memories in that. And really, for us, Dave did a great job, or really, I should say, dad in this instance. We're in the office, so I'm mixing it up, right? I'm calling him Dave just because we're sitting in the office right now. But growing up, dad did a great job at not pressuring us.

he talked about earlier. He really made it the option known and available, but he very much encouraged me to go to the Lord and really seek my own calling and seek my own purpose. And he would ask challenging questions. He would ask questions to force me to think about my future, to think about what God had for me, and still does. You know, it still does. You know, obviously I'm working here in the business, and God has different paths for me and has had different plans for me over the years than I even expected. And my dad and conversations with my dad outside of work have been incredible in formulating that and how I respond to the changes and the curveballs that God throws our way. Wow. Well, I've seen you grow exponentially over the seven years here, and you

are absolutely called for where you are. So we're pumped. You said yes. At least I am. Thanks, George. So you talk a lot about wearing hats. And you're talking about dad versus Dave. What does that look like in the day-to-day operations? So my sister Rachel actually started that. She really came in and she started calling Dad Dave, especially in the office setting. And for us, that laid such a good foundation for me, especially. She modeled it well. And for me, I loved it because I always had a desire of like wanting to be treated normal. I didn't want to be treated like the boss's kid. I hated the thought of that. And so for me, calling Dad Dave at work was really important for me. And for me, the first several years I was here, I was in very few meetings with my dad.

And so I got to talk about him from a distance and call him, Dave, refer to him as Dave. I was in sales, so I was actually calling on clients or potential clients referring to him as Dave. And that was interesting in its own right. But going through that, over the years, I think it's done twofold. I think it has added my credibility for me being my own person. And it's also added a layer of like the way the team, interacts with me. The team is more likely to treat me like a team member when I refer to him the same way they refer to him as. Yeah, that's important. And family businesses, they can get

stuck in this operation space. We want to park in this for a little bit. So let's dive into this. You talk about people working in the right role for them. How do you determine the right role when it comes to family members? No differently than you determine the right role for someone else. Jim Collins talks about getting the right people on the bus, wrong people off the bus, the right people on the right seats on the bus. And so if your family member is not good at details, don't put them in accounting.

Well, you know what I mean, duh. You know, so, you know, they have to be a match with their gifting, a match with their calling, a match with their talents, their training.

Can they do the job? You don't get the job just because of the last name. That's ridiculous. You get the job because you can do the job. And don't, because you set the whole thing up for extra drama, toxicity, resentment through the team, lack of effectiveness, pissed off customers, everything else when somebody can't do the job.

And when they can't do the job in their family, it just makes you look horrible. It's just awful. And so you've got to add the training and add the mentoring. They've got to build their skill set to be able to step into something a little bigger each time if they're going to move through the organization. But I was with a guy that has a huge business. and I went, we're going around. He goes, this is the creative area.

And he goes, my daughter works in here. And I said, oh, your daughter wants creative. And he goes, oh, no, no, no, no. She is a creative. She is not a leader. She does not want to lead. She wants to be a creative. She works for my director of create, my lead creative guy.

And so he had no forms to him. It made no sense to him at all that his daughter should be leading it. She has no leadership skills. Yeah. She's a, you know, creatives can have leadership skills. I'm not saying that. but I'm saying she didn't. And it was just like, he was just a gas that I would even suggest.

But I automatically assumed because there was his daughter that should be run in that apartment. Yeah. And when Daniel, you came on board, Dave didn't just go, all right, you're going to be over an entire area. I'm going to put you in a leadership role in your early 20s. That would have been a disaster. And you've moved, like you said, from role to roll to roll. In the last few years, you've been in different leadership roles. And you've earned each of those roles.

None of them were nepotism where Dave just said, well, I think he can do it. Just put them in there, right? To my knowledge, I don't think my dad was part of it really any of the conversations about me moving roles or being promoted. I really like to think that, and in many of the cases, the leaders that I had at the time were really going to bat for me. They were the ones suggesting the change. They were the ones that saw the opportunity and saw how I fit into that change. That's exactly what happened. That's kind of what I was going to say.

And the last couple of moves were all senior leadership moves with Daniel moving into Ramsey Plus and then now into this entree role. And in every case, other people on the operating board spoke up and go, okay, we've got to fill this position. And the way this has gone down and looking over here at skill sets, we really need to pull, you know, Dan Ram out of the Ramsey Plus where he's running squads on acquisition because we're going to be real heavy squad-based organization in Entree. And it looks like it's a good fit. And he knows the Entree material because he grew up in it. And so it's perfect. And so I just sat there and said, yeah, I agree. Now, the guy, the executive VP that he was working with, and Ramsey Plus wasn't real happy because he lost a key team member.

But he had to grudgingly go, yeah, that's really the smart thing for the company, but I don't like it. You know, that happens all the time in here. Yeah. And it sounds like, you know, sunshine and rainbows because of how well you guys have done this. But for a lot of business owners out there who are in family business, they may have to fire a family member. at some point. So this is theoretical for you, thankfully, but how does a business owner go about that process where they have to have a hard conversation with someone who is family, who is a team member, and terminate them? You know, it should start before they were hired, and the sad thing is it

usually doesn't. So before they're hired, the expectation is that you're going to be better than anyone else in this role in order to be respected, what we said earlier. And if you're not, then expect to be called out on that. And so the standard for excellence is the Ramsey kids, in other words, are more like coaches' kids. They get the, I'm harder on them. The leadership teams, even other than me, has been harder on them than maybe otherwise. They didn't get, they got the opposite.

If they got any side of the pendulum, it wasn't super hard, but if they get, they don't, not to the point, they're disrespected, but there's just an expectation of excellence by everyone in the building. Now, the problem is that someone listening to this right now may be, you know, my uncle was partners with my dad. Now I've bought them both out and my cousin who's a drug addict works in shipping, you know, and you inherited the problem. So you weren't able to set the table ahead of time. And that could be true, though, of any other team member if you took over a business. You could have another team member who's been with the company 30 years and is just lame.

And they've just been getting away with it. being a grouch or horrible or whatever they are. And so, you know, regardless of the thing, if you'll just back up and go, would I allow anyone else to act like this? Would I allow anyone else to perform at this level? No. And so whatever the situation. And so you've got to sit down across from the table with them and begin the conversations.

And it shouldn't happen in one conversation. It should be a whole series of conversations that start with just identifying the problem and then try to coach and work. through the problem together to help them turn the corner. But if your cousin, who's a drug addict in shipping, is going to keep smoking pot on all his breaks, he's going to have to leave because you wouldn't allow anybody else to do that. It's dangerous.

You know, people get hurt back there when you're shipping stuff. So whatever example you want to use. But that's the thing. So you just sit down and go, look, I wouldn't allow anybody else to do that. I'm not going to allow you to do that. And so, well, you know, my daddy started, honey, it doesn't work. You don't care who your daddy is. Your daddy is gone.

It's me and you now, buddah. So we got to work through this. and you're going to have to, you know, you're going to have to perform like anyone else at that role is going to perform. And now let me help you get there so that you can stay. Yeah. So it goes back to that before stage of setting the table, making sure that we're aligned on the values, the calling, the mission, the expectation, the prerequisites. And you go, hey, we told you there's no favoritism. And so we're going to treat you like any other team member.

And this is the consequence. But again, you might have come in and there was favoritism. And you might go, you know, the bad news is. that there's now no favoritism. The good news is that there's now no favoritism. So you're going to have what's called dignity when we're through with this. Yeah. And that kind of brings us into this idea of nepotism. And I want to talk on the team member side because from the team member perspective, you have family coming in and they go, well, of course that happened. He's family. So of course he's going to get treated differently. So what should those interactions look like? And I know we talked

a little bit about that with the hats. But talk to us about a little bit about that nepotism, favoritism. How do we avoid that and make it clear to the team that they're no different just because they're family? Really, I think it goes back to what we talked about earlier of like when we're in meetings together, I don't treat my dad like my dad. I treat him like my CEO. And I really show him the honor of that I would show a CEO. And taking a step back, I mean, talking about like honor and we like as a as a Christian I am commanded to honor my father and mother and in business I'm obviously responsible for honoring anyone that leads me but even more so my father and so I have to be really sensitive and really intentional about the difference between honor and loyalty we talked about

that a little bit earlier I'm not always in agreeance to decisions that are made that that my CEO Dave might make. Now, most of the time, definitely, like most of the time, nine times out of ten, I'm very aligned. But sometimes I would do it stylistically different, or sometimes I may have made a different decision. But regardless if I'm in agreeance of that decision, I have to honor that in front of the team. I have to honor that in the meeting. I have to honor that to Dave. And so I have to respect that decision because he is in authority over me. And I have to respect that authority that he has, including the decisions he makes. And so that's incredibly important.

And also that mindset can prevent so much resentment that may build or things of that nature. And we talked earlier about how we create that environment of difficult conversations. And man, difficult conversations are hard with any regular team member. But gosh, they're 10 times harder with a family member, right? Because you love that person and you're very afraid of damaging that relationship on both ends, whether that be which generation is having the difficult conversation. And so it is impossible to really have a working dynamic in a family business without really going there and having the difficult conversations. And me and my dad get to spend a lot of time together and me and my CEO spend time together throughout the week.

We have a one-on-one every Thursday. As CEO and EVP, we have conversations about the business. And we talk about fun, exciting parts of the business and we talk about hard parts of the business. and we talk about hard parts of the business. He, as my leader, coaches me, calls me out on blind spots I have, talks to me about, gives me feedback on, hey, in this meeting, I saw you do this or I saw this that was really good or this could have been better. And those are really, those are uncomfortable, but it's good.

And it makes me a better man. It makes me a better leader. And then on the family side, we have breakfast every Tuesday. And we have an incredible time where we talk business and we talk family and we talk life and we talk fun stuff. We talk values. We talk politics. we talk conspiracy theories.

And in those settings, too, we also have difficult conversations. You know, we talk about of various sorts, you know. And what's so important is by leaning into those difficult conversations that we get to have and going there, speaking the last 10% of truth, we get to have the relationship that we have. I think because I have the honor and privilege of being in the trenches next to my dad, I get to have so much stronger relationship than I would have otherwise. With that, though, nine times out of ten, it does not work out that way. Nine times out of ten, people aren't willing to really go there and have those uncomfortable

conversations. They go halfway there or they don't go there at all. And that's where resentment, animosity builds over time and ultimately can ruin the relationship you have. As far as nepotism goes, nepotism is when someone gets an unfair advantage or disadvantage because of family. Nepotism is not just simply that they're family. It's if they get an unfair promotion, an unfair pay in either direction.

They don't get promoted because they're, you know, a cousin and you don't like your cousin. You know, that's a toxic form of nepotism. Another toxic form will be if they get promoted beyond their competence because of their family name, because of their relationship. So that's nepotism. What the team resents is either one of those. They resent a family member being mistreated or being given. unfair favoritism, whether it's comp or whether it's position or power or voice or access or whatever it is. And so what we've just said all through this place is if we're going to

make an error, it's going to be an unfair disadvantage just slightly because we don't want anyone to ever be able to say, oh, well, I figured. And the actions speak, but then you also just need to say it out loud. We tell the team all that, we're very cool. We're very cool. comfortable talking to the team and just saying, look, where it comes Ramsey family, here's our expectations, here's what we do, here's how we do it. The stuff we talk about here on this podcast, we talk about in this organization. And so, you know, in other words, if someone wants to have that thought about nepotism, it's against both the actions that they've seen and what's been verbalized.

Wow. So it sounds like the theme here is treat them like a team member, whether it's compensation, promotions, interactions, and meetings. You treat them like a team member when you're at work. And voice out loud to the family member and to the team and even to vendors and customers that we realize there's a potential awkwardness and here's how we're dealing with it. Go ahead and just put it out on the table. When you just say, look, we demand excellence and here's what we do, we wear these hats,

and here's how we do it, and you don't get promoted around here, because you're a Ramsey. You know, it just doesn't work that way. And you don't not get promoted because you're a Ramsey. It's just equal across the board. Yeah. So I want to talk about conflict here for a second because when you're family, and we talked about Rachel, right?

She's not scared to have some conflict. Let's say you and Rachel are in a meeting. She's going to have conflict differently with you because you're her dad. Even though you're in a workplace environment, she's calling you Dave. How do you deal with conflict when it's family? Does it feel like you can go deeper and cut a little more because they have that history and context? You shouldn't in a business setting. And Rachel doesn't.

Rachel's just, she's like me. I mean, we both enjoy a good debate. And that's how we process information. And so, you know, out of our 17 operating board members, there's about four of them, other than me, that are very verbal. and the way we get to the last 10% of truth is we're fighting and arguing about it, and it's a sport. It's not a thing where we're trying to hurt someone or run. It's not personal.

We're not running someone down. And Rachel just enjoys the sport of arguing more than Daniel, for instance, or more than other operating board members. But there's a couple of them that like it. And that's okay. And it's okay. And it's okay. Daniel's going to, he's going to speak up.

He has plenty of voice or whoever, whichever other other operating board. remember you want a name is going to speak up. They have to have a voice. They don't get to sit in that room. But some of them are more apt to process information or process decision making by arguing and debating. And Rachel falls in that category. The thing you can't do is be disrespectful. I can't use my dad voice on her. And she can't become the, I don't know, the bitchy grown daughter or whatever, whatever thing you'd want to come up with. She's not allowed to do that here because someone else would call her out on it, you know, in there, if that has. happened. It wouldn't be me. And it comes back to what you're saying. You can disagree without

disrespecting. That's right. And that's a line you've got to figure out there. And I feel like you guys obviously do that really well. Most of the time. I can think of a time where I showed some bad body language that wasn't very respectful. But yeah, we try. We're not perfect. Yeah. So we've been in the operations side. I want to move into the succession side. So for that business owner, they want to transition the business to family, what are some of the practical things they need to be thinking about doing, maybe even when it comes to, you know, the finances, the legal side, not the relational. Well, if you do what we said earlier and you make your succession plan gradual, it helps a

bunch with the financial side because it doesn't, it isn't a sudden moment in time where someone has to come up with bazillions of dollars to buy dad out or mom out or whatever. or your uncle out, whatever their scenario is. And so if it's been planned over a long period of time, then it helps position the next generation to make that financial plunge if there's one involved. Certainly, there's a lot of companies do a lot of families do things differently. In our case, Sharon and I've worked very hard to be independent, and we've been really blessed.

So we're more than independent. We're in really good shape. We don't need income or we don't need the asset of Ramsey to exist. So when the day comes, if I'm alive and hand it off, they will not be buying me out. They'll just be taking it. I'm managing it for God. They'll begin to manage it for God. And they'll become the owners, the formal owners at that point.

We've already transferred the majority because it was estate planning, but it's not going to do with the power flow or the governance. I own controlling. I have control today. But when I relinquish that control, if you're a business owner and you're listening, get your act together on your own. Have a million dollars in your 401K. You know, have some rental properties that are paid for. Have some stuff. And then the business doesn't have to be put in a huge financial strain for the next generation in order to support you.

And so that's a big deal. And that might take you 10 years. That might be part of your 10-year transition plan, your succession plan. So get your act together, independent of the business. Now, then if they're going to buy you out, it can be stuff where you give them almost all the cash flow for three years. And the next generation just takes a salary, you know, a minimal salary. But all the profits go to mom or to dad or whatever to buy out. You know, three years of profits buys them out or four years of profits buys them out.

And that would give them a huge nest. if that's your only thing. But a lot of small business owners that are family do not do a good job of having investments other than the small business. And you need to have your own 401 case. You need to have your own real estate investments. You need to have your own stuff other than that. So how important is having an outside party, like an attorney, get involved? And at what stage would you begin to do that when it comes to transferring a business?

You need to consult one early on about how you're going to do it. I mean, we decided 10 years ago, 12 years ago, how we were going to do it mechanically with an attorney. And then really, we put a few things in place. We've done a few adjustments as we've gone along here, there, little things. But some of that was from a tax planning standpoint, from a state tax planning, and some of that was structural. We've got it set up to where, you know, there's only one last step, and that's the last little bit of percentage, which is all the voting stock, that I'll hand over. And that'll either happen at death or at, or at, quote, when I step aside. And my intention in this case is I intend to still work here and be a Ramsey personality.

Who report to me? Yes. I don't know if I'll be able to behave or not. So how do you know, is it based on a timeline? Because you're talking about 10 to 12 years. Is this a hard and fast thing? And, hey, we set this goal and say at the end of 10 years, we want to be in a place where this can happen? Well, what happens is it makes you answer the question like it does with a lot of strategic things.

Well, what must be true. What must be true is the finances need to be in order. What must be true is the next generation needs to be ready. What must be true is the brand transfer, if there is one that's associated with the founder, needs to be able to have been handed off. In our case, it's been a big deal. What must be true is the next generation, I think I already said this needs to have the money. The money needs to be figured out. And so then you start working towards. that. And if you don't set a date certain, it's like these guys that call me on the radio and they go, well, my fiance and I'm like, well, when you get married? Oh, someday. Well, that's not your fiance. Not until you set a date. Painter, get off the ladder. You know, and if the founder will never quit unless they force themselves to by putting a date down, and you'll be 87 years old with your

67-year-old child running the business with no power and no backbone. And that's just, that's not, that's not healthy for the business. It creates a horrible thing for the next generation. And it really reflects poorly on you. So how do you know when it's time to say, all right, I'm out. I'm letting go. Obviously, death is one way to do that, right? That's an easy way to let go. You don't have control of that. But is there a point where you go, all right, I don't want to do this anymore, or I'm not on a place to be able to do this anymore? I think it's an individual decision that you make with your family and with your leadership team, but do make a decision and put a date down, because otherwise you'll kick the can on down the road. Now, you can kick the can down the road if the things that

must be true aren't true. If you say, all right, you know, the next generation has to be ready to lead. And they're not ready to lead by the date you thought. And everybody around you's going, they're not ready. If you hand it to them right now, you're going to break their back. They don't have muscle structure to carry this thing, then you've got to stay a little bit longer and finish the mentoring process out or whatever. Or you've got to decide if you're going to go another direction because they're not able to lead it, not able to carry it. So, you know, if you've answered all the questions of what must be true, then you stick with your date. And some people go, I want to retire at 63. Some people want to quit sooner. In my case, I enjoy coming down here. I'm going to

force myself to step out for the good of Daniel, Rachel, Denise, and for the good of Ramsey. I'm going to force myself to do it, because I could work until I can't make sense, and it wouldn't bother me a bit. I could drive it all the way into the ground. It wouldn't make, it wouldn't bother me a bit. But it's not good for the things that I love. It would be completely selfish. So as we wrap, Daniel, I want to hear from your perspective as the next generation, what advice would you give to those that might be in your spot where you're going, all right, I got to carry this thing. I've got to make sure this transfer is smooth. What advice would you give to those people? Yeah, so for me, when I first joined the business, I raised my hand and kind of wave

my hands and said, hey, when it comes to talking about the future, when it comes to talking about what my potential role could be years down the road, I don't think I am at a place where I can emotionally carry the weight of what the future could hold. Like, I want to focus on being the best salesperson I can be. That was the role I joined the company with full time after college. And so for me, I said, hey, guys, can we just not have the conversation because I'm not ready for it. I just really need to win in my sales role. And over time as I grow, I think I will have the capacity from a confidence, from an emotional, from a spiritual perspective that I can carry the burden of this path. And so over the years, as I grew in my role, we had more and more open conversations about what the future could hold.

Now it doesn't intimidate me at all. Now I, well, that's not completely true. Now it's significantly less than it used to. Now I'm excited about what the future has in store, and I know that God, of course, as I mentioned earlier, there's always going to throw us curveballs, and he's going to do that on purpose so that we are forced to rely on him,

or we're forced to stretch in new ways that we wouldn't stretch ourselves. And I love how God does that for us. I don't always love it at the time. And so that transition should be gradual. It shouldn't be this, if both parties are intentional, If both generations are intentional like we've been talking about, it won't be this overnight transition. It'll be over time. It'll be talked about it. It'll be processed. It'll be earned more than anything.

I think what's important is, again, I'll go back to the gradual part. If you haven't started your succession plan and your transition plan, you're late. Well, my child's three. You're late. You should have started when they were born. You know, you need to start it because you've got to start processing it in your head. they've got to start processing it at the different levels like Danielson, you don't want to talk about it early. Now he's more open to talk about what we're going to do, how we're going to do it, and those kinds of things.

So you begin to talk about it. And then that allows that person that's coming up to be mentored by your leadership team, to build relationships with the leadership team that they're going to be leading, the organization they're going to be leading. It allows them a personal growth curve because they've got to have, they've got to put some tools in their belt they don't have. in order to be ready. And so you got to identify and go, you know, like when I was 32, I had, you know,

had 10 people and I was a boss. I wasn't a leader. And so I get John Maxwell tapes, right? And I start reading leadership, everything I could get my hands on. I didn't know what a leader was. I was a boss. I told people what to do. It's all I did.

And most of the time, they didn't even do it. So, you know, it was awful. It was horrible. And I'm a world-class leader today. But that didn't happen for me, and it's not going to happen for my successor. And it doesn't happen for you out there listening. And it's not going to happen for your success. It's not a natural state of affairs to grow.

It's an intentional act. And so reading, growing, attending conferences, you know, sticking with entree leadership, all the different things you can do to become better. And the successor, you know, needs to be continually sharpening their saw. Yeah. It goes full circle to what we talked about at the beginning of this. It has to be calling and it has to be, you know, as the older generation is planning, they have to do exactly what I'm so grateful for, which is what my dad did for us is he was very

intentional by planning with open hands. He didn't hold on tightly or too tightly to the plans that he had in mind. He, as we grew, both in our childhood and in our careers as adults, he adapted and he watched us and didn't pressure us to fit the plan that he may have had, but really like allowing God to to guide it and for it to adapt and change and continue to be intentional throughout it. You know, when have we ever created a plan and it worked out exactly as we did, right? King James Version says in Proverbs 22, train up a child in the way he should go and when he's old and not depart from it. A lot of people use that as a parenting thing and the idea if you teach him out of behave later

they'll behave, you know, that kind of thing. And that's truth to that. But this has to do also with calling and career. And what we forget is this. Those of us that, you know, let's say you're out there and you're listening and you want one of your children to come in and take over the business. It's your desire. What's not up to you? You better hold this with an open hand.

It's the best laid plans of mice and men because that proverb does not say train up in the child in the way you want him to go. It says train up a child in the way he should go. Actually, that's new King James. The old King James says in the way he is bent, train up a child in the way he is bent, meaning the way he is designed. And so I talked earlier about, you know, Rachel is a communicator on the stage. That's the way she's designed. Daniel's an entrepreneur. It's the way he's designed.

Denise is more ministry minor. It's the way she's designed. Had it been different, the roles would be different because I didn't figure, I didn't create them to do that. they were created to do that. I just watched it and said, this is the way they're bent. This is the way they should go. And then let that happen rather than, I really need someone in accounting. I wish you new details.

You know, sorry, can't do it. Wow. Well, Dave, Daniel, thank you so much for peeling back the curtain and showing our listeners how we have done family business, how we continue to do it, and how we continue our succession plan to pass it to the. next generation. I know it's going to help tons of business owners out there trying to figure this thing out. And it's so difficult. There's so much emotion. It's so relational. It's so tactical. There's money attached to it. So thank you guys for giving us that wisdom today.

Thank you, George. Thanks, George. Hope you enjoyed that conversation with Dave and Daniel. And there's no doubt about it. Owning a small business is hard. And when you add family to the mix, it can get even more challenging. That's why we've created a guide on the six major mistakes that will destroy your family business. To get the free guide, click the link in the show notes. Hope you enjoyed today's episode of the show. If you did, leave us a review and subscribe so you don't miss the next one. And if you're a small business owner with 2 to 200 team members, we'd love to hear your feedback on the show and ask you a few questions. Click the link in the

show notes to fill out a brief survey to schedule a call with Tim, our producer. As always, you can follow us on social media at Entree Leadership. This episode was produced by Tim Hull, edited by Jacob Harrison and mixed and mastered by Will Rudder. I'm your host, George Camel, and on behalf of the entire Entrail Leadership team, thanks so much for listening. Until next time, keep learning and keep leading. If you enjoy this podcast, you should check out other great podcasts from the Ramsey Network, like the Ken Coleman Show. Are you doing what you were born to do? I'm Ken Coleman, host of the Ken Coleman show, where I give you practical advice to help you discover your purpose and then map out a plan to get you there, from accounting to advertising, from plumbing to production,

you were created to fill a unique role, and the world needs what you have to offer. Join me on the Ken Coleman Show, wherever you listen to podcasts.