EntreLeadership - The Headaches of Leading Your Own Business

Episode Date: April 3, 2023

Today, we hear from: •      A business owner wondering how much cash she needs to hire her first team member •      A solopreneur wanting to know how to reduce the taxes his business pays •      A son seeking advice on the succession plan for his dad’s business •      A framing contractor struggling with cash flow since he keeps getting paid late Links mentioned in this episode: •      The EntreLeadership Podcast: https://bit.ly/TheEntreLeadershipPodcast •      Learn more about EntreLeadership’s Stages of Business: http://bit.ly/3yvdavv •      Find a RamseyTrusted tax pro: https://bit.ly/3RQZSlO •      Learn more about the EntreLeadership framework: https://bit.ly/3yvdavv •      Start your free trial of EntreLeadership Elite: https://bit.ly/3tI2fN8 •      Have a question for The EntreLeadership Podcast? Leave a voicemail at 844.944.1070 or submit your question for a chance to be on the show with Dave Ramsey: https://www.entreleadership.com/ask   Take our listener survey and let us know what you think about The EntreLeadership Podcast being a caller-driven show. If you do, you’ll be entered to win a $100 gift card: http://bit.ly/40dV9hf Start growing in business and leadership with the EntreLeadership Newsletter. Sign up to receive tactical tools, advice and resources in your inbox every week: https://bit.ly/3IRWnsL Support our sponsors: •      Hite Digital: https://bit.ly/HiteDigital •      NetSuite: https://bit.ly/NetSuiteEntre •      BELAY: https://bit.ly/351P9AE •      Payority: https://bit.ly/3IaA5SK •      Staples: https://staplesbusinessadvantage.com/ramsey Learn more about EntreLeadership Events: •      EntreLeadership Summit: https://bit.ly/EntreLeadershipSummit •      EntreLeadership Master Series: https://bit.ly/EntreLeadershipMasterSeries   Learn more about EntreLeadership Coaching: •      Elite: https://bit.ly/3tI2fN8 •      Advisory Groups: https://bit.ly/EntreLeadershipAdvisoryGroups •      Executive Coaching: https://bit.ly/EntreLeadershipExecutiveCoaching •      Workshops: https://bit.ly/EntreLeadershipWorkshops Listen to all the Ramsey Network podcasts anytime, anywhere in our Ramsey Network app: https://apple.co/3eN8jNq Learn more about your ad choices: https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy: https://www.ramseysolutions.com/company/policies/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. This is the place where we talk common sense for your small business, not theory, actual practical, applicable, ideas, facts, and processes that you can, used to change your leadership, change your business, change your life. Doing business, owning business, and running a business in the great country of the United States of America has been one of the great privileges of my life. And to come alongside many of you, tens of thousands of you in the Ontario Leadership Tribe and help you move your businesses along is also one of the great privileges. If you want to be part

of the show, call me at 844-9-4-1070. Leave a voicemail. We'll get you set up to be one of the callers here on this podcast. That's 8449441070. Or you can fill out the form at Entreeleadership.com slash ask. Alisa is with us in Chattanooga. Hi, Alisa, how are you? Hi, Dave. Thanks for taking a call and thanks for all you do to help business owners. Well, thank you. How can we help today? I started my architectural design business about a year ago. year to date, I've grossed 150,000. I have no debt in my business, and I've hired two part-time 1099 employees, office manager and a designer. I'm looking ahead in the next three to six months,

and I'd like to hire the designer full-time. But I'd like to know how much cash reserves, or I'm kind of thinking of an almost like an emergency fund I need to set aside because I do have some slower months and I want to still be able to make salary and still sleep at night, knowing that I'll be able to pay a full-time employee. How long have you been doing this, you said? One year. Okay. So your slower months, were they associated with seasonality,

or just the fact you were getting started and hit a bump? Around the holiday season, November to January. Okay. Yeah, design services probably not as much in demand. That makes sense. Okay. So, yeah, you've got to build up and be ready for that. Well, cash reserves are retained earnings, we call.

them are used for emergencies, for expansion of business, and to cover cash flow fluctuations as well. That's one of the things you would use them for. So you're asking the perfect question. Very, very well done. You're at the first stage of business that we talk about, the treadmill operator, where the whole thing depends on you still, and you're trying to get it to where it doesn't all depend on you so you can level up and move on up in the business. That's the right way to do this. very, very well done. Now, so what does this position that you're going to bring on full-time cost? The salary will be between 50 and 55,000. Okay. So if you had two months of the salary set aside, I think you'd be pretty safe as long as you have a fairly predictable cash flow and

pipeline of business. And it sounds like you do. My guess is you're steadily growing. rowing since you've opened, but not necessarily hockey sticking up into the right. That's correct. Yeah. As long as we don't have extreme volatility in your cash flow, and I'm guessing you don't. You're just add a client, add a client, and then you've got a logistical barrier. You can only do so much work by yourself, thus the reason we're hiring this person, right? Mm-hmm.

That's correct. Perfect. Okay. Yeah, a couple months. Because, A, you've got a predictable cash flow situation. It's fairly steady. it's not erratic, it's not volatile, it's not all over the craziness, and B, you know, we've got a situation where this person is also going to produce more money than you've ever made. And so,

given all of that, I think a couple months of salary, five or ten thousand bucks, $10,000 probably be where I would want to be and then bring them on full time, because I think you can weather almost any storm regarding that person with that amount of money. Now, again, Other things can come at the business. Other issues can pop up, but that that wouldn't. You couldn't survive it. But that's just part of the, you know, the fits and starts of business. Does that make sense?

That makes sense. Yeah, that's perfect. That's exactly what I needed to hear. What kind of income, what kind of revenues will that person generate? After expenses, I'm going to say somewhere around 2000. You mean after you pay them? after I pay them and then I'll have to upgrade some software and computers. Right.

You're running CAD or something like that then, right? Correct. Yeah. So, okay. I want to bill them out a little higher than that. That's not much spread. Okay. An income, this is a revenue producing position.

It's not unusual to try to 2x that. Well, and that's assuming that they were 60% productive. that 40% of their time is not spent on billable hours. And I've heard that that's a good ratio, but I can adjust my numbers. Well, I mean, let's run in a few months and see where we are, but it may be that we raise prices across the board, if that's the case. Because, A, you've got to manage billable hours. They've got to create the billable hours.

And so 40% of lack of productivity, is that lack of business to do, or they just are that inefficient? I think it's going to be a combination of training, continuing education, rep presentations, that kind of stuff, and lack of productivity. Okay. All right. I don't know enough about your world to dispute that. I'm just thinking that anytime we bring someone on that is a revenue producing position, one of our goals is to look at it and go, how can we two-exit? If they cost us 60, how can we have them produce 120? Okay. That's what we're looking at. Now, it can't always do it. It depends on the space you're in, the margins you've got.

But I'm talking about gross revs, not even that. I mean, I need, because I've got to pay for their office space. I've got to pay for taxes on them. I got to pay for their phone. I got to pay for their computer. I got to pay, I mean, it costs us $50,000 to $60,000 to sit someone down in here. You know, it doesn't cost you that much. But in our setting, we know all of that.

And then we got to pay them too. Oh, and then there's a 401K, and then there's a health insurance, and then there's, you know, and so when I add up what someone actually costs me when they enter the building, I mean, sometimes it makes me want to trade places. Not really, but I mean, that would work. So that's what I want to do, Elisa. I want to make sure I'm making really good gross revenues on a revenue producing position. I love to see two times.

I don't really want to have it. It doesn't sound like you've got it. I want to squeeze these numbers. I want to squeeze this orange a little harder, get a little more juice out of it. Not to abuse a team member or something like that, not to abuse a client with overpricing something. But I need these numbers to work to where I create a stable situation

for the company for me and for that, the new team member. Oh, man, I got to tell you guys, running a small business, the largest item on your P&L is payroll. And the biggest blessings you're going to have is your people. And the biggest problems you're going to have is your people. It's the biggest thing you deal with in business. The expense, the revenue production, the drama, the opportunity to help.

someone who's hurting, who's on your team, the compassion. It is the most bandwidth in your life when you're running a business that's taken up is your team. And it's a wonderful privilege. It's driving us. This is the Entree Leadership Podcast. I'm Dave Ramsey, your host. We're talking to small business people, the backbone of the American economy. If you're a business leader, I've got some great news.

Entry Leadership Summit at Opryland in Nashville. is a complete sellout. You missed it. You should have come. Because we're going to have Malcolm Gladwell. We're going to have Jordan Peterson. We're going to have Willie Robertson. We're going to have me.

We're going to have Dr. John Deloney and Ken Coleman and many, many others. Some of the top leadership minds in America today speaking to you, and you missed it. It's May 31st through June 2nd if you want to have some FOMO. I got better news, though, really. You did miss your chance to come. come live, but we are launching a live stream, and you can participate in the live stream. So you didn't miss it. You're okay.

But you did miss it. You should have come, but you can watch the live stream. You're going to be challenged and inspired. We'd love to have you. It's coming up quick. You need to register the entree leaders. Go to ontreleadership.com slash live stream. We're not going to run out of tickets to the live stream, okay?

We did run out of tickets because you missed it on the one in Nashville, but, But the live stream, you can get your tickets, okay? But you really should since you missed it. And you don't want to miss it. So get the live stream. It's going to be good. You're going to love it. Entreeleadership.com slash live stream.

You do not want to miss it again. May 31st through June 2nd. Don't miss it. If you want to join this show, call and leave us a message at 844-9-4-1070. We would love to have you. Theo is with us in Tulsa, Oklahoma. Hey, Theo, what's up? Hey, not too much, Dave.

Thanks for taking my call. So I own a self-employed swimming pool maintenance business that I started about three years ago. Last year, I revenue about 40K, and they hit me with about $8,000 in taxes. And so I was just wondering what's some good investments or something I can do to keep more of my money rather than give it to the government. You made a $40,000 profit, not revenue. Yes, yes, I'm sorry, profit, yes. Okay, taxable income, and your taxes were $8,000 on that. Yes.

Welcome to making money. You get taxed. Yeah. Yeah, there's no way you can hide from that. If there was, I probably wouldn't be doing the show. I'd just be selling that. Gotcha. Yeah, no, there's, you know, you don't want to create.

artificial expenses to avoid taxes. Right. So, because that is trading a dollar for a quarter. See, you're paying 20, you're paying less than 25% in taxes right now. And so if you, if you spend $1,000, you're only saved $250. So every dollar you spend on your business should be an investment. It should make you money, more money, not less. And so increasing artificial expenses just to not pay taxes is, you, you,

just blowing money. That's a dumb idea. You're trading dollars for quarters. Don't do that. Now, the idea is, you know, what can we do? I think you probably ought to sit down with a good tax pro and see if you're missing anything on valid deductions on activities you're already doing. Okay. How good a set of books are you keeping? I use QuickBooks, and so it keeps track of everything for me. And you keep all of your, you keep all your pool company cash completely separate from home until you take some out of it to pay bills at home. That is correct. Good job.

Good man. Because a lot of guys in your situation that commingle their funds and then they're buying groceries out of the company account and that kind of crap. And you can't really keep up with your accounting when you're doing that. So you're doing a really, really superior job, Theo, by keeping that separated. I must have taught you that. Good. Yep. But that's really good.

I'm proud of you. And one year in, you're already doing this. Do you have any team members yet? No, I'm going solo right now, but my son's getting ready to start driving, so hopefully I'm going to put him on that side of it as well. Yeah, good slave labor. Good. Nothing like having a parent who owns their own business.

You get to work. So can a self-employed person do like, 401Ks and that type of stuff? Yes, you can. If you're ready to start investing, if you're debt-free at home and you have your emergency fund at home and you're ready to start investing, you can do a 401K. However, I would recommend you did a Roth before you did a traditional, which creates no tax advantage today.

Okay. So it's not, it doesn't help what you called about. Right, gotcha. Because I would rather have tax-free when it's a million dollars than tax-free when you're putting in 10,000. So that I'm going to go Roth there. Yeah, I think sitting down with a pro, a tax pro, and letting them comb through your stuff and going, okay, you missed this, you could have done that.

Because I learned something from our tax guys almost every year, that there's something around here. You know, we found we could take an R&D credit that we didn't know and went back and had to refile some admitted returns a few years back and file the, you know, do the whole thing that way. And I didn't even know that kind of crap existed. So our tax guy brought that in and showed me that we, you know, we were leaving money on the table with stuff we were already doing. And it might be that there's a, you said you're taking mileage, it might be depreciating the vehicle. It ends up being better mathematically depending on the miles.

I don't know, depending on how expensive the vehicle is and all that sort of stuff. So, yeah, I, and the other thing is, are you setting aside, are you doing your quarterly estimates? I am not. It does it on my app that I have, but I do not set that aside. I just pay it all at the end of the year. Okay. You're the second year of business. If you don't do your quarterly, you're going to get extra penalties.

Oh, okay. All right. So they let you do that. They let you pay at the end of the first year, but after that you've got to file your quarterly estimates and make the deposits or you're going to get penalized. And so that's another reason to pull in a tax pro to help you get that part set up. But that, again, still not helping you on the dead gum $8,000.

It's a guy out here cleaning pools, D.C., Washington, D.C. And you took $8,000 of his money. And 51% of Americans pay zero federal income tax. But this pool cleaner is giving them $8,000. It's just not right. It's just not right. And it's not all the rich people aren't paying taxes. It's deadgum people not paying taxes is what it is.

So, tax, you know, we're going to put, we're going to tax the rich. You already are. The top 49% are the only ones that pay a dime of federal income tax. So that's a dumb but statement. And this guy gets taxed. So, yeah, get me started on Washington, D.C. We're so pro-business in our party. Yeah, I don't know what party you're going to, but I haven't seen any of y'all that are pro-business.

none of you people up there. Y'all need to get your crap together. It's unbelievable. If anybody ought to get to keep their money, it's this guy. You know? You guys milked me like I'm yesterday's cow already, but I get this, but this guy ought to be able to keep his dadgum money. This is just ridiculous. I'm sorry.

Theo, I'm on your side, man. But I'm not a very good lobbyist because I make too much noise. So you're going to pay your taxes, man. And I don't have any way you can hide it. that simple. So, ah, dad, blame it. Well, you don't get advice or metaphors like that in other business and finance shows. I'll just tell you. So you only get that here, only here, on the Entree Leadership podcast. Let me give you a couple of things to think about. If you are a business leader out there, you need to be plugged into a group. Now, if you get in our coaching

groups, Entry Leadership Elite, we can plug you into a group of other people doing Entree Leadership. And you should do that. 25 years ago, I started a Bible study in my office in the mornings before work. And I decided I was, I know, I knew then and I know now, and you know now, if you think about it, that you become who you hang around with. You use the same words they use. You read the same books they read.

you have the same gripes and anger that they have. You, if they read the Bible, you'll read the Bible. If they're good to their wives, they'll be good to your wife. I mean, you become who you hang around with. If they run their spouse down all the time, you become who you hang around with, right? and I decided that I needed to be better at leadership and better at business and better at being Dave. And so I needed men around me that were bigger than me, higher capacity than I was, or at least as big as I was, for a morning Bible study,

because I'm always pouring out to people that are trying to get something from us. We're trying to pour out and give and help people move up a notch. level up. And I can't very well do that. And I can't be leveling up if I'm not hanging out with people that are at least, I mean, I didn't need another, I didn't need another class where I'm the teacher. I'm always the dead gun teacher. So we, I, I, I wrote down a list of men in my area that are, and were, the tops in their industry. There were large income earners. In many cases, they were very well known in the music business. They were pastors of some of the larger churches in the area. They were authors that had more bestsellers than I've had. They were business guys

that no one ever heard of, but they were running their businesses fabulously and were kind to their team. They were good to their people. They were leaving a legacy. They were good men with their spouses, with their kids. And so I aspired to be like them. And the weird thing is about guys that are doing things at that level, gals that are doing things at that level is they don't generally flock naturally together. Eagles don't generally fly in a flock. Turkeys do.

And so if you want eagles to get in a flock, you have to line them up. So I got on the phone, called all of them and said, hey, I'm going to do a Bible study only for, high-performing, high-integrity, guys that are walking a spiritual walk, if you want to join. Every one of them came, much to my surprise. And these were guys I looked up to, not guys that looked up to me. We were together, that group was together, 15 years. It formed, it was an element in our success.

In my capacity as a leader growing. It changed me. It grew me. We called it the Eagles group. That group ran its course, disbanded, and we put together another group of a little less serious, but just guys that hang together. But again, the same criteria. And there's 12 guys in that group, and that group has been together now 11 years. They were at my house last night.

It's an evening meeting, and once a month. And one of the things I asked that group to do, and we did it last. night and I'm going to ask you guys to do it right now is I guys don't have people that are performing at this level don't have anywhere they can go that they can just brag they can just say this is just going good I mean COVID hit and I'm in the Plexiglass business I mean this is going good I mean I'm having the best year of my freaking life I everything I touch is turning to goal this is a good because it's just uncool to brag it's especially with big numbers.

You know, I made $8 billion. You can't say that to everybody. It's not a safe place to do that because you come off as being some kind of twerk, right? But in a group of guys where you're mandated that you have to say, tell me something good that's going on. And if there's something bad going on, share of that. So we went around the room, took an hour, 20 minutes last night, after we just sat around and shot the bull and discussed who's going to run for president

or whatever crap we talk about, right? But then we got down and said, okay, tell us something good. And the amazing things that those 12 men in that room last night have done in the last few months, the successes they've had, it was cool, it was inspiring. So we want to do that for you guys right now. If you're running a business out there, I want to give you a brag spot. This is a safe place. It's just you and me and a few million people, but it's just you and me hanging out right here on the internet.

and I want you to call up and tell us you did something good that you were able to help this team member whose family was had a family member that was sick. You were able to make profit like you brag on your team, brag on your business, brag on yourself because somebody needs to hold you guys up and give you a trophy because you deserve one. And this is the place.

So I need some of you to call in and get in touch with us. We're going to start a brag segment here where you call in and go, okay, things are going good, this is working. And it could be that you leveled up. It could be you went from, you know, trailblazer up to peak performer in the stages. It could be you're working on the personal driver or you're working on the people driver, or the profit driver and the six drivers of business that we talk about. It could be there.

You're doing one of those things. It's the best profit you've ever had. You know, I solved this people problem. I fired him. That you can brag. That's good because you needed to get that guy out of the office. He was a problem. He was like a splinter in the organization.

It was festering. And everybody was putting up with it, including you, and you finally manned up, gerald up, and did it, and cleaned up the mess. Bragg, we want to hear what you're doing that's winning out there because everybody talks about everything that's not winning. You talk about all the garbage that's going on in the economy, all the stuff that's happening in Washington, all the dysfunctional weird people that are running around in our culture right now.

There's some wackos out there, man. and you know and everybody's always spent all their time talking about that we want you to brag because it is healthy for you to brag and it's healthy for other people to hear that that small business people are winning in america right now because you are there's a bunch of you winning it could be bragging on income it could be bragging on things you've done i don't care what it is leave a voicemail 844 944 1070 844 944 1070 or fill out the form it on contrary leadership.com slash ask and just puts in you know put on their brag brag session and I'm serious I need to hear from some of you it's good for all these listeners to this podcast to hear that

you're winning and if if you have to change your name because you think you're humble or some kind of bull crap that's fine change your little name that's fine but you ought to man up girl up and just go my name is Dave and I'm freaking winning and tell us the story we want to hear about it We want to hear when you're doing something good, when things are working. You know, sometimes you do stuff and it's just like, my, how in the world? That's pretty cool. And, yeah, let us know about it. All right, Garrett is up.

Garrett is in Flint, Michigan. Hey, Garrett, welcome to the Entry Leadership podcast. Hey, Dave. Thanks for having me. Sure, man. How can we help? So I am three weeks into working for my dad's heating and cooling company. we have about 65 employees with a revenue of 15 million and I have an agreement to for the ownership

of the company over time to transition to me and the caveat is that both of my brothers have at one point been a part of the company and they are not any longer they don't have any attachments to the company any longer and I just wondered if you could hear that and have any advice for me about family and business and I know Daniel and Rachel and your family are involved with the business, a little bit different situation than I got going on, but if there was any way you could help. Okay. How old are you?

I am 27. All right. What's the timeline on this transition? About 10 years. Okay. All right. What were you doing before? I worked for Gordon Food Service.

Doing what? I was kind of an in-between sales and supply chain. Okay. And what are you going to be doing as your entry position with your dad's company? Right now I'm an administrative assistant, and I'm working in one department, and then the plan right now for us is to have me cycle through all the different departments to kind of see what everyone has to do at the company. and then from there a year or so down the road kind of see where we think I could help the most. Okay, that sounds healthy. Okay.

And yeah, then the next thing would be once you find out where you can serve, after you've served and proven your competency at that level in a position, then I would escalate you to lead a subteam of some kind. lead your first small team would be the next one and then lead a larger team and gradually because one of the things we've discovered about family transition succession plans is that the more gradual they are the the more successful they are and so I love your 10 year plan I like all of that and so the last two years of the 10 year plan need to be like You and your dad are hand and glove running the place together. That's actually where Daniel and I are right now. Daniel's the president of Ramsey Solutions,

and I'm the CEO. His office is next door to mine. And he and I, along with our operating board and our leadership team, are running this business together for this next season. And it's, you know, maybe five years or maybe six years. I don't know. We don't know exactly. We're just going to run it together for a while.

And it's not going to be 10. But that's the process. And so one of the things we heard as we studied successful succession plans was that when the next generation takes over and it's announced, everybody goes, oh, I thought he already was. Okay. Because you'd already been performing the duties of service, leadership is service. And you'd been serving the organization in a way that, as my friend Dan Kathy says, you get elected. the president in the elevator, not in the boardroom. In other words, the team says the team at Ramsey was not shocked because Daniel Ramsey had been leading at such a high level for the last

two years that when he moved into president, they're like, oh, kind of thought he already was. You know, it really wasn't like, whoa, it's a big leap. You know, it wasn't that, right? So, you're looking for this gradual, gentle thing and process. And so you've got to create org chart processes as you move along. But your first year is a good year. Go visit every station and keep your mouth shut and learn and serve. You're not there to help fix anything. You don't know anything. Yep. Okay. And just go in there with a lot of humility and always paying honor to your dad for the rest of your life. No matter what he says or no matter if you disagree with him or no matter what's going on, you're going to always give him honor because him turning this loose is hard for him emotionally.

And the closer he gets to turning it loose, the more emotional it's going to become. I know a guy who's experienced that, ha-ha. Yeah, I got to. Now, what happened to your brothers? Where are they gone? Determined that they are not a fit for the business. That was diplomatic. So my dad uses GWC, get it, want it capacity to do it for different roles.

And I just, I think that one of those three points, he's determined that they both are lacking in. They're not there at all. So he let, he fired them. That's correct. Yeah. So it's a delicate situation. and I'm just... How is his relationship with him as a father-son now, with them?

It started rocky, and more recently we've kind of all come together and just tried to have a big picture discussion of, regardless of business, we want to still be family and be able to see each other and love each other. So I think it's headed in the right direction. How about when they got fired, how was your relationship with them? With my brothers or my dad? Your brothers?

My relationship with my brothers has always been good. Okay. So you signed up to potentially take the same trip? Yes. Okay. All right. Your dad's a tough nut. All right.

I like him, I think. Wow. All right. Da-da-da-da-da-da. Well, I think one of the things you've got to manage is make sure. you keep the the the you might talk to your dad and your brothers about this a little bit it might help you all navigate some of these feelings keep your hats separate and so you're wearing a hat when you're at work as an entry level gopher all right okay and he's the CEO and

owner of a 15 million dollar business that he built I take it from the ground up yes and so an entry-level gopher pays honor to the person that does that. And that's your position at work right now. Okay. When you go home, you take that hat off and you put son hat on and he puts dad hat on, and that's Thanksgiving dinner. You don't wear those work hats at Thanksgiving dinner, and he doesn't use his dad voice on you at work. He treats you with the same respect.

He would treat anybody else at work. Okay. And I, you know, we've worked really, really hard on that. particularly Rachel and me because we argue a lot and so we have to argue the same way I argue with everybody else in the building I argue with everybody in the building by the way it's part of my style and I like people like fighting with me because it's how process information so I think they call it an enneagram 8 or something like that

the challenger right so you know I think you know I get I get intimacy from arguments it's weird but the anyway so I Rachel and I do that. We fight and I fight with people on operating board. I have big argument with two of my leaders this morning. And so, but it's a way to get through things. It's a hillbilly way of processing things for me.

I like it. So anyway, Rachel and I, when we're doing that, we have to remember that she's arguing with the CEO and I'm arguing with Ramsey personality. So I need to argue with her the same way I would argue with Dr. John Deloney or Ken Coleman or Jade.

Okay. And so, I don't know. argue with her like she's my daughter. Now, when I take my hat off at work and I'm not the CEO and I'm home and I've got the Papa Dave hat on and I'm playing with my grandbabies, which she produced three of, then that's pretty cool. That's a whole different thing, right? Yeah. And then she gets to say, Dad, don't drop my kid over the wall, okay? I mean, you know, quit playing with him like that. You know, she gets to say stuff like that. That's different. Okay, so don't throw him up into the ceiling fan,

you know, that kind of thing. So, uh, which, you know, we're going to, I almost did with one of the babies one time. But anyway, yeah, so that's the process, right, dude. So you keep those hats separate. Now, your brothers, they need to do that. And then part of that process was that several years ago, Rachel had her first book come out. Daniel was in college.

Denise runs our family foundation. And I brought Denise's husband, Rachel's husband, Daniel, everybody was at dinner one night. And I just kind of laid it out. I said, okay, we're going to put work hat out on for a minute, everybody. But it's also family hats simultaneously. So this one's a little bit weird. Rachel's getting ready to have an incredible year financially because this book's going to be a big hit,

and she's going to make, like, a truckload of money. And it's her book and her money. And so now the rest of the family gets an opportunity to either now be jealous or to be cheering her own and thankful that their sister just had a big hit. You get to decide. To their credit, they instantaneously. all decided they were happy for her. But if you don't say that out loud,

like what if your brothers get jealous in your situation, Garrett? That's what I'm talking about. Yeah, right. So it might be a good thing to say out loud. Guys, if this works over here, you're going to have that, you got an opportunity to be my brother and happy for me that this all worked out,

or you got the opportunity to be jealous and bitter that it didn't work out for you and it did for me and you're going to be angry at me or hold resentment against me for the rest of your life. you probably ought to go ahead and decide that ahead of time. And I might have that conversation with your brothers if I were you. Okay, yeah.

If I was your brother and you go over there and win after I got fired, I would have to be conscious, it would be a conscious effort for me to be happy for you instead of pissed off. You know what I'm saying? Yeah, absolutely. And they've been very happy for me up to this point. Yeah, but I certainly haven't. Exactly.

When you're sitting on top of a $15 million or by then a $30, million dollar company and they're not that would be a different scenario could be better to approach it they could on the front end then yeah and if they want to be mad at somebody needs to be your dad not you so yeah okay i don't want to mad at anybody but that's the point so yeah hey man you got a really fun time ahead of you if you all will uh communicate clearly and kindly about everything that's going on stay in your roles and keep a gradual process on this, you're going to really, you know, you could end up running a huge company here, transferring the ownership to you. It could change your life.

And your brothers can go on and have a great life doing something else. Your dad could have the great satisfaction of working with his son and being proud of his excellence, his, what was it, GWC he called it or whatever. Proud of his, you know, your rating, your score because you made it. I'm proud of mine. I'm proud of the kids, you know, the Ramsey kids that are in here and what they're doing. And, but they, you know, they're excellent. They're really, really good at what they do.

And so I've got reason to be proud of them. And so that's the thing. That's what you're looking for. You've got a really rich environment to do this with family business. But you have to be extremely intentional. You have to set aside extra communication. You have to do all kinds of things in that area. and just go, and if you've got a problem, you've got to air it out early and often.

Don't let it build up. And in private, all those kinds of things. So you got the right ingredients here to go for this, Garrett. I'm proud of you. Proud of your dad. This is a good move. What a great opportunity. This is the Entree Leadership podcast.

There are six drivers that drive a business. personal, your personal attributes, skills, capacity, which you should continually be growing and changing, your business is not going to be bigger and better than you are. If it's a family business, it's not going to be any more functional than your family is functional. You have a dysfunctional family? Expect a dysfunctional family business. It ain't like you can keep crazy at home when you come to the office with it. The second thing is you need purpose.

the business is bigger than the bottom line. It needs to have some meaning to it more than just cranking out dollars. The third driver is the people driver. Building a unified team is the key to winning in business, getting the thoroughbreds in the building and getting the donkeys out, trying to keep the donkeys from getting in in the first place, the hiring process, because no one ever won the Kentucky Derby with a donkey, I'll just tell you. So you need thoroughbreds.

This is what it is. and by the way, they're less drama and they're more, they're less selfish than donkeys. And they're less stubborn, literally, for real. So people, people, people, people, people. We spent a lot of our bandwidth on people in business. We've talked about that earlier. The fourth one is plan. You have to have a plan.

No one wins by accident randomly. And then that leads you into developing your product. If you start with product and you're not, you ain't got your, act together, you don't have the right people, the purpose and the plan, your product's going to suck. And people do this all the time. They go, I got this great idea. But you don't know how to find your butt with both hands. So, you know, you really need to, you really can't just take a great idea to market. You have to have some business acumen. You have to have some people skills. You have to be able to do this. You know, people say all the time, I've got a great idea. I want to

bring it. Listen, dude, I don't need any more great ideas. What I need is great people that can implement ideas. Ideas are a dime a dozen. People who get crap done, they're not easy to find. Ideas are everywhere. Profit. Profit is the natural byproduct of having done all these other things. If you open your business to make a profit only, and that is your sole goal, you're going to go out of business. You've got to be serving your team. You've got to be serving your customer. And the byproduct, the natural thing that occurs is profit. As my friend Rabbi Daniel Lapin says, if you serve people, well, they will give you certificates of appreciation with president's faces on them. And then as you go around these six drivers of business, personal purpose, people, plan,

product, and profit, you will cycle through those. And each time you do, you will get more sophisticated and more layers to each one as you walk through the five stages of business. The first stage is the treadmill operator. Too much of the business relies on you. You're a startup. You're a one person, two person, three person show. If you don't go to work, there is no work. That's how we all start. But if you stay there, you stay on a treadmill. If you want to level up,

you've got to get some of the business results that are generated without you, and that takes you to the Pathfinder level. In the Pathfinder level, your problem is you lack clear direction. If you want to level up and get out a Pathfinder and move on, your team has to be engaged in a shared direction. That's where plan kicks in big time.

And then once the team is all, we literally have got the ducks in a row. We literally are all heading towards the same goal. It's a stated vision. Then we level up. We become a trailblazer. Now, trailblazers is where sometimes you lack the leaders and you lack the detailed plan to scale your business. There's a lot of stuff happening at the trailblazer level, but there's a lot of chaos, too. It's reactionary.

It's not intentional. There's bottlenecks. There's not enough systems and processes. There's not enough vision and strategy. Man, I remember that. It's kind of a fun time, actually. But it's not sustainable. It'll kill you.

So if you want to scale up on that, you've got to have a leadership team. It's executing a plan, executing processes and systems that's scaling the business. And it doesn't require you to check on every little detail anymore. It's not only the team doing what they're supposed to do, the leadership team knows what they're supposed to be doing. they're holding them accountable and pushing that on. That takes you to peak performer. Now your business is rocking and rolling, and you've got to be careful. It can become too comfortable.

And the way to fix that is you and your team have a relentless culture of excellence, a relentless culture of getting better. And then you level up and you go to Legacy Builder and you develop a succession plan in the Legacy Builder. We're at the Legacy Builder stage now, but we still work the six drivers all the time here at Ramsey. And you do too if you want to win. So that's the entree leadership framework.

The six drivers and the five stages. The six drivers take you up through the five stages, and it will change everything in the process. Once you recognize where you are and what you've got to do in the six drivers to level up and go to the next stage. And it's not necessarily about how much money. It's not necessarily about how large your team is, although we traditionally see money get bigger,

team get bigger as you move up through these stages. That's not unusual at all. All right. Up next is going to be Dave in Canada. Hi, Dave. Welcome to the Entry Leadership Podcast. How can I help? Dave.

So I lead a team of about eight of us, including my wife and I. And I'm in residential construction, framing services to be exact. And my question is, how do I get my contractors to pay their bills on time? You're framing a house and the general. contractor is not paying you properly? Yeah, basically. So what happened, I used to, I used to not have a due date. So finally, I didn't know exactly when to ask them for payment. So I figured I'm going to put up a 30-day due date because some were paying within 30 days and some were paying in two weeks. and now, yeah, systematically, lots of them pay after the 30 days, and yeah, it just really hurts my cash flow.

How many different contractors are you working for? Probably about 10 of them, 10 to 15. That's good. Okay. So you're not locked into one or two. All right, good. No. And I do have a couple of really good ones that I'll bend over backwards for just because they pay basically right away.

Yeah. Okay. So we always say around here, and it's going to be true in your case, too, that a collections problem is not really the problem. It's a symptom of the client relationship has not been handled properly. Now, that's a very nice way of saying you didn't tell them what you expect them to do and hold them to it. Right. You never sent them a bill before, and they just sent you a check. Then you start sending them a bill that said 30 days, and now they're paying in 35 or 40 days. and it just kind of came out of nowhere. There's never really been a detailed up-front discussion. And so here's the way you fix it. You could print up a five-point bulletin on a one-page thing in 18-point font that says these are the five things I need help with. And you sit down with a builder before you take.

a job again. He calls up and says, I want you to do the framing on lot 49. Okay, happy to do that. We need to have coffee because I need some help with something before we start. Right. Go sit down with him off the site, not in front of his guys or your guys, just the two of you and say, here's exactly what I want you to say. I'm a small business guy. I'm learning to be more sophisticated in my billing and I need your help. I cannot handle it financially if you don't pay me on time. And if you don't pay me on time, I'm not going to be able to work for you anymore. I know you're the kind of person who pays on time. I just never told you this out loud, and I need your help.

So I'm going to send you a bill at the first of the month. It's going to say on it 30 days. It does not mean 31. it means I need the money in 15 days, but it's going to say 30 days on it. And if you will send me the money inside of 15 days, I'm going to be your biggest fan because you're helping this small business guy become more sophisticated and helping me to keep my guys on the job. And we will fight and fight and fight and fight to meet your deadlines

and serve your customers and do anything we can because you're the guy that pays me in 15 days. And I need you to be the guy that pays me in 15 days. because I need the help. Right. It's not your, you hear the difference in the spirit. We're not slamming our fist on the table and being demanding and waving around and saying you have to do this or I'm going to cut bait. You're asking for them to help you and letting them know if they can't help you,

you're not going to be able to do it anymore. But you've never said that out loud in their face. Not exactly. I've had a few discussions with some contractors. Yeah, after the fact. Yes, after the fact. too late. You didn't set the table. I'm telling you to set the table before dinner, not try to figure out how to get the plates out after dessert. Yeah, great, right, right.

Okay, you got to get it, you got to sit down with them ahead of time and set their expectations. I got to tell you, if a contractor reacts poorly to the way I just told you to present that, humbly and asking for help, I'm a small business guy, I need your help. And if he gets, if he kicks sideways after that and is a jerk, you don't need to work for him because he's probably broke. Right. Well, and that is actually the case with a lot of my contacts or quite a few of them is they're on a construction draw. Yeah.

So it has to be done to a certain extent before. They don't even have the money when I start building for them, and I know it for some of them. No, they're going to get the draw based on the framing package going up. That's one of the marks on getting your draw. Yeah, exactly. If they do it in Canada, the way they do it in the U.S. anyway. Here, you're going to get a draw when you break ground.

You're going to get another one when the foundation's up. You're going to get another one. The lumber package is up. You're going to get another one. The roof goes on. It's pretty standard draw schedules. Yep. And you're probably on something similar to that anyway.

And so you don't need to bill inconsistent when they're going to get their draw. But you also know that what you're telling them is you need to get your dadgum draw in because you need to pay me. That's the message inside of this bottle that I'm set. I'm selling here. Right. And so that's going to set you up to win on this. So what we discovered was early on in our business, the mistake I made was exactly the same thing. I didn't tell people what I expected. And then I was pissed off when they didn't do what I didn't tell them. Right. Which is weird, you know, because I never told them. Yeah. So I'll just, if you just set the table, and I have made a thousand phone calls to big companies in the early days of this going,

guys, we're a little old radio show over here in Nashville. We're not freaking eye heart. We need you to pay your bill because it's how we stay open. I can't make payroll. Help me out here, guys. And that's my first collections call. And then I got to where, oh, if dot com is in the name of your company, you just need to prepay because you people fold up like a tent.

So, you know, and we just, we had to set our business policies and procedures differently to cause them to pay us is what it amounted to. And so, yeah, and again, most of it is you having a very clear, if you'll take the time and do that 10 times with 10 builders, you're going to solve 90% of your problems. Right. If you'll go have coffee with all 10 of them before you take the next job,

I need your help. I'm a small business. I know you pay me out of the draw, but when we hit that point where you can draw, I'm going to send you a bill, and I need the money in 15 days. The bill's going to say 30, and I can't wait 32 days,

because I've got to pay my guys, and I've got to have your help. And it's the only way I can operate, and I'm going to be your best sub. I'm going to build these houses. This is going to be a clean job. They're not going to be, you know, we're going to take care of this framing package.

We're going to be on schedule. We're going to work in the cold. We're going to do whatever it takes. It's Canada. Of course, you're going to work in the cold. My God. So that was a given. But yeah, I mean, you just tell them the thing.

We're going to take care of you. You're our customer. We love you. But you've got to take care of us. And that's how this works. And you put that back together. So, hey, Dave, you're in a good business. And carpenters, man, they build the world.

So thank you. It's very, very cool. It's interesting. Those of you that aren't in a construction business, I'll tell you about guys like Dave. I grew up in a construction business, real estate business. So if you're walking around and, you know, you see a house over there and a guy's, you just run into a guy and he goes, I built that house.

He's either the framer or the general contractor. Because framers always say I built that house. The bricklayer never says, I built that house. He says, I put the brick on that house. But framers always say I built that house. There's tremendous pride among framers. I built that house. They'll act like they did the whole dead gum thing.

They put the frame of package up. But there's this cool vibe that comes with that. And the roofer never says, I built that house. The electrician never says that. He says, I wired that house. But they just don't do it. But the framer, I built that house. Because in a structural way, he actually did.

That's very true. But it's a cool pride thing that goes with that trade. And it's a wonderful trade and a wonderful bunch of people in that trade by and large. So good people. I've had good experience with framers. over the years and all the stuff I've built. I like them. They're good, good, good bunch. Hey, small business in America is a good bunch of people. They're not like corporate America. I mean, they're going to take care of you. They love you. They want your business. They want you to be a

happy customer. They want your, they want their employees. They love their employees like their family. That's how small business operates in this country. And I'm tired of some of you idiots in the media that don't understand that. And you act like, let me just tell you, the driving force in the American economy is a small business owner. It's 54% of the gross domestic product.

It's not a philosophical statement. It's a statistical statement. 54% of the gross domestic product in America is small business people. You're the ones that do it. I'm one of you. I love you. And that's what this thing's about.

We're here to help you get better, to level up and to do what you need to do, guys. That's how this thing works. So thanks for listening to the Entree Leadership Podcast. I'm your host, Dave Ramsey. I want you to remember that your business only grows when you do. You've got to get off your couch. You got to turn off Netflix.

Read a dadgum book. You need to do something different with your life. Choose to become a better leader. This is the Entree Leadership Podcast.