EntreLeadership - We Made $1.2 Million, But Took Home Nothing

Episode Date: August 4, 2025

Today, we’ll hear about: •             A woman whose niche business doesn’t make a profit •             A business owner considering adding commissions to her pay structure •             Dave Ramsey’s take on how to properly demote an employee •             A man looking to increase his revenue above $1 million Next Steps: ·      📞 Have a question for the show? Call 844-944-1070 or send us a message: https://ter.li/ask-us ·      📚 Learn about the EntreLeadership System: https://ter.li/system-p ·      💻 Get EntreLeadership Elite for your business: https://ter.li/elite-p ·      ✉️ Sign up to receive tactical tools, advice and resources in your inbox every week: https://ter.li/enl ·      🏢 Attend EntreLeadership Summit: https://ter.li/summit  ·      🎤 Attend EntreLeadership Master Series: https://ter.li/masterseries  ·      📖 Order Dave’s new book, Build a Business You Love: https://ter.li/b4kru2   Connect With Our Sponsors: 💼 Go to  Belay Solutions or text ENTRE to 55123 for their free resource! 💻 Visit NetSuite today to learn more. 🧾 Visit Payority for a free consultation! 📈 Grab Sales Gravy's free resource to help you hire and lead better. 📝 Use code ENTRE15 to get 15% off your first year of Trainual.   Listen to More From Ramsey Network: 🪑 Front Row Seat with Ken Coleman 🎙️ The Ramsey Show 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show💰 George Kamel   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

From the headquarters of Ramsey Solutions, this is the Entree Leadership podcast where I take calls from leaders like you about what it takes to win at any stage of business and leadership. I'm Dave Ramsey, your host with over 30 years of experience leading in the trenches right alongside you. I did this crap today. If you have a question you want to ask on the show, well, fill out the forum at Entreeleadership.com slash ask or give us a call and we'll call you back and get you on us. a caller. The number's 844-944-1070. 844-944-1070. Renee is with us in Evansville, Indiana. Hi, Renee. Hi, Dave. What's up? My husband and I own an antique car parts business with six employees that did 1.2 last year. We've been in business 35 years and we've amassed a huge inventory and we're

62 and 65, love what we do, but we're exhausted from the treadmill. My question is, can we expect to sell our business if our bottom line is usually close to only 2%? Well, there's three ways to place a valuation on a business. Typically, small businesses are sold at a multiple of four or five times net profit. That doesn't sound like that's a good plan for you. The second, way is what we call book value. Book value is if you turn the key and close the door and sold off all the stuff, what would all the stuff bring? How big is this inventory? What's it worth? 10 years ago, not someone who was familiar necessarily with the industry at 1.5. But we have six buildings and 12 Connix containers just jam-packed full.

Do you have a good accounting of it? Do you know what's there, or is it just a scrapyard? No. 60% of our revenue is from these large parts buyouts that we have. What's that mean? Well, we buy them in lots. Like a widow calls us and said, husband's collected this for 50 years, come and get it. And so we bring that in, we stuff it in our

buildings, and about 60% of our revenue comes from that. From reselling those items? Yes, yes, and we do it on a cash basis. So once we spend a dollar on inventory, it hits the bottom line. Yeah, I got you. Okay. And all of our extra cash, this is why we don't make any money. All of our extra cash. It goes back into more inventory. Right. And making obsolete parts fabricated. So we've got a whole list of things waiting for cash. We have no debt. Okay. And the third way to value a business is a multiple of gross, which probably does not apply here.

That applies in a very standardized business where you're selling a sub-sub-shop, sub sandwich shop and people on the sub sandwich business pay three times gross or five times gross or whatever, that kind of thing usually. But your business is so nuanced and unique that that method would not apply. It sounds like that if you guys went bananas and had a going out of business fire sale and cleaned out the inventory over the next two years, you would make more money doing that than you would selling the business. Interesting. We prefaced that sale with some feelers, on some legacy partner that might want to just take it all? Yeah.

I'm fine either way. I don't care. But they need to pay you not for the net profit because there's not any. They need to pay you for the inventory. If someone would give you a million dollars for the inventory, you'd take it, right? Absolutely. And call it a day. Because you're not going to get that as a multiple of 2% on 1.2 gross.

not close right so i mean if someone gave you you know just walked up and said i'll give you a million dollars for all this you would take it you should without a doubt yeah yeah i'm going to start there and or talk to the big buyers in the business and say hey come bid on and and i don't know how you do this in your world um but some method of liquidating the inventory Right. That's all I'm saying. So it could be all the way from one big buyer, or you build crates and you sell off, you know, grab bag crates at antique car shows. And, you know, I don't know. You can buy this for $100 and, you know, it's a big old pile of stuff. I don't even know how this works, but I'm making stuff up here. But stupid stuff, really. It's so interesting. But I mean, if you could, or if you've got this stuff categorized enough that you could sell, you know, 42 of the same kind of part, door handles or wheels or whatever, then you would have people that are doing rent of car rehabs and stuff.

Okay, I want to, I want to create a wheels. I'll take a crate of wheels or I'll take a crate of door handles or or bike. you know more how people would buy this stuff. Maybe it's by brand or by year. You know, all Chevrolet stuff from the 1930s, all Chevrolet stuff from the 1940s, or I don't know. What like that might work?

What would work? I think the one person who wants to leave, because if we go down, there's not a lot of alternative sources. We ship all over the world, and we're very, very specified to one kind of car that you can't get parts for at Rock Auto. Yeah, they're all antique cars, is what you mean. They are, but it's pretty special.

To a certain vehicle? You've got a million dollars in parts for one type of vehicle? I know, it's hard to believe. Is that what you're telling me, though? I'm asking. Yes, we do. We do. And we're one of the only places to get it. I don't think you should tell me, but I'm going to ask what the vehicle is. Maybe you shouldn't tell me, though. I don't really want to tell you.

Okay, you shouldn't. I don't disagree because it makes you vulnerable. I'm so interesting, though. Okay. Now my brain is run amuck trying to figure out what it is. So this has to be an antique luxury vehicle, doesn't it? Yes. Ah, okay. Okay, good, good. Yeah, then you know who your buyers are. They're all over the place, but they're a very unique bunch. So it's not a bunch of different brands or it might be a series of years.

There might be two or three different decades involved, but there's nothing more than, but it's all one brand. And then so do we put the, 1528 or 60 most requested parts for a 1950 through 1955 renovation of this vehicle in a crate and sell you the starter kit for a renovation? I think that that's what we do on a daily basis. We sell the garages, we sell to hobbyists. But you sell individual parts, don't you, not kits?

Yes. Okay. Wow. That's quite a bit of part of my job is getting kits together. Okay. I do all the purchasing too. All right. Well, what I'm going to do is I'm going to be less in love with inventory purchasing,

and I'm going to get really in love with selling inventory. And a matter of fact, I'm not buying anymore. Okay. That was a question. Should we stop buying to make our bottom line look good? No. You stop buying because you don't need any more inventory. You've got a million dollars that's not profitable.

You don't need to increase this inventory. As a business model, you need to learn to sell what you've got and clean it out and or scrap it out and get down to close to zero. And then if you want to stay in business, you can start to buy again. But you need to reduce your million down to $200,000. You're sitting on a lot of crap. Oh, we are. Yeah. And real estate taxes.

Yeah. Oh, you own the real estate? All of it, yeah. What's the real estate worth if we cleaned all the car junk out of it? Oh, gosh. Not a lot. Okay. Not in a good neighborhood.

Okay. So it's just shops and storage units in whatever, small warehouses in bad neighborhood. Okay. But you could get $100,000, $200,000 for it, probably. Oh, yeah. Okay. Yeah, let's get it cleaned out and sell it. And so what you, I'm going to, the one thing, yes, I'm going to look for the legacy. Yes, I'm going to quit buying. Yes, the method for you to get the most out of this business in the next 24 months is price everything to sell in 24 months. Yes, or 36 months or whatever the number you want to come up with is. But at that point, we're done. And the rest of it's going to the scrap yard for metal pricing and or a legacy. buyer comes in and buys it for almost that price and piles it up in his backyard and then you sell off the real estate and you walk out of this with a total of 700 to 1.2 million between the real estate and then

selling off the stuff over 36 months. And you quit buying and so yes, your profits are going to go up, but not for the purpose of reselling the thing. If someone comes along and says, hey, I do want to buy this, that's okay too. We'll do that. But I don't think our purpose of reselling the thing. But I don't think our purpose here is that I think you getting this inventory liquidated is going to give you your most dollars is what I think I'm understanding. That's what it feels like to me. And however we have to liquidate it to the end-use consumer, to one legacy buyer, to three legacy buyers minus the real estate, and then you go clean the real estate out, and then you go sell the real estate separate. Separate the real estate from the business, by the way, for sure. So those are a couple

of suggestions to mix in there. But book value is your highest and best appraisal based on what you're telling me, I think. And you can dig into it certainly further, but it was a good discussion. And everyone out there is dying to know what this car is, including me, a car guy. But, oh, well, we'll just deal with that. Have her tell us off air so we can at least, so at least we will know. The rest of you are screwed, but we're going to know. Okay. That's... We'll keep your secret, Renee. It won't be broadcast. These days, business as usual is anything but.

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It brings accounting, financial management, inventory, and HR into one place, so you're not left shuffling a dozen different spreadsheets. That gives you the visibility you need to make quick decisions based on actionable data. And NetSuite AI automates everyday tasks so your team can focus on. strategy. It's one system for full control and no guesswork to tame the chaos. And right now, if your business is doing a million or more in annual revenue, download NetSuite's free e-book, navigating global trade, three insights for leaders at netseweet.com slash Ramsey. That's netsuite.com slash Ramsey. Gene is in Nashville. Hi, Gene. Welcome to the Entree Leadership Podcast.

Well, thank you for having me on, Dave. I appreciate it. My pleasure. I have a company that provides environmental consulting services for new development and construction. We have about $1.4 million in revenue and 15 employees. The majority of our business is recurring monthly income from regular services, just services. And I would like to get your input on how can I structure a commission when an employee acquires new business for us. What is the ongoing services? I buy commercial property and buy and I purchase environmental reports, but it's not an ongoing service.

It's a one-time part of my due diligence. We do the stormwater inspections during construction. As a matter of fact, we're working on one of your projects right now. Okay, you're doing the stormwater inspection up through the end of the bond? Not necessarily the bond, but through the end of the project. Okay, all right, all right, because our projects are old enough that should be about done. on new construction. Oh, well, I bought a new piece, and maybe you're looking at it.

Okay. Yeah, all right. So, but it's stormwater. So it's not recurring perpetually. It's recurring just through the distance of the construction, the calendar of the construction, right? Correct, but it can vary in length of time. We've had, like we've got a client that turns around dollar generals in four to six months, and we've got some subdivisions where we've been working for over 10 years because they go into new phases.

Yeah, the development, the developer, okay. Correct. Mm-hmm. But the actual physical storm drain you're inspecting moves along as the development moves along. Yes, we're actually inspecting the construction. Yeah, okay, that's what I'm saying. Yeah, new construction. So once the, okay, wow.

All right, and your question is how to pay commissions on landing that client? Yes. We have an employee that is switching to more of a sales role, and I would like to find a fair commission for her. I'm getting a real tight range of 5 to 20%, which doesn't help. So I'm not sure how to structure that because the project could be a very short duration and a very low type monthly billing scenario, small project, or it could be something again that could last 10 years and be a big project.

Wow, okay. The relationship last 10 years, but really the actual project doesn't. Because like if you had like a residential development and it was six phases, phase one doesn't last 10 years, but all six might. Correct, but usually we'll roll over from one phase to the next. Yeah, but that's a client relationship versus the actual product. Okay. All right.

Wow. And this is just paid as done. I mean, there's not like a big lump on the front end. It's just as the work is done over that. Let's say it's a six-month project. You just bill them once a month for six months, right? Correct. It's steady.

It's the same, it's a level cash flow. Yes. Okay. Number one, I'm going to pay them as I get paid. Okay. Not before. And that way, if something blows up in the middle, you don't have to try to recoup out of an employee.

That's a really rough place to be in. And so I'm just going to, and so their first few months, I might have to support them with some salary until they get enough of these things layered up to make a living. Well, right now our employees, including this employees doing more sales, actually provides the service. I mean, if you think of it,

sort of like a pest control company that might have require new clients because someone saw their truck. Yeah, but what I'm saying is, is if you just start fresh, they have zero clients, then they get one client, they're not going to be able to eat off a one. They're not able to pay their own bills. Okay. And so until they get layered up from one client up to whatever, 10 or however many they can, their capacity is, you might have to support them in the first 90 days of getting

clients or the first six months of getting clients. but then after that, then they should just keep enough new clients coming in to offset the old ones dropping off. Agreed? Yes. Okay. So looking at that, then, it's just a straight commission thing per dollar, and it is a straight percentage. We don't have to do anything where I would pay them as you get paid, not as your promise to be paid, not as there's a contract.

If their client doesn't pay, they don't get paid. Like if the developer goes broke, they don't get paid. So only when the money hits my books do I pay. And that's been a cash basis company. We don't borrow money. I'm not going to be in debt to my employees. And that's what ends up happening if you owe them regardless whether the contractor goes broke or not.

So their job is to not only get clients, but get clients who pay. Right. And so, yeah, then, and you've never done this on commission before, and you're doing 1.4 million of it? Correct. Hmm. How long you've been doing this? 22 years. Okay.

So you ought to be able to map out this new person's capacity and what they can bring in. What dollar, gross volume can they bring in in a year when they get full? I'm not sure I understand that. Okay. If this person does all the work that is humanly possible logistically, because there's a limit to what they can do, because they're not only selling it, they're servicing it, correct? Correct. So there's a limit. How many dollars can this person, can a single person generate towards your gross revenue?

Can they bring in 400K? Can they bring in 300K? Can they bring in 500K? Okay. What do you think? I'm not sure. Well, you've been doing it 22 years. I mean, you've got 15 people.

many of them are in the field doing the 1.4? We've got 15. All 15 are doing the generating the deal? Correct. Yes. But they're just all on salary. Yes. Yes.

So they're bringing in 100,000 apiece? Correct. Okay. Well, 20% is 20,000 bucks. They're not going to be broke. I'm confused. Right. You don't have anybody doing staff work in the office or anything.

Oh, we do. The 15 includes people in the office as well. Okay. What I'm asking is how many of the 15 are currently selling and doing what you're asking this other person to do? Anybody? We have 11 potential people who could be selling. Who's in the field now generating the 1.4? 11 people.

Okay. So that's 150,000 apiece. Yep. At 20% they're still starving to death. Well, they're paid hourly as well. As well as the commission. Yes. Oh, okay.

I missed that part. Okay. Huh. All right. Then so we, well, the thing I'm trying to do is I'm trying to give them a commission and now including their hourly that doesn't cause you to lose all your margin, but also gives them enough that gives them a reason for. doing it. If they can't buy a biscuit with the commission, it's irrelevant to do all this.

Right. Okay. But if they can, but we also don't want them breaking you. And so, so what does that, okay, of the 11 that bring in the 1.4, what would the average income currently be for one of those? The average income be? What do you mean? Annual income. What they're making or what we're making? You pay 11 people to bring in 1.1.4. You pay 11 people to bring in 1.4. before. One of those people, what do you pay them annually? Between $50,000 and $70,000. Okay. All right. And so, so your biggest cost is the payroll associated with the actual revenue production, by far. Yes. You don't have anything close to a second on that. Okay. No. So you don't have a lot of room to add commission to that. Are you going

to reduce the hourly in order to put commission on top of it? I hadn't considered it, but I could. Okay. If you don't, then it's only 5% because you can't afford anymore. Right. I mean, so on 150 grand, they're going to make an extra $7,000 a year in commission on top of their hourly, and that's going to be about it. Okay.

If they make 75 and then they get a little bit, this is basically a bonus system more than a commission sales rep. Or if you wanted to say, okay, I pay somebody 75 now, they bring in about 100. that's a 50% commission rate and take them off of hourly. Right. Or do some hybrid in between. You could do that. You could cut the, you know,

I'm going to pay you $50,000 a year and $25,000 in commission. And so $25,000 on is, you know, that's more like 15% then. But you'd have to reduce what you're paying them now in order to pay them north of five. Or you're going to cut your margins to ribbons. Yeah. If I'm doing the math right in my head,

I'm sitting here just doing it while we're, talking, but I think that's right. So what I'm always doing is I love to give them an incentive. I want them to be able to eat first, then I want them to see their way to making really good money while I'm making good money. And so if I've got a guy that brings in a million dollars and I pay him 10%, he makes $100,000, I want him to make, if I'm paying him 10%, he gets $100,000, he brings in a million. and we've got 900,000 here to deal with after we pay him, how many times do I want him to do that?

All day long, I want him to go make a million dollars because I'm making $10 million. You see how that works? So you want it to where, if they can really ramp up and make serious crazy good money that you're making crazy good money while they're doing it. But what you're describing to me, I don't know that they've got the capacity

since they're doing the service and the sales themselves. they're actually providing the inspections and the reports and the environmental whatever on this. As well as selling it, I don't know that they've got the capacity to bring in much more than a couple of hundred grand based on what you're telling me. You don't have anybody else out of the 11 bringing in $2,000, $400,000 in revenue based on the numbers you're giving me. Right. So you can't promise somebody on that. for some reason, are they able to do more and they're just not? Hours in the day?

No, I think that's pretty standard. We're building market rates, I would say, probably a little above market for what we do. Yeah, but I'm saying of your 11 people, could they double their production logistically, physically, hours in the day? Do they have enough hours in the day to do it? No, not really. I don't think so. I don't think they got 50% capacity unused.

I doubt it. Definitely not. So these guys have an upside of you paying them on somewhere around $100 to $200,000 worth a revenue production. And so if you pay them 20% on that, they're starving to death. If that's all they get. Right. So that's what I'm saying.

So it has to be salary. It has to be some kind of salary plus something. And if the more you wait it on commission, the more you're looking at having to reduce their current fixed pay, which probably would be a morale buster. Yes, right. Yeah, unless it was on the way to make a double income, which they can't do because they don't have the capacity to do it.

So my scenario of I pay a guy $100 grand to bring in a million, and if he goes and does that 10 times, it doesn't apply to them because they don't have the bandwidth to do that. So I don't want to put them, I don't want to box them in a position where they lose, but I also don't want to set up something where I get choked to death and your margins get cut to rib. So it sounds like if you leave the pay about where it is, you're probably at a 5%.

If I've done all this math right while we've circled the plane here and tried to land it. That's exhausting. I'm not sure I did it right. But I think I did. I love messing with this stuff. I like a good math riddle. You guys just listened in while me and my CFO do these kinds of math riddles or our comp, our comp team, our compensation team is looking at something. We try to land these planes all the time, trying to figure out.

some way to motivate people with their pay and then not screw it up. In a typical small business, you spend more money on payroll than any other expense. Your team is your largest investment, which means you need to get a rate of return on it, a return on investment. That's where Entry Leadership Elite can help. Elite is the online platform that aligns your team so you can scale your business. You use integrated tools to get your whole team on the same page, and our proven trainings will help you become the kind of leader,

people want to follow. Plus, Elite's community of business owners will have your back, even when things get tough. My leaders use Elite every week to unify over 1,000 team members at Ramsey Solutions, and now you can use Elite to align your team as well. To grow your business with Elite, go to entreleadership.com slash Elite, or just click the link in the description if you're listening on YouTube or podcast. Our question of the day is from Sarah in Florida. a how do I demote an employee.

Uh-oh. I hired a designer a couple of years, who was a good fit at the time. When a senior designer quit, I quickly promoted her to fill the gap, though she wasn't fully ready since then. We've raised our standards, and while she may have been a solid fit before,

it's now clear she's over her head. Despite months of feedback and one-on-one training, her progress has been minimal. She struggles with communication and project management. It's become a burden for me and the team. She has a great eye, but the operational mistakes are adding up. I'm starting to feel embarrassed that I haven't been able to turn this around.

I need advice on how to proceed. Depending on who she is, you're going to get one of two reactions based on her maturity and how she's wired. We've experienced this with creatives, with writers, content people, with programmers, that we move them up beyond their level of comprehensive. It's called the Peter principle. You promote someone to the level of incompetence. You keep moving them up until they can't do the job. When we ask them to return back to where they actually are doing the job,

rather than trying to lead all the people doing the job, we end up with one of two reactions. Their feelings are hurt and they quit, which probably happens more than half the time. Or you've talked about it, talked about, talked about it, and they actually feel relieved to be able to. go back and actually do the work. So this is a designer that has a great eye.

She probably enjoys doing the work. She might miss actually doing the work and might hate the pressure and not living up to your expectations. She might really love, this might be good news for her that she gives to go back to being a designer. But you cannot control her reaction. She controls her reaction. The only thing you can control is presenting this in a way that allows her to keep her dignity

and where you take the fall, you take the blame. And so I would start this conversation with an apology. I moved you up into this position too quickly, and I haven't been able to get you to, I haven't been able to train you to be able to do the operational stuff, and it's frustrating you. It's frustrating the team. is frustrating me. And I'm really sorry I messed up on that because you're an excellent designer

and you have a great eye. And if I could have done better and taught you these things and this move would have been successful, it would have thrilled my heart. But it didn't work out. And I think you know that. We've talked about this. We've had months of feedback on this. You know the operational mistakes are there and it's my fault because I moved you into this and I wasn't able to train you to get you to be able to do it and I'm sorry for that but I want you to know I really love you and I think you are a great designer and I need you know what what your best thing for you and your best thing for this organization is for you to be a designer again and so I'm going to move you back to that role and I hope that that I hope you understand that it's my fault and I'm sorry

and I hope maybe that's a relief to you. I hope it is. And then she gets stood aside. Is she going to be a four-year-old and have a temper fit and have her feelings hurt and run out the door with her hair on fire about the toxic workplace? Or is she going to say, yeah, all this feedback I've been getting, I go home, I tell my husband, I'm stressed, and I hate this. I hate all this operational crap. I wish I was a designer again. Thank you for letting me be a designer again.

And she goes back to doing that. We get that sometimes. but if you go in and just go, you suck, you're now demoted. I mean, don't expect anybody doing anything, but quit. Take the blame for it. You said in the email, I hired a designer a couple of years ago who was a good fit. When a senior designer quit, I quickly promoted her to fill the gap, though she wasn't fully ready. That's not her fault.

That's your fault. So you apologize. and you weren't fully ready. I thought I could get you there. I was wrong. I overestimated my ability to train someone. And the operational mistakes are taking the fun out of this for you, for the customer, and for the team, and for me.

And so, you know, I've come to the conclusion that I need to move you to being a designer, which you are an excellent designer. And, you know, and you know what? If you have the bandwidth and the money, you know, give her a business. a $2,000 handshake at the time and just go, and I'm going to give you a $2,000 bonus for moving back. One-time shake. I might add $2,000 to your check this month because it's my fault. And something like that.

And that just, that gives dignity to what her capabilities are. And we put her back in the roll. And again, you have no idea what she's been telling her roommate or her husband or whatever. when she goes home at night. This may be come of a great relief. I have seen that more than once, and I was all braced for somebody to be hurt or pissed off because they're ambitious

and they didn't get to hold the job that move up, and now they've got to be embarrassed and move down. I would not call it a demotion. I would just call it a reversal. I'm just going to move you back to where you were. It's not a demotion. It's not a pay cut. It's not, you know, or it may be a pay cut.

I don't know. You may have to decide that. But it's not a money thing. It's a she can't get the job done thing more than anything. So that's the way I would approach that. But I give you a 50-50 shot at it, and that's based on the experience I've had here. We've done it, and people accepted it. And that had to do with the maturity and the quality of the character of the person.

And then other times people get their little butt hurt feelings, and they run off and Dave Ramsey's a toxic workplace or something, which is bullcrap or not. But, you know, when somebody gets their feelings hurt, that's what they say. I hope it goes the other way for you. Thanks for joining us, America. Hey, please consider clicking the follow button or the subscribe button. It helps us a bunch.

Let people know we're here, leave a nice five-star review. Share the show. If there's a share button or click, cut the link out and put it in an email, send it to your friends. Say listen to this show. If we're helpful, we would appreciate you telling people we're helping. and that's our only marketing, so we hope it happens. Let people know we're here doing this. I thoroughly enjoy it, and I enjoy hanging out with you guys.

I love small businesses. I love small business people. You're my people. So I'm glad to be with you doing this show. It's a lot of fun. Jake is with us in Cody Wyoming. Hi, Jake. How are you?

Good. How about yourself? Better than I deserve. How can I help? Hey, so my question is a saying, essentially any tips or ideas you might have for me to increase our gross revenues and get above the $1 million mark. I'm a co-owner with my brother. I'm essentially the president of a fence installation sales company, all aspects of residential, commercial, all types of fence. And we've recently

decided to part ways amicably. I'm buying them out. And it's kind of lit a fire under me to try to increase our gross sales as well as increase our profit margins to get to buy out finished sooner. How long have you been in business? We're going on 13 years. Okay. And what did you do last year in gross? 750. Okay.

All right. And we've been there. We've kind of been complacent over the last five or six years. And we've been just at that 650 to 750. for about five or six years. Where's your business come from, your new business? Primarily residential the last couple of years. Word of mouth, some advertising.

So somebody calls up and says, I want a fence around my backyard for my kids or my dogs? Yep. And so you're doing chain link and privacy and... Yes, sir, yep, a lot of vinyl, cedar. Yeah, okay. So some luxury stuff, too. Yeah, a little bit of the higher-end stuff.

There's not a huge demand for that here, but it's getting to be a little bit more of the higher-old. Okay, so what percentage of your business comes from the last job you were on and the neighbors see it and say, hey, I want one? I'd probably say only about 5 or 10 percent, but a lot of it, I mean, we're in with a couple of builders, and so we've got a pretty good relationship with a handful of custom home builders. So the custom home builders are you're putting up while the house isn't brand new or after the new? buyer moves in? Usually just before they move in, or usually the last one's in on those projects.

So you're a sub on a custom home build. What percentage of your 750 is new home deals? Probably in that 25, 30% range. Okay, so you've got a half a million, you've got $750 or $250 coming in that way, give or take, and half a million coming in direct to consumer? Yeah, yeah. Where are the leads coming from direct to consumer?

A lot of word mouths from, you know, community donation. type of deals. We do quite a bit of radio advertising, a little bit of print, not a ton on social media, but a little bit. Okay. So I'm trying, you know, if you want to just double that half a million, do you double those lead sources? Or are they all at a point of diminishing returns? I don't think they are. We kind of, where I say we've been kind of complacent, it seems like over the last couple of years, we'll book out six, eight weeks. And, oh, goodness, we've got too much coming in, too much to do.

We need to close the tap on those. Okay, instead of staffing up and then going ahead and go into a million or two million. Correct. And I think that's kind of where we've been at, is that we get a little scared. We're going to start irritating people and not getting into them soon enough. Well, you can get to them soon enough if you hire. Yeah. Yep.

You can't get to them soon enough with the existing crew structure. And no, you don't want to book out five months out on a dadgum fence. Nobody wants to wait that. No, that's crazy. So, but yeah, you do, you know, so once you get full on your current crew, in order to grow, you're going to have to add crews, are you not? No, yep, you're correct. And I think that's where I've just been spinning a little bit here lately

because I need to get, I think, stepped out of the field of running a crew to where I can start doing some more training. Yeah, absolutely you do. And where you can do more marketing and more running of the business instead of actually putting fences up. Yeah, you're just above treadmill stage, you know, and, you know, starting to hang out around Pathfinder, right? And so, you know, you've got to start getting your layers of,

leadership in place to move on up through the stages of business. And that's going to be one of the things you do where you're not responsible for the actual production of the good or service and where your main job is running the business. So yeah, you need to round out those existing crews and then fill them up six weeks out. And as soon as they start approaching four or five, six weeks out, you start hiring the next crew. Okay. So double your volume. and don't stop your, and don't turn your advertising on and off,

and don't turn your, yeah, because you're losing a tremendous amount of marketing momentum turning this stuff on and off. Yeah, I think so. Oh, I'm positive you are. Yeah. Okay. And, you know, and in your marketing mix, start putting in some social media in there and somebody working, you know, some geo-targeted Facebook stuff,

and, yeah, you need to, you may. have to add a full-time marketer to help you manage the media buys and the social media. One person that's solid can do all of that at your stage. And, yeah, that ought to get you to a million, five, close to two million, but I don't know how many crews that involves, but that structure will get you there based on what you're telling me. Because, yeah, you're turning it on and off. And here's the thing, when you quit turning it on and off, you're going to see how fast that water does run.

It's going to keep running and running and running. And so there's no telling how much that fear and cutting the spigot on and off as cost you. So, yeah, you've got to get out of the field, round out those crews, get those crews loaded up. But then be ready when you get at that four-week mark on the existing crews. Before you take it all the way out to six, go ahead and start hiring. So they got that new crew out there. And you've got to be in the field training them. and working with them when that next batch comes in and then put a supervisor on them,

then turn them loose, and then do the same thing again. And you layer that up. And so you're running two or three crews right now. Right at two. Yeah. Okay. So, yeah, you're talking about going to three and then to four. And that'll put you, that'll, four probably produce close to two million with what you're telling me.

Okay. And then you'll move on up to the other stages of business because you'll have new problems to solve. And, man, that's how it works. Congratulations. I like your attitude. I like how you're approaching this. I think you're going to do well. Good to talk to you.

Thanks for sharing all that with us. Hey, folks, remember better a wary warrior than a quivering critic. This world needs more high-quality leaders, so take courage and lead. I'm Dave Ramsey, your host. Thanks for listening to the Entry Leadership Podcast.