EntreLeadership - When Turning Down Business Is Actually a Benefit

Episode Date: October 7, 2024

Today we’ll hear about:  A business owner considering abandoning a portion of his business  Dave interviews Donald Trump about small business and leadership Dave Ramsey’s reaction to Netflix���s company memo about when to fire employees  A man considering closing his current business to take on the family business    Next Steps  📞 Have a question for the show? Call 844-944-1070 or send us a message: https://ter.li/ask-us  📚 Learn about the EntreLeadership System: https://ter.li/system-p  💻 Get EntreLeadership Elite for your business: https://ter.li/elite-p  ✉️Sign up to receive tactical tools, advice and resources in your inbox every week: https://ter.li/enl  🏢 Attend EntreLeadership Summit: https://ter.li/summit   🎤 Attend EntreLeadership Master Series: https://ter.li/masterseries   🫴 For more on how to delegate to your team: https://ter.li/vverjo    Offers from Today's Sponsors  NetSuite: https://netsuite.com/Ramsey  BELAY: https://www.belaysolutions.com/entreleadership  Payority: https://www.payority.com/entreleadership  Trainual: https://trainual.com/entre  Found: https://found.com/entre    Listen to More from Ramsey Network  🎙️ The Ramsey Show    💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💰 George Kamel  💼 The Ken Coleman Show    Learn More About Your Ad Choices   Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

From the headquarters of Ramsey Solutions, this is the Entree Leadership podcast, where I take calls from leaders like you about what it takes to win at any stage of business and leadership. I'm Dave Ramsey, your host with over 30 years of experience leading in the trenches right alongside you. If you've got a question you want to ask on the show, well, you can fill out the form at entreeleadership.com slash ask. Entreeleadership.com slash ask. Or you can call and leave a voice.

mail will call you and get you on the show. 844-9-44-1070 is the number. If you haven't heard the news, a while back I was able to reach out to, our team was able to reach out to Vice President Harris' camp and President Donald Trump's camp and offer a long-form interview. We were able to sit down with President Trump and do a long-form interview. Some of the questions had to do with not only economics, but with small business. We're going to play a couple of those.

questions is a part of today's broadcast, so be sure you stay tuned all the way through this. You don't want to miss this. It was a lot of fun. Quite an experience for me, I'll tell you up front. I'm just a kid from Antioch, Tennessee, so I kind of had a while there, but it's pretty cool. And I think you're going to enjoy his answers because he's very, very, of course, direct and very clear on the way he looks at the economy and looks at small business. So worth hanging on for that. In the meantime, let's go to Jake in Ontario. Dave, it's an honor to speak with you. I'm a long-time fan of yours. I appreciate all you do. Well, thank you, sir. How can we help?

So I'm a co-founder and COO of a commercial HVAC company with four employees, myself included, that does about $1 million in annual revenue. My question revolves around the subject of specializing versus generalizing, specifically between residential, commercial, and industrial. The primary skill set of our technicians is in the commercial light industrial field, which is the niche that we'd prefer to target. However, about 20% of the revenue in the last year has been outside of that niche, mostly residential. We have the ability to do the work and the margins are fine. We've been working it into the schedule due to our hesitation to turn away too much revenue as a growing business.

However, as we scale the business, I wonder if it's wise to separate this somehow, kind of how you have done with Ramsey Solutions and the various brands that you've created, or should we be turning away this work altogether to focus our marketing, training, resources, etc, on a specialized market rather than a generalized approach. So I'd love to hear your thoughts on that. Okay, 10 years from now, and you're making gross revs of $12 million, do you want that to be commercial? or commercial and some residential.

What kind of business do you want to grow? Yeah, that's the type of business what we want to grow. I think our training and everything, it's difficult to mix the two just because, like, it's, from a technician standpoint, it's twice the training to train a well commercially trained. Like, it's twice the apprenticeship program,

and you have to pay twice as much to get these guys. So in order, and it's just a different setup in general, And I think that we found kind of our happy place in commercial. But you're just picking it up. You're just picking it up because you wanted the revenue. It wasn't because it's like the love of – because, you know, I come out of the construction real estate world. I do a bunch of it.

And on the customer side of the arrangement, my perception is these are two completely different products. Right. I mean, way different because the customer is different. the actual, I don't know anything about working on an HVAC unit, but the actual HVAC units have nothing to do with each other. I mean, it's like I work on motorcycles and I work on cars and I work on tanks and I work on aircraft, but I'm a mechanic.

Oh my God, aircraft mechanic doesn't need to be working on my motorcycle. You know what I mean? Yes. Because it's way different, isn't it? That's what we're experiencing. Yeah, and the customer's way different because my experience, for instance, we built this, building these complex here on our campus, we got about 600,000 commercial square feet under roof.

And my experience of working with the commercial contractor, whether it's HVAC or somebody else, is that they are very, very, very precise, very, very knowledgeable. And they've got a detailed set of specs. There is no making it up as you go whatsoever. Everything has to be exact. you got no wiggle room. But you also know exactly what the expectations are.

Schedule. And by the way, pay, you don't have an issue with pay. You get paid. Yeah. Because you're dealing with professional people up and down the line. Residential, you're dealing with the public. And the customer is nuts half the time. You know, my air conditioner's out.

You know, oh, my God, you know. And that's me, by the way, if it's out. That's me calling you saying that. So, but, and the weird thing is, if it goes out here at the building, I don't say that. I just look at somebody and the professional maintenance team calls the professional, you know, and it's like, then it gets fixed. Like, it's a whole different thing. So if I were in your shoes, you said you want to build a commercial, then I'd go build the commercial.

If you want to run residential for a little bit and do what you've been doing, I don't want you to necessarily lose 200 grand worth of revenue out of a million, but, but I don't want you to purposefully grow that. I would double down on the other. Yes, I think that's what we're thinking as well. It's just, for me, I think it's tough just being this, you know, as we grow and everything, saying no to any potential revenue that's in our field. It makes me sick, right?

It's just kind of like for me having worked in. I'm thinking, I'm thinking I'd have to go back and look at the budget, but I'm thinking I've got way more than a million dollars in the HVAC alone in this building I'm sitting in. Yes. I mean, it's a 50 million. The one building I'm sitting is a 50 million. So I'm sure I got more than one of the 50 in the HVAT. And you only did a million in commercial, or 800 in commercial, 200 in residential.

So you've not picked up a building this size. Some high-rise buildings we look after a decent amount. But, again, it's service and maintenance that's growing on that size. And one of those jobs will be, you know, 10 residential jobs. Yeah. Well, or more. Yeah. One of those jobs.

The maintenance would be more than 10 residential jobs. The actual, if you actually talk about, you know, doing a, you know, a large office complex or a large piece of retail or something, that could be a million dollars. For sure. Or half a million. Three half million dollars jobs and, you know, you doubled your dadgum revenue. So that's what I want you to focus on is developing the relationships with those contractors that are playing at that level that are going to be your new boss rather than spending money

marketing to Joe and Susie to fix their heat and air. The question I just, like, mainly was when those things come in inevitably from just offspin of, you know, having an HVAC business, everybody knows you have an HVAC business, I like to take it on. But again, I think in my gut, I'm thinking I need to say no to some of this because I need to prioritize my focus. Yeah, I would take, I would take, my goal would be to take fewer and fewer. You don't want just cold turkey go to zero because that cuts your revs 20% unless you've got 20% increase in the commercial side, right? sure but you could say this year we're only going to take 10% and we're going to fill it with and then next year we're going to take none sure or something like that or you could over three years I don't care what you do but you see what I'm saying you could phase it out you could phase it out and reach

the point that we just don't do that anymore and we can't help you I did that on a personal level it's it's not related but it's a metaphor in that you know I used to do a thousand years ago one-on-one financial coaching when I first started, right? But I reached a point that I don't do that anymore. And so like one of my friends called up the other day is going through a divorce and wants to sit down with me. And I'm like, yeah, well, I don't do that. I love you. So I'll sit with you for 15 minutes as your friend with one of my coaches in the room and they're going to take you from here because they're actually better at this than I am because they do it every day. And I'm not that available. I'm not that good at it.

And it's not what I do anymore. So I don't do that. And not even for one of my friends, you know, I mean, I'll sit with them and hurt with them while they're going through this. But one of my other, one of my coaches was sitting in the room and got the details and they're going to run the thing to ground. They're going to finish the job because I'm not, you know, I don't do that anymore. I just, I made that decision. And not even for friends. So, You'll reach that point, but you have to have an intelligent know. And the reason for your call is very wise is, you know, what do I really want to be when I grow up? Where do I want to be in 10 years?

Where do I want to be in 20 years? And that kind of stuff. And, you know, I knew that I did not want to do one-on-one coaching for the rest of my life because it was very limiting. I had to have a bunch of other people doing it. and that that could get there. But I knew that I personally couldn't scale that. And what we're saying here is you can scale commercial a lot easier. It's a lot lower hassle business, a lot better pay business,

but a lot more technical and a lot more demanding. So I think you got your answer. You knew what you wanted to do for you called, but you're wise to frame it up and ask it and walk it through. Honored to participate with you in the conversation, my friend. This is the Entree Leadership Podcast. Hey, are you done waiting for things to improve on their own yet? Your business won't grow faster or become healthier if all you do is listen to Leadership

Podcasts. You actually have to do something. And the Entree Leadership System is the roadmap that will help you do exactly that. You'll finally scale your processes, unify your team, and build a business you love to run. This system is how I built Ramsey, and it's how I've seen thousands of small business owners transform their lives. This guide will walk you step by step through the practical steps we took to build Ramsey Solutions from a card table in my living room to a $300 million business today.

That's Entreeleadership.com slash get started to download your free getting started guide. As promised, a clip of some of the questions and answers we had with President Donald Trump. Watch this. Talk about what it's like to work for Donald Trump. How do you hire leaders and put people in place to do that? Because I know you're obviously not there personally managing that, but you put a culture in place in your organization, and that applies to the administration as well, hiring people that are quality leaders.

Well, my son, Eric, is very much involved, and he runs a lot of it. And Don helps out a lot. And Ivanka, to a lesser extent, you know, she's a great mother and everything. She did a fantastic job in the administration. All she wanted to do is get people. people jobs. And she'd go around and see Exxon and see Walmart. She wanted jobs for people. It's really pretty amazing. She could have had a very glamorous job and she would have done well. So what leadership qualities when Eric's hiring did you teach him to look for? Well, I like the recommendation

business, but what I like best is taking people that are in the company and moving them up. you take a waitress as an example and she becomes the head of the restaurant. You say, because you know if certain people are good. And when they work for you already, you know, it's better than recommendation. But if you don't do that or if you can't do that for some reason, you really need strong references. And then they have to enjoy their job. If they don't enjoy their job, they're not going to be very good at it. One of the things that our viewers know about us, we work with tens of

thousands of small business people. And so coaching them 54% of the gross domestic product is businesses 500 people or less. Almost everyone in America, over half, almost 60% of people work for a small business. And I know small businesses are where jobs come from, not from government. So politicians don't create jobs, small businesses do. The small businesses is people like me off when the politicians say they're one's making the jobs. We're the ones making the jobs. But when you guys in government can take your hands off of small business and allow us to do our thing, we're able to employ people and change things. So how can you help small businesses?

Well, the best way is just letting them do what they have to do, but we still have to give them a playing field. If we don't give them a level playing field, they will die. And that's what happened before. That's why China came in. That's why all the – they came in and they came in at a level like nobody's ever seen, and we did nothing about it. So the word tariff to me is a very beautiful word because it can save our country, truly. And yet, I think because of graft, because of a lot of consulting payments and other things that are given by other countries,

we have so much fighting with politicians on using it. I saved our steel industries by putting tariffs on steel that China came in and dumped. And you know what they do? They dump and dump and dump. Everybody goes out of business. then they buy those businesses very cheap, and then they raise the prices to hire than they ever were. That's one of the many benefits that they have if they want to do it.

But by putting tariffs on, as an example, in the furniture business in North Carolina, it was so vibrant, and they stole our business, and they charge us, if you wanted to build a furniture place, if you want to sell your furniture in China, they won't take it. But if you want to build a plant in China,

to make furniture in China, using their labor, they open it. We're doing the same thing. But a lot of people, oh, well, we don't want to have tariffs. The country was at the richest point in its history in the 1890s. It was all tariffs. If you looked at William McKinley as an example, he was a big tariff president. They had committees that were put in charge of what to do with the money.

We were taking in so much money. And McKinley would say, why should we let other people, come in and steal our factories and steal our workers and steal our jobs and why shouldn't we benefit. And he tariffed the other countries. And we made so much and then they went to the income tax system later on. But they would actually have, they had a blue ribbon committee. Our country was so rich. They didn't know what to do with the money. And this blue ribbon committee was set up to determine how can we spend all of this money and they took it in through tariffs. But we can turn on a country.

around, make it strong, and then guard it with tariffs. Interesting discussion. And I thought when I did that interview that I actually enunciated more clearly than I did, that when politicians say they create job, it pisses people like me off because it does. You've heard me say that on the podcast before. He did agree with that, although you have also seen him and every other politician claim that jobs were up under my administration as if they did it. But they do have the ability in the White House to create an environment that is more friendly or less friendly to businesses.

And that does cause job creation. That does drive the economic prosperity. So that much we're in agreement on. And it was, again, an interesting, interesting day. This is the Entry Leadership podcast. If you guys have never looked back at the... Netflix story, you ought to look back at it. They used to send out DVDs in little onion skin fiberglass envelopes to your house, and you paid and monthly feed or rent DVDs from them. And there was a little

negotiation story with Blockbuster that didn't go well. Blockbuster, of course, has now disappeared, and Netflix has become a media giant on everyone's television just about these days. And, of course, on demand, everything, right? So pretty interesting. So they post an internal memo to their team on their website. Our guys picked it up. It's kind of running around the Internet. And they thought it'd be fun for me to kind of talk through it in light of entree leadership.

Now, obviously Netflix is a huge organization, billions of dollars, all that kind of stuff. stuff, right? Talking points. This is from the memo. Netflix culture is based on four core principles. Here are two of them. The dream team and people over-processed. The dream team maintain a high-performance culture. We model ourselves on a professional sports team, not a family. Families are about unconditional love, but they can be dysfunctional. Sports teams are focused on performance, even if it means swapping someone you love for a better player. I don't really disagree with that. I often say we're a family around here,

but you really can't fire your family from being family. You can fire them from your business, but you can't fire them from being family. So the sports team analogy is not bad at all. I kind of like it. I never thought about it in that life, but I kind of like it. The keeper test. If X person wanted to leave,

would I fight to keep them? or knowing everything I know today, would I hire ex-person again? If the answer to either of these is no, we believe it is fairer to everyone to part ways quickly. Completely agree with that. If you ever look at a team member and you say there's no way I would ever hire them again and pay them that, then you're just keeping them because you're a wuss. And you're not doing them any favors. because they know that they're not pulling their weight.

I mean, most people are somewhat self-aware. They know. So, now, you don't want to do that analysis moment by moment. I'm talking about over the scope of time. I mean, in a particular moment, you could be frustrated and go, I would never hire that person again. And now, that's not what I'm talking about. I'm not talking about over the scope of a six-month period of time,

I'm looking at this person going, if they weren't here, we wouldn't let them in the building. And so it's time for them to leave the building. That's what they're saying. I like this. People overprocesses, the other two of the second of the four core values they're outlining in the memo, expect managers to practice context, not to control, giving their team's context and clarity to make good decisions instead of trying to control everything themselves. Good. Farming for dissent. Best ideas can come from anywhere, which is why we expect informed captains to seek out opinions and listen to people at every level. Love it. The no rules rule gives employees freedom to exercise their judgment, prevents the process creep that typically happens when

companies grow and try to dummy-proof their organization, stifling creativity, making it harder for businesses to adapt. Vacation policy. Take vacation. Expense policy. Act in Netflix's best interests. Biggest threat of creativity, adaptability, and innovation. Minimizing rules and processes while giving people freedom to use their own judgment

and learn from mistakes is a superior recipe to long-term success. I was just listening to my friend Craig Groshell, who does a leadership podcast. He's a pastor in one of the largest churches in the world. over in Oklahoma City, Life Church. And I was just listening to his podcast, and he was talking about, you will not retain your top people if you don't give them the dignity of room to operate.

If you're control freaking down on your top people, they're going to leave because they don't have any dignity. They don't want to be gophers. Go for this, go for that. They want to have room to wiggle and innovate and come, up with stuff. Now, I will say we're talking to small business people right now, two to 200 folks on their team right this second. Most of you fall in that category. You cannot have an expense policy that says, act in my best interest. That won't work.

At Netflix, if one person goes off the ranch and spends double what they should have spent because of this policy, Netflix won't even notice. They got more money than Egypt. so I mean they're not going to notice if you have 10 people and one of them spends three times what they should have spent on something they go rent the Ritz Carlton suite presidential suite for 15,000 a night and you meant for them to stay in a $400 a night hotel and they thought it was in your best interest but they were stupid if you're if you got 10 people that'll put you out of business so you can't have that lax you don't have the you don't have the you don't have the margin to absorb a blow that hard. So I can't go with them on extrapolating their, I don't mind it for Netflix. I don't think it's evil or unwise or something for Netflix, but I don't think you could do it.

Ramsey, we might be able to go more that direction. We're big enough, we could probably absorb it, but I'm not sure I emotionally can absorb somebody just completely misbehaving with their expense account. I think they just need to, I mean, we already let people do pretty well, whatever they need to do. We very seldom tell someone no unless they're just getting out of bounds.

But we need to have something here. But we're not corporate about it to Netflix's point here. So big fan of the memo overall. 99.99. Most of it applies to all of us in the small business world. And I like this. Expect managers to practice context, not control. Now, we'll go back to our delegation lesson in entree leadership.

where we talk about you can't delegate to someone until you can trust their competence and their integrity. So managers allowing people to work in context, not control, is after they have proven, in other words, they're trained, and they have some level of proven to be competent and have integrity. And so if someone is competent and has integrity, yes, practice context, not control. let them have room to do their thing because it is their thing and they're smarter about their thing than you are.

That's why you freaking hired them. So let them do it. That's the thing. But we're not talking about somebody that we hired a week ago. And they still don't know where the bathroom is and we're going to turn over the keys to the kingdom. I don't think so. We're going to all get aligned and gradually turn them over to context, not control. And I suspect that's what they're saying here.

They give their teams context and clarity to make good decisions instead of trying to control everything themselves. That would be after we're aligned on how things operate around here. That's what I'm reading into this, and I think that's what they're saying. So it's a good memo, and it's some good insight here, some things to think about. You can look it up. It's on their website, and if you want to reread it for yourself. But worth commenting on and worth just reviewing this kind of stuff that's coming through. there are lots of big companies that do things right and to the extent Netflix is doing it this way, they'd be doing this right.

I'm a fan. That's pretty cool. Very, very well done. Good stuff. This is the Entree Leadership Podcast. Thank you for joining us, America. I am Dave Ramsey, your host. This is the Entry Leadership podcast.

We're so glad you're here. I appreciate you hanging out. If you want to be a caller, call me at 8449. 4-4-1070. And I will set you up to be one of the people on here on the show. Brian is in Miami. Hey, Brian, welcome to the Entree podcast. What's up?

Hi, Dave. It's an honor to speak with you. You too, sir. So I run a small detailing company, just my wife and I and a couple subcontractors. And we gross about 250 a year. last year's revenue. We netted about 50 grand. My question is, we just...

Wait a minute. You're detailing cars? Cars and boats. Okay. And you grossed 250? Where in the world you spent $200,000 in expensive detailing cars and boats? So along with the detailing, we do small repairs. Installations of new equipment, new radios, things.

Yeah. Huh? And there's $200,000 worth of them? Because you really shouldn't have much expenses in a detail operation. Right. So, I mean... We do a little bit of everything. Our main focus, or I guess you could say, our specialty is doing polishing on both cars and boats, and then basically ceramic coating, which is a fancy name for a whack. So you've got 250,000 gross revenue coming in.

You're spending $200,000 on something and netting 50. But your big line you said is the ceramic coating. Now, what are you spending to purchase the materials for the ceramic only? For the ceramic only, it's not very expensive. It's labor. Yes. And you're the labor. Correct.

Now, out of the $200,000 of expenses, did you pay you something out of that? or is that real expenses not counting you? So $241,000. I got it. Our cost of goods sold was about $30,000. And that would be the purchase of the cleaning supplies, including the ceramic material. Correct. Also, any upgrades in, like, say, a new GPS for the boat or a new radio for the car, you know, certain upgrades like that.

Okay. So you spent 30,000 out of the 240 on that kind of stuff. All right. That's your cost of goods sold is what you're calling that. Okay. I got you. Supplies. Okay. And so that gets you to 210 and you netted 50. So where's the rest of this money? On the P&L, it's showing total expenses is 113,000. Our net operating income is 97,000. Okay, so you made 100. You didn't make 50. Yeah, net income is showing 95,000. Okay. All right. So what is in the 113? 113 includes utilities, taxes, our supplies, office supplies, rent. You have a shop, you bring the cars and are the boats to your shop? Correct. We have a warehouse.

Okay. All right. And how much is your rent? About $2,600 a month. Okay. So $30,000 a year of the $1.13 is that. Okay. The other 70 is what? Give me a little breakdown again, because I'm just having trouble figuring out how you possibly could spend, including cost of good sold.

It's now down to $140,000. So you had $30,000 and cost of goods sold and another $100,000 in miscellaneous expenses, which includes $26,000 on rent. So that's still only $64,000 of miscellaneous. That's where your problem is in that. These numbers are talking to you. Right.

We do contract labor, and there's about 21,000 in contract labor. Okay, okay, that's there. All right. I got you. So you made $100,000. Right. So what's your question? So our question is, the business is struggling.

Cash flow is tough. And we recently just had an opportunity where we could possibly own owner finance my wife's family business. Which is what? Which is a service business restaurant. Okay. And it makes money? So that's the kicker. They are not netting basically anything.

So you want to trade a business that makes $100,000 a year for a business, it makes nothing? Why am I doing this? Right. I mean, when you put it like that, it sounds horrible. Why would you do that? Well, the problem is that her parents are one foot in and one foot out in the company. So? So. Why would you do that?

Why would you want to go walk away from 100 grand profit to no profit? And they want to finance it? Why would you pay for it? Why would you pay anything for a business that doesn't make money? Well, I, you know, we spoke to them about the buyout as being of what you talk about as taking about 10% of profit. There's no profits. Well, they get a salary.

That's not a profit. That's a salary. Right. If I bought that business, I'd have to pay somebody a salary to operate it. And I would net zero. Correct. I would never buy that business. Yeah, I mean, it was more, obviously in the past it's done well.

Doesn't matter. But it was more so that. we kept the family business in the family. That was the... Yeah, how long have they had it? About 15 years. Oh, there's nothing nostalgic about that. No.

They own a brewery and a restaurant for 15 years that doesn't make a profit and they closed it. That's what they did. That's not keeping the family business. It's not like her great-grandfather started her or something, and he has a name on the beer. I mean, it's nothing. There's nothing nostalgic.

Algae care at all, man. You're just tired of cleaning cars. Yeah, I think that's a big factor as well, is that I'm burnt out. Yeah, I'm doing all this on my own. Yeah. And, and your problem, you know, I don't know why you have a cash flow problem, because nothing here described the reason for a cash flow problem. You should have a, you know, you should have a steady income, gross revs of about $20,000 bucks a month coming in, and your expenses are half of that. and so I don't, you should not have a cash flow problem.

You're not managing your books well and you're not managing your receivables well. Maybe you're not keeping the people, are the people paying you on time? Yes, we do get a 50% deposit up front and they, as soon as the car, both leaves the shop. Before they pick up the car, they pay the balance, yeah. Correct. Okay, or before you deliver it or whatever it is, yeah, okay. Correct. Well, I don't mind if you don't want to be in the business you're in anymore and you sell it

because it makes a profit. But I have zero need for the romance to go buy a 15-year-old business that is not profitable from anyone. It's not a business. It's a hobby. And it's not romantic at all. Just because it's wine and beer doesn't mean we need to be silly about it. You know what I mean? No.

No. If they want to give it to you and you guys make a run at it while you do, while you save a bunch of money over on the other side and keep running this for a year and then get this one sold, somebody will buy this business that you've got. It is operating. I mean, you've got a location, you've got a profit, you have a name, you know, that business has some kind of value and then go over. But if they want to give you the other place, that's fine.

Does it have real estate with it? It does, about 30 acres. the family business? Correct. Okay. Now, our owner financing the 30 acres, that's a real estate purchase. That has a value. Right.

But the actual business is not making a profit, does not have a value. No, it doesn't. Yeah, but I mean, if you want to buy the, I assume it's got like a distillery on it or something. It's a brewery, a restaurant, and a winery. Yeah. Yeah. you're making wine in southern California, or southern Florida?

It's the most... I bet. Yeah. Okay. Yeah. All right. Interesting. Okay, fun.

Yeah, if you want to do a deal on the real estate, now that does make sense. Okay. Okay. But the problem is your household income is zero at this point when you do that, other than paying yourself the salary out of it, that they're paying themselves. but the, if you guys want to put a value on the real estate and work out how you're going to pay them out of profits for that,

which would might take a while because there's not any profits. Like if you took their salary, what are they paying themselves as far? You said 75? They're paying themselves each. Okay. All right. Well, you could, you know, you could create a situation where you said, all right, we're going to buy the real estate for X, and we're going to live on 100 grand, and we're going to put 100 grand.

towards the profit at the bottom, and that creates a profit, because y'all are used to living on 100 now, out of the detail business. So you could swap that around. Now, that's starting to make a little bit of sense. That's a lot of money. They're paying themselves.

They force this thing to not be profitable. Yeah, and that's the problem, is that they sucked it dry. Yeah, they have. So, yeah, so anyway, you guys, you guys buy it. You live on 100 out of it. That puts 100 on the bottom line, and you said, okay, we're going to put 80% towards the debt, 80% of profits towards the debt,

and year one, if it's run like it was last year, 80% would be 80 grand towards the debt on the real estate. And now, does your wife have siblings? She does. Okay. And how old are your parents-in-law? 70 and 60. Okay.

So I need an estate plan also. that says that this deal that we're doing is in writing, and you own the real estate in your name, and the financing of the real estate does not change upon death, because you're going to be paying her brothers and sisters if after mom and pop are gone, if you haven't paid out the real estate out of profits, right? Right.

So have they given you a number, what they think they want to sell it for? I mean, expression that this is a goal. even though I reinstated that it's not making a net profit. Yeah. It hasn't been for the past two years. It's not a gold mine. No.

It's a gold mine. It's a gold mine. There might be some gold in the ground, but nobody's ever seen it. Right. And that was kind of where we were optimistic about the situation of, well, we could turn it around. Yeah, it's not the business. What do they want for the real estate? What will they sell it to you for?

I believe the going rate. per acre on a non on a commercial acre out here is around 75 to 100 per acre which is expensive you'll never make that work yeah you'd be better off to sell the real estate and forget it they they would be better off because they're never you can't pay the bill on that you get 38 acres at 100 grand an acre 30 acres yeah 30 acres i'm sorry so i mean you can't support that with this business. Right. It's a pipe dream.

So what happened is, is they opened a business and ran it, and the only thing they did right in the whole process was they bought real estate. They're going to make all their money on their real estate and none on their business. So if I were them, I'd sell the real estate, and I think you need to go do something else.

If you want to close your other thing, you cannot support 100,000 an acre on 30 acres with the numbers worth of $80,000. You don't come close. I mean, you'll be to the family the rest of your life. And you can't clear this. You've got to be able to clear it reasonably quick with the formula that we use and get away from it.

So it's just not, it doesn't work, man. I'm sorry. You do whatever you want to do. But I'm telling you, 10 years from now, you're going to be sitting right where they're sitting if you buy into this silliness. And I think they'd be much. better off just to sell the big, big old, get a big old pile of money. And, man, that's, that's pretty

cool. You know, three, four million dollars in your pocket and somebody buy the real estate and call it a day. And the same thing with your business. Just, you know, either figure out a way to get, get your volume up and where you're not personally detailing cars and you're using all labor to do it. And then your business is more fun because you're operating a business rather than actually living in the, you're working on the business, rather than in the business, as Gerber says in the e-muth, what's killing you is you're at the treadmill stage and you don't see a light to get out. And so you're grabbing at straws over here with this other bad deal from the in-laws that's got all this family romance on it, but they're very unrealistic.

No, I would stay clear of that deal. You do whatever you want, but you asked, and so there we go. That's how it works, boys and girls. Remember, better a weary warrior than a quivering critic. This world needs more high-quality leaders. So take courage and lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast.