EntreLeadership - Why Leadership Is Hard at Every Stage of Business

Episode Date: November 20, 2023

Today we’ll hear about: •       A leader that failed their team by not being open about the position of a new hire  •       The number one thing that makes a great salesperson •       What to take into consideration before hiring your spouse to work for you •       The biggest issue that must be fixed when you have clients that consistently pay late Links mentioned in this episode: •       The EntreLeadership Podcast •       EntreLeadership Elite •       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 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: •       NetSuite •       BELAY •       Payority •       Trainual Learn more about EntreLeadership Events: •       EntreLeadership Summit •       EntreLeadership Master Series Learn more about EntreLeadership Coaching: •       Elite •       Advisory Groups •       Executive Coaching •       Workshops Find out what Stage of Business you’re in with our new Stages of Business Assessment 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 of the five stages of business and leadership. I'm Dave Ramsey, your host, and I've got 30 years of experience in the trenches. I've done a lot of stupid butt stuff, and that qualifies me to answer your question. I've got a Ph.D. and D.U.M.B. In 30 years, I've done about every dumb thing you can think of, and in spite of that, our companies become successful. So we'll share with you the ups, the downs, and the sideways, and we'll do it in the form of answering your questions.

The phone number here, if you want to be a caller, is 844-944-1070, or you can leave a little message at the website. Team will get back with you and set you up to be a caller at entreleadership.com slash ask. If you're looking for a college professor answer to this stuff, you're not going to get one here. I'm a guy with dirt under my fingernails, so to speak. I've been digging and scratching and clawing a long time, and this is just real-world stuff.

I made some of these decisions today. I'll make some of them tomorrow and stub my toe along the way and, you know, might just be 30 years further along the process than you are. So that's the only hope you got here. We're glad you're here, though. The number is 844-944-1070. Will starts off this hour in Erie Pennsylvania. Hi, Will.

Welcome to the Entry Leadership Podcast. Hi, Dave. Thanks for having me on the call. Sure. What's up? Yeah, so I work in the financial sector, about a $1.5 billion institution with about 170 employees. I was recently hired about four months ago to be the successor to my bots in a department of about 10 people. I'm in IT, so I'd be the vice.

president of technology for the company. And as I was hired, it was very well apparent that I was the guy that was coming to replace my boss. And that's how it's been communicated to me and the executive management. However, my team does not know that. Why? Well, there's a guy. Why did you all not tell the team what was going on?

Well, there's a guy on the department that's been there. was 20 years who thinks that he's giving the role, but has proven even the four months that I'm there. He's not... But you already... He wasn't getting the role when they hired you. Correct. Why hadn't they already handled this before they brought you in? That's kind of why I'm calling. I had a conversation with my boss, and I had a conversation with HR, just like, hey, you know, and one of the issues...

The guy's going to quit. Well, that's one of the issues. and I can't afford to lose them because you're going to lose it. You're going to lose him because your boss is a wuss. Well, I think it's an interesting situation that our company has grown quite a bit over the years. And this round of leadership that's getting ready to retire is really the main growth of the business. I don't think they know how to handle something like this. Obviously, yeah.

Yeah. Because they mishandled. It's not fair to the poor guy. He's been working his butt off for 20 years. He thinks he's in line for a promotion. They hire a guy who probably is more qualified. He probably wasn't ready for the promotion. He probably just thinks he is, but they did not handle that.

Instead, they swept that under the rug. And surprise, along comes Will. Oh, my gosh, the poor guy. You didn't do it. I'm not fussing at you, but your leaders, man, they let the poor guy down. And he's going to be disillusioned. If he stays, you're going to have a bad team member. and he's probably going to leave.

Well, I can sense a little bit that he's seen the writing on the walls, and he doesn't matter. His feelings are going to be hurt when the writing is put in spotlight. Absolutely, absolutely. And so, yeah, I'm just trying to understand how to navigate this. It's a great company, great culture. I think this is just one of those situations that they're not sure how to manage, and I want to make sure it's done right because I don't want to lose the guy.

I'm sorry, you don't have you don't have. have that option. It's already too late. It's not been done right. And so the only question now is how big the damage is going to actually be. I'll give you a 90% probability based on my experience. This guy hits eject. I don't think he stays. If I were him, I probably wouldn't stay. Just because how it's been handled, mishandled by the people that hired you. And so honestly, it's not your job. They should go in. The guy that hired you should go in and sit down with whoever the guy's name is and say, listen, I made a grave error. You've been here 20 years. I should have been straight with you and told you that we were hiring Will for this position. And Will was brought in to

take this position. I know you had your eye on it. And I love you and I didn't want to hurt your feelings. And in the process of doing that, I'm actually probably hurting your feelings more. And I'm so sorry, I goofed up as a leader. And that's your leader's script. Now, if your leader won't do that, your only shot at maybe. But I'm still telling you, I think the guy's gone. But that's the proper thing to do. That's what should have been done before you were put in there. You can't do it.

You can't do it. You don't have any street cred by the guy. He doesn't care what you think. You're just the thief that took his position. Not to mention I'm 20 years younger than him. There's that too. Yeah, it makes it even harder. Yeah.

I mean, you are in a, you were left in an untenable position by weak leaders. So you may have a great culture, but your leader was weak. And listen, I will say that boldly, and I have been the guy that did crap like that too. So I've made the exact same mistake. That's why I'm passionate about it. Because in the name of not hurting someone's feelings, I ended up hurting their feelings worse later. That's me. And that's what your boss did or the guy that brought you in did.

So I'll tell your boss, listen back to this podcast when we play it, and he owes the guy an apology. He screwed up. and a good leader's got the backbone to sit down and apologize if they screwed up. And it just says, you know, hey, Charlie or whatever his name is, you know, you've been here 20 years. You do a great job. I honestly didn't think you could fill this role. So I brought Will into fill the role. And I should have told you that beforehand.

And I'm so sorry. I owed you more than that. You've earned more than that. And I let you down. I'm so sorry. I hope you'll forgive me. And I hope you'll stay because you're valuable. to us. We just didn't see you filling this role. And, you know, Will, I mean, the guy will go through

all of his emotions and he's probably gone. But I hope, no. I think he's seen the right on the walls because he started to threaten to me so. I'm sorry, Will. You know, him having hints is different than him being treated with respect. Understood. It's the lack of respect that'll cause him to eject, not missing the position. Okay. Yeah, that makes sense. That's what, you're dealing with. And so you know, I tried to use that in my mind, too. That's why I'm cutting you off when I made the same exact mistakes. And I've made it more than once, sadly, because in the name of being nice, I know I sound real rough on the radio on the podcast, but in the name of being nice, I have been horribly unclear at times, and I have accidentally caused more damage than actually

just telling the freaking truth would have done. So I know how this feels. And then I wanted to justify it and go, well, they should have known because, I mean, if they, if they're were more self-aware. They would know they didn't have the chops to cover the job. And so I try to put it back on them, but it was, you know, it's just my fault. And this falls squarely on the shoulders of your leader. And if I were you, I'd sit down with him and say, listen, I think we need to retain this guy. And I think the only shot we've got at retaining him is you going in and say, you messed up by not telling him and you apologizing to him. That's the only shot. And I really do think that's the right thing to do, even if the guy leaves, it's still the right thing to do

to give him the honor of 20 years of showing him some respect, even if he can't do the job. And I will tell you, you're going to run into this again because you're in a growth curve industry. We've ran into it where somebody's been here a long time, and I love them. And it's, they just do not have the tools in their belt to do the next thing that we're going to go do and I have to bring someone in in addition to them. I don't fire them, but they don't get that promotion because they just can't, they can't handle it. And it's, it is hurtful, but it's a lot more hurtful when you wait till later to tell them. Ouch, that's how this works.

Yeah. When you delay these things, you make them worse every time. Kicking the can down the road just hurts your toe. It just, it just leaves the blood. toe. That's all you get. Bloody toe kicked can every time. I've done it and I'm as guilty as y'all are, but you know, but we've got to stop doing it. It's weak leadership, you guys. This is the Entree Leadership podcast. Well, for 30 years of doing this, we know that our business and particularly small businesses go through five stages of business. The treadmill treadmill, where you're on your own and you feel like you're stuck on a treadmill, everything depends on you. That's how you start, and then you move to Pathfinder, then to Trailblazer, then to Peak Performer, and finally

to Legacy Builder, where you start talking about succession plans and exit plans. And that, you know, you can go through those in five years or in 50 years, but you're going to go through the five stages. And you really don't get to skip a stage. Sometimes you go through one, I'm faster than another, but that's the process we teach. And if you've been listening to us for a while, you probably heard me tell other callers mention that stage of business they're in. But how do you find out what stage you're in so you know how to level up and get to the next stage. Well, the Ontario Leadership team just released our new and improved stage of business assessment. It'll help you easily and accurately identify exactly where your business is today. Then you'll know what to do,

what to work on so that you can level up, like I was saying, and push on through to the next thing. Click the link in the show notes or go to Entreeleadership.com to find out which stage of business you're in. Camie is with us. Camie is in Idaho. Pocate Tell it to be as precise. Hi, Kami. How are you? Hi, Dave. How are you?

Better than I deserve. What's up? So I am a CEO inventor of a business to business company selling directly to salons across the U.S. We have been selling since February and we've made about $30,000. Good for you. Way to go. Oh, really? Yeah.

People have told me that's not good. Well, February and you made $30,000 bucks in your first year. year? Yeah. Okay. There's a lot of people, a lot of people lost $30,000 in the first year. So how you buy yourself? You're doing this as a treadmill?

There are four of us who are C-suite, which is kind of funny considering how small we are, and then five people who sell for us part-time. Okay. So the five people that are selling aren't selling a lot then. That's not $30,000. They're not making a living, are they? They're not. They're doing this as, uh,

side hustle. Okay. Why can you not sell enough to make it a full-time job? Because, and that's my question. I don't know how to find good salespeople. Training, I'm a chemist, and selling scares me really bad. When I go out and sell, I throw up or I cry. A little bit in my mouth. Yeah, I understand. Yeah. And I'm trying to find good salespeople. Okay, listen, what do you make? Right now I'm totally in the business, so I don't bring home anything. No, no, I'm sorry. What is the product that you make? Oh, okay. It's a brand new treatment for hair.

Does it work? Yes. Do you believe in it? 100%. If somebody buys it, is it good for them to buy it? Yes, it will change their hair. Okay. Not mine, but somebody else is here. Not yours.

Okay, too late on some people. But yeah. All right. All right. So here's the thing. The reason I ask you those questions I was setting you up. Yes. The best salespeople are not salespeople.

Okay. They're teachers? They're servants. Okay. They believe that this product should be in everyone's hair because their hair will be better. Okay. And they believe if they don't talk you into it that they let you down. Okay.

So quit looking for salespeople and look for servants. Okay. The way I like to think about the best salesperson in the world is a fine dining experience with a white tablecloth. And they come in and they say, Dave, we're so glad you're at the restaurant. Tonight our special is da-da-da-da-da-da-da-da. And the perfect wine, we know you love wine. The perfect wine will go with that is this. And if you want to continue, look through the menu, you can, but I got to tell you, this is what I would do if I were sitting in that seat.

And every time my water glass is half empty, not one inch empty, but half empty, they're filling it up, and we don't even realize they're there. And Sharon and I have a wonderful conversation over a incredible meal, and we don't even realize the service has occurred. And when we get done, we realize that we've had a world-class waiter service. Right? Oh, yes. Okay. I got what I wanted. I was a customer.

Had an incredible experience. I had incredible food. I was never thirsty. I was never hungry. I wasn't waiting on the bill for 45 minutes while they waited seven of the tables. They were there with the bill at the end. You know, when I sat down, they're already pouring a glass of something. I mean, it was from from soup to nuts, a wonderful experience.

And it was all because that person saw their job as an opportunity to serve someone and create an experience for them. And that's what selling is. So when I teach you to go get Entree Leadership Elite, it's because it's incredible. And if you run a small business, you ought to be in it. By the way, we're going to sign you up for it as my gift. That's how much I believe in it. And you need to be in it because you need to watch this lesson about serving is selling. Selling is serving. And it changes everything. And then you'll quit feeling nervous about it. Because you're going to go in and go, it's my job to make sure these folks know how awesome this is. And it's not an ego thing. Financial Peace University, I invented it. You know, 10 million people have been through it. It was me on the videos. But it's not an ego thing. The proven facts are is that the average family that goes through Financial Peace University pays off $5,300 in debt and saves $2,700 in the first 90 days. That's an $8,000 change in position. They only paid $80 to go through it. That's called an incredible deal. I can change people's lives if they go through this. If I don't get them to go through it, I let them down. Do you see it?

how I'm feeling? Yes, yes. That's how you feel about your product, isn't it? Yes. Okay, that's selling. You're serving. You're serving. It's not manipulating someone into doing something against their will, twisting their arm and peddling snake oil. That's not selling. That's ripping people off. Yes. And that's not what you're doing. You have a quality product, I suppose, you believe you do, and I believe you do, because you said it. You have a quality, product at a reasonable price that creates outstanding results. Yes. And to not tell someone about it would be a sin.

That's a good way to look at it. Yeah. I mean, that's serving. I'm serving you. I'm helping you. This is a great bottle of wine to go with this filet mignon. Oh, my gosh. And the lobster tail, if you add that, oh, surf and turf, here we go.

Game on boys. I mean, right? I mean, we're having an experience here, right? and that's, you know, if you buy something from someone who is slimy, you end up buying it against your will, you were not served. And you've had that experience, and that's why you hate the idea of sales. Yes. But there are times you've bought something when you were completely served, and you're unbelievably glad that you did business with that company and bought that product or service, isn't there? Yes.

I bought a car not long ago. The guy was incredible. he was one of the best salesmen I run into a long time. I tried to hire him. I mean, he was incredible. And he just, but he took care of. It was a luxury freaking experience, expensive car, but it was a luxury experience. And it made me want to go back and get another one.

You know, I mean, it's like, gosh, you know, and so, and guess what? Guess where I'll go for my next car? Hello, you know, as long as they've got a good one. But I mean, you know, but that's, that's, you know, so that's what you're going to do. Now, so what you're looking for are crusaders, not. salespeople. Not someone who's trying to make a buck off of somebody. Not motivated only by commission. They're motivated because their hair was changed by your product and they feel obligated to tell the world about it. So you might hire them out of some of the salons even. There may be

somebody that's in a salon that would make a lot more money selling for you full time if they sold a bunch of this stuff, and if you paid a good commission rate, they might make a lot more money passionately selling something they believe in than actually working in the salon. That's possible. And of course, that depends on the pricing of the product and the comp structure and all that kind of stuff to go with it. But I think you're incredible. And so what I had to learn to do, because there's always haters out there, you're just a grifter. You're taking advantage of poor people. No, I'm making poor people not poor anymore. It's stupid. So, you know, That doesn't make me a grifter.

It makes you an idiot. You know, so there's always haters out there. And so anytime you do anything in volume, you can count on that and little people that don't understand, little in terms of their minds that don't understand. You're going to have some of that. But that doesn't matter to a crusader. To a crusader, you're doing the right thing. You believe in what you're doing. And I think you're incredible.

And I can just sense off of you that this is going to be highly successful. I think it's going to be 30,000 to 300,000 to 3 million. And you're going to have problems with the volume of production. I hope that's your problem, not a marketing problem. So you're looking for crusaders that are servants. You're not looking for people who manipulate to take people's money. There's no magic little phrase or script that you can say and take money from intelligent people. I mean, you can take it from dumb people that way, but you can't take it from intelligent people.

And these are salons you want to do business with you over and over and over again. so we hope they're intelligent enough to stay open. And that's the beauty of a B-to-B transaction. You are usually dealing with a more intelligent human. So it's an easier sale to make, but it requires some passionate belief in the act of service, not selling. That, by the way, folks, is a video that you can watch

in Entre Leadership Elite. So check out Entree Leadership Elite. Go watch that video, and you'll see all the other videos on how to run a business in there that we're going to do. We're going to sign Cammy up and get her going here, get her a free subscription, get her started. This is the Entree Leadership Podcast.

I'm Dave Ramsey, your host. This is the Entree Leadership Podcast, designed for businesses and people worried about and thinking about and fretting about leadership that have team members from anywhere from about five team members up to about 200. And if you're managing 15,000 people, I'll give you advice if you want, but I've never done that. So our company is about 1,100 folks, about 300 million a year. And the principals will work in a larger company. We know that. They worked when we were a smaller company, and now they work for us. But overall, that's who we're talking about and who we're talking to.

And by the way, 54% of the gross domestic product in America, that's over half of the economy is created by businesses in the size of 5 to 200 team members. Small Business is literally mathematically the backbone of the U.S. economy. In spite of Washington, D.C., trying to poison small business as a full-time job, they've got legislation laying up there right now that they're supposed to pass to put back in place some of the tax breaks for small businesses that they accidentally took away because they were stupid and they came seem to get it passed. But they can't find their butt with both hands up there. So that's the way that works.

Am I bitter? Yes, I'm getting ridder. right after write a tax check because of these idiots. So there you go. So, but hey, we in small business know that we are who makes the things go around out here. We're the ones that get stuff done, boys and girls. And I'm here to help you. If you want to be on the show, call me at 844-944-1070.

That's 844-9-4-1070. We're glad you're with us. By the way, if you like the show, please follow us or subscribe or whatever your particular venue, YouTube, or podcast that you're doing this. click the subscribe, the follow button. It changes the algorithm and causes us to be pushed forward in the offerings. Helps us a bunch. It's a huge promotional item.

We would appreciate it greatly. Click follow, click subscribe. Share the show. There's links for you to share. You can share the link or you can push the share button in some cases and it's easy to send it to a friend. Hey, listen to this. It'll help you. And of course, you can also leave a five-star review and that's very helpful.

If you hang anything nice to say, don't say anything at all. If you hate the show, why are you wasting your time? Go somewhere else. You have to leave a one-star review. It's dumb. All right. Michael is with us. Michael's in Albuquerque, New Mexico.

Hey, Michael, what's up? Hey, Dave. Thank you so much for taking my call. I really've learned a lot from you, and I appreciate everything you and your crew does. I'm 32 years old. I run a specialty food business in New Mexico. We have a brick and mortar store. We also have a food manufacturing operation.

Cool. Good for you. I've owned the business for about eight years. And this year we're on track to do about $1.2 million. Yeah, good for you. Yeah, thank you. So my question is, is how do I navigate possibly making my wife a co-owner of the business and changing the business structure or leaving it as is, but just honoring my wife and her work?

And I'm just trying to figure out really what's the best way to have a partnership in life and also in business. And so that's the reason for my call today. Okay. What is your ownership structure? A sub S and LLC? What? So when I purchased a business in 2015, I created an LLC.

Okay. And it was before my wife and I were married. Okay. So it's an LLC with a single member. Yeah, that's how it's currently set up. Okay. Did you have an attorney do that? Yes, we do.

Do you work with an attorney regularly? I do, yes. Okay. Just call them up and tell me, put your wife on the LLC as one of the owners. Okay. Shouldn't be any big deal. I mean, she's not, she doesn't work there, right? No, she does work with the company.

Oh, okay. She does our marketing. And obviously any major business decisions, we're going to open up another store or acquire another company or something like that. She's, you know, she's really the right-hand woman. I should say. So, okay.

She's very smart. How many people work on your team? We have about eight people. Okay. All right. And does she get paid for the marketing or just gets paid out of the profits? So we both just get paid out of the profits. Okay.

But we do take a annual withdrawal before the profit. Yeah, that's fine. That's fun. But there's not, nine, quote, salary that you get a CEO or salary that she gets is marketing, which is fine. That's perfectly fine. No problem with that at all. Okay. Yeah. No, we lump it together. So we use the... I don't know the divorce court laws in New Mexico, but I suspect she probably owns half of this anyway. Right. In the event of a divorce, she would probably get rights to half of it, particularly since she works in it. I don't, again, I'm not an attorney in New Mexico, so,

but it's real simple. Sharon is on all of our LLCs. In some cases, she's, Sharon's the only one on them from a risk management perspective. I own so few things nowadays. It's ridiculous. In case somebody wanted to sue Dave Remsey, he really doesn't own anything. You know, it's pretty interesting. But, yeah, technically speaking. So, yeah, so that's fine.

How long have y'all been married? Five years. Okay. Everything's going good, then. Marriage was. Yeah, it's going good. We have two, you know, we have two small children. Okay.

They're, you know, four and two. So we have a lot going on for sure. Well, Sharon's on all the accounts here as a signatory, and she's at least 50% in every LLC, in some cases she's 100% of it, depending on where it falls in our estate plan. I've got a bunch of LLC, so, you know, in different things. Now, what I would do is, that's an easy one. Just call the attorney and give her half the LLC. It's not a problem.

All it does is just do what's probably already there anyway. She probably has marital rights to the assets anyway. But it's okay. And it's a way to honor and to say that. So then we, the one thing I will advise you that is not what you called about, but to be careful of your roles at work, you described her as two things as of today. She's now one of the owners and gets paid out of the profits. You're one of the owners and gets paid out of the profits. And she also does marketing. And you, and you You're the CEO. When the business gets ready to expand, you guys put on an owner hat and the two owners sit down and decide as owners both having a vote in your mutual, in your relationship.

You know, you both have a discussion about, okay, we're both going to talk about this. We both value the other one's opinion. Do we open another store? Okay, a big decision. That's an ownership decision. That's not a CEO and marketing decision. You follow the difference? Yeah, that makes a lot of sense.

And then when you walk back into your offices after having that discussion, and she starts doing some social media buys, some paid media buys, or she starts placing some other kind of marketing campaign in place, she takes off her owner hat then and puts on her marketing vice president hat who reports to the CEO. So marketing decisions flow up through the CEO's office, not the ownership office. You follow me? Yeah.

And if you guys will keep those rolls, we use that hat thing around here all the time. So, like when we're at Thanksgiving dinner, I'm Papa Dave. I got on the Papa Dave hat, okay, because I got eight, seven grandbabies running around. All right. But it's the same people at that dinner that would include Rachel Cruz, one of the Ramsey personalities. When we're sitting here at this desk doing the Ramsey show and Rachel Cruz as a co-host, I've got on my CEO hat and my Ramsey personality hat, and Rachel has on a Ramsey personality hat. I'm not Papa Dave then.

We joke and cut up about it, but I'm functioning in the role that I'm doing at work. She's functioning in the role. She does it work. And then when we're at Thanksgiving dinner, she's my daughter and the mother of three of my grandkids. And I change hats. And so you've got to be able to do that when you're working particularly with your spouse. I had a guy, we did a high-end VIP thing at one of the entree events, and we had 20 couples, 20 people up at our house,

and this guy and his wife were having this same kind of discussion. It's kind of an interesting discussion. She was his CFO until they figured out they yelled at each other all the time, and she quit. And he said, no, I fired you, and she said, no, I quit. And I said, well, here's the problem. You would never talk to another CEO the way you talk to her. you disrespected her and you with your screeching wife argument would never talk to a CEO like that

in any other situation unless you expected your butt to get fired instantaneously and she said yeah I said so y'all were both misbehaving because you were doing you're having a husband and wife argument instead of a CEO and a CFO discussing a business situation and you know if you're the CFO you work for the CEO. That's how that works. You're not in charge and you don't get to get your claws out and make it otherwise. Now, if we want to go home or go to an offsite and sit down and say, we both own this thing, and as two owners, I disagree with you, then we could talk about that. But you don't disrespect each other in the office and have a husband and wife fight when you should be having a CFO and CEO discussion. And you're not doing that, but that's an extreme example of what I'm talking about.

about with you. You've got to be very careful to have these roles defined and when you're functioning into different roles. So when you guys are making your expansion decisions, you're doing that as husband and wife owners. But when you're doing a marketing campaign, she's the marketing director submitting that to the CEO. He's approving it and we're going off with it. She doesn't run out there and do it by herself. She couldn't do that in any other organization. There'd be accountability for that. And so that's how we walk this through. So just be careful with that. That's something you didn't ask for, but it comes with the price of the call. And the advice here is free. And some people say it's worth exactly what you pay for it. This is the Entree Leadership

podcast. Thanks for joining us. I'm Dave Ramsey, your host. This is the Entree Leadership podcast. If you want to be a caller, call me at 844-944-1070. Leave a voicemail. We'll call and get you make you part of this deal. We treat it like it's a radio show or something. because that's how I grew up doing this, and we'll turn you into a talk radio caller. First-time caller, Dave, long-time listener, and all that kind of crap. No, not really.

But anyway, entreeleadership.com slash ask. You can also leave your question there. We'll get back to you and put you on. We would love to have you. Thank you. Thank you. Thank you for following us, subscribing us.

The numbers and the ratings have gone up dramatically on this show in the past few months because of you. And I really do appreciate you. I have a lot of fun, carry on like a crazy man, but I'm really glad you're there because we love helping small business people. You are heroes as far as I'm concerned. Adam is next in Cookville, Tennessee. Adam, how can we help?

Hey, Dave, how are you? Better than I deserve, man. What's up? Oh, not too much. I am a owner-operator of a small lawn care company. In 2022, we did a little over $100,000 in revenue, basically just me and my wife and one employee. This year we're on track to do a little over 250. And basically to give you a quick background, 11 years ago, I was in a really bad addiction, heroin addiction. And so when you say

you're better than you deserve, I truly understand what that means and basically gave my life to God. And since then, work in a ministry full time and then started the lawn care as part time because of my work in ministry, I don't get paid for, and it helps others that are an addiction. So very thankful today. $250,000 part-time gig. You're amazing. You're working your tail-off part-time. Yes, sir.

Yeah. And anybody can beat heroines of a rock star, man. That's hero stuff. And 11 years dry, you're amazing. Congratulations. I'm proud of you. Thank you very much. That means a lot coming from you.

I really respect you. Well, I'll go ahead and get into my question. A basic question, and then I can give you a little story behind it if you'd like. But basically, I've encountered this as my business grows a couple of times, just twice. Most of my customers are great, but there have been a couple times where people just haven't ate their bill. Well, basically send them the invoice, send them another invoice, and they basically just don't respond. the first case was, you know, a minimal amount of money. And when I went to go knock on their door, they had moved out of the house.

And, you know, never to be seen again. This most recent time, basically the story is we landed a large commercial client, and it was managed by a property management company. And basically, that property management company wasn't managing the property well, They were, you know, lacking in communication. They were doing apparently some shady things. But long story short, the commercial company reached out to me directly because I was subcontracting for the management company. And they said, hey, we're firing this company and we want to bring you on full time.

And basically, that company found out that I continued to work for this commercial site. and basically, you know, just told me over the phone like, yeah, we're not paying you, and it was a substantial amount. So basically moving forward, I wanted to. It was a little over 10,000. Okay. Did you hire an attorney? No, I did not. And a quick update, they did end up paying, but my question was...

How did they end up paying? Well, they owed another contractor about 20,000. and he had a pretty, pretty big company, and he had a legal team, ended up sending them letters and filing, I guess he was going to file a lien on this property, this commercial property. And I guess once that company found out, then they were like, okay, well, we don't want to mess around with that. So they ended up paying all the contractors, basically. So it turned out okay, but my question was, how do I handle this? Did I do anything wrong on my end?

And if someone does not pay, what is the proper procedure to basically get paid? Yeah, okay. Well, number one thing, when we have a collections problem here, we immediately assume that we should not have sold that client or we sold them wrong. Okay? So selling them wrong means I don't set the expectations at the front end of the relationship. And so it sounds like this. When you take on a new client, regardless of who it is, if I'm in your shoes, it sounds like this.

Hey, I run a little lawn care business. We're not a big business. We're not a bank. We don't have the money for you to not pay us promptly. If you're not going to pay us promptly, I'm not going to be able to do your work. Because I don't have the money to be your bank. And so I'm not trying to be nasty, Joe and Susie, but if we're going to cut your grass, we've got to get paid exactly on time, if not a little bit early.

And I just can't do it. I'd like to do it, but I'm not a big corporation that can, you know, float you for 60, 90 days. And so expect that if you don't pay on time, that I'm probably going to be over here like two or three days later and talking to you about it. Right. Because I just, not because I'm a big meany or I'm scary, but because I'm, I'm a little guy and I can't absorb the blow of you not paying. And if you set the table like that and then they don't pay and you show up at their door, they're going to be unbelievably embarrassed and they'll never do it again.

Right. So that's setting the relationship up on the front end. Okay? Right. We don't have any surprises later on. In other words, I'm not the guy that you don't pay. You cannot pay somebody else if you want, but I'm the guy who we're going to have a discussion very quickly and very promptly. You're letting them know in a kind of way that that's

going to do. Then on the occasion that you have someone, and you've been fairly lucky, actually, you've only had two clients in all this time, but it caused you a lot of emotional distress because you personally felt betrayed. Yes. But in neither case was this personal. Okay. Property management guys are crook. Right. And the other guys broke and dodging all his creditors. and left town. Right. It had nothing to do with Adam and Cookville. Sure.

You were just one of many people that the property management tried to screw over. The other guy was bigger and thumped him and got you paid in the process, right? Yep. And the other guy, I'll guarantee you the guy that left town not paying you, there's a whole bunch of other people that can get paid. That's somebody's broke. Yeah. Kind of like when you were on heroin.

Yeah. You know, that's who that was. And so back in the day, day. You're not that guy anymore, but I mean, you know what I'm talking about. Yes, I know exactly what you're talking about. So, I mean, it's, so the trick is if I can, if I can ascertain that someone is broke and can't afford my services, I don't even want to start with it. Right.

Okay. So if you had a clue that the guy that moved off was in financial trouble, you probably just wouldn't have done it. Right. So if you can fish around and get a couple of clues, in one of the clues, they'll be if they react with anger to the type of conversation I mentioned earlier. Because broke people sometimes get very defensive. When I was broke, I would get defensive. Like, what do you mean you think I'm not going to pay?

Hey, hey, hey, right, right, right, right. You know, and as soon as people start doing that, that's like, that's like when you were dating in high school and some girl said she wasn't crazy, it always means she's crazy, right? Right. You know, I'm talking about? Yep. A hundred percent of the time.

So, same thing here. It's like, what do you mean I'm not broke? It means they're broke every time. Okay, that just, so, you know, I'm just going to say, you know what? You're probably going to get somebody else cut your grass. Sure. As far as the other thing goes, I don't think you could have seen that one coming. So the last piece of this is, so I think if there's a collections problem at Ramsey,

we set the relationship up wrong, possibly, number one. Number two, we didn't ascertain if the client was actually qualified, meaning could they pay the bill, where they broke people, okay? And then number three, is there a pattern in this industry that's different? Now, you don't have that, but I've got, for instance, in the radio business, I've got ad agencies sometimes that are representing the companies that buy ads on the Ramsey show, right? And it's a lot of money.

And sometimes these ad agencies want us to bill them, and then they bill the client, and then the client pays them and then they pay us. And they want 120 days for all that crap to happen. And so I've had to have the conversation for 30 years that I've been on the radio. We don't do that. When we bill you, you got to pay like right now. And if you can't pay right now, then you can't use an ad agency. And ad agencies get pissed and don't want to work with us.

So you might have property managers to get pissed and don't want to work with you, but you don't work with them either if they're going to not pay you for six months or 120 days because you're a small business guy and that'll put you out of business with cash flow problem. And they'll string you along and be jerkwads like that guy was. So if you're dealing with a client base that has a normal way of doing things that doesn't fit your cash needs, you've got to change that relationship or not do business with them. Right. Because all business is not good business.

You could get a big old contract from somebody and them not pay you for six or seven or eight months and put you out of business. Yeah, I'm learning that. Yeah. So that's bad business. You don't want that piece of business. Somebody else has to do that because I'm not in the banking business. I'm in the lawn care business. I'm not in the banking business.

I'm in the radio business. I sell ads. And so I'm not your banker. And if you want someone to facilitate your little job, with your client. Here's an idea. All of y'all get together and prepay for 30 days. You can not have the ads run until you prepay. Oh, I did that a couple times. That shut them up. Right. And so, but you can tell that me and agencies have been going around and around for about 30 years now. And some of them love working with us and some of them hate us. Right. You know, so for that.

And that's okay because the client base, the industry standard didn't fit my business model and cash needs, I don't borrow money. And I'm not going to be your bank. Okay. So lastly, one other thing, and this is more for other people out there, you could do this, but sometimes the way to have a collections problem is not have any collections. And that would be, I changed a couple of people inside the building here, a couple of clients and some of the business units here, from us billing them to automatic draft on their checking

account. So on the first of the month, we push a button and all the money lands in my account. Bing! No collections problem. No billing, no waiting on them to think about writing a check. Da-da-da-da-da-da-da-da-da-da. And so sometimes I'm running into this with small vendors like you, where they just come to the door with their phone and like a stripe on top and you just pay them with a card right there that day, cash on the freaking barrelhead. Now, that would be unusual. That would be unusual. usual, I think, in the lawn care business in Tennessee, but there's people doing that out there. And so, you know, if you, you know, but if you're out there and you've got a different kind of a business, maybe you don't need to collect at all. Maybe you just need to push a button that it automatically

hits your account. And if it bounces a check on their end, they probably want your client to start with. Let's just take them off the list because they're not paying their bill or prepay or something like that. You know, in your case, you could say, hey, I'll sell you a package for the summer of however many cuts, 24 cuts, whatever it is, right? Mm-hmm. And this is the price. And if you prepay the whole thing, I'll give you a discount. Yeah.

Yeah, I've moved a lot of our clients now are on a card on file system. So every month I just charge their car on file. That's it. That's exactly. And I'm trying to get people to move to that, you know, then, you know. And here's the thing. If the broke person that you smell is a defensive doesn't want to do card on file because they're broke, they're not your customer.

Let them go. Right. Give them your competitor's business card. Yep, yep. Let them go do business with him and put him out of business. Sure. Oh, my God. Right.

And so, yeah. Or, for instance, a big account. You go, hey, man, I do it with all my residential customers and you guys are property management. I've had trouble with property management people. I know y'all are fine. But the way I do everything is just card on file. So you guys need to give me a card.

And they're like, what? We don't do that. I'm like, yeah, I know, but that's how I do it. And so you guys, you guys give me a card. And they're like, huh? I'm like, yeah, give me a card, and we'll get the whole account set up. What's your card number anyway? And you just, yeah, that bet, that.

And before they know it, they've signed up with a card on file on frequent property management operation. And they've got a card. You know they do. Oh, yeah, of course. Yeah, you'd be $10,000 less nervous if you had their card on file. Yeah, absolutely. So that's an example of changing the process. Very cool, Adam.

I like it. You're a neat dude, man. Doing ministry, staying dry for 11 years, and scratching and clawing trying to figure out the basics of business and $250,000 in yards cut in Cookville, Tennessee. That definitely qualifies you as a stud. Man, that's amazing. Well done, dude. Well done. I'm honored to talk to you.

People like you that make America great, not some corporate weenie that does layoffs to get their profits up. You're the man. Appreciate you. Hey, better a weary warrior than a quivering critic. Leaders serve. Leaders are active, not passive. Leaders act on principle, not appearances. This world needs more high-quality leaders.

So choose to lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast.