Should Leaders Work a 4-Day Week or Does It Create Resentment?

From the headquarters of Ramsey Solutions, this is Entree Leadership, 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 this show, then fill out the form at entreeleadership.com/slash ask. Or call us at 844-944-1070. That's 844-944-1070.

Many years ago, uh we took the class that we had been teaching, the event that we'd been doing called Entree Leadership, and put it into a book that became a best selling book. It is the playbook for how Ramsey runs. And the secret sauce for entree leadership has always been that we show you what we've been doing behind the scenes. Real people really running a business. Not theory. This is not a think tank.

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theory, that central idea that it's not theory, that it's practical information that we're gonna give you. Just like with Brandon in Houston, Texas. Hey Brandon, how are you?

Hey Dave. Doing well. Thanks for having me on. Sure, man. What's up? So I'm the owner and CEO of a small manufacturing company. We've we've got thirteen employees and our annual revenues are a bit over six million dollars. And I I wanna take a step back. I wanna step back to a four day work schedule so I can spend more time on family and friends and hobbies. But I've got two main concerns about making that change. First I I'm worried that

my team will somewhat resent me for stepping back while they continue to work a normal five day week. He might even say that I feel some kind of guilt about this. And and the second concern is that I'm only thirty five years old, so I worry that I'm too young to take my foot off the gas in my career and I might miss out on even greater financial success. So

I really just wanna know what you think if you put your your therap business therapist hat on. Are these concerns valid that things that I should listen to or do you think it's acceptable in my situation to cut back to a four day work schedule? I don't think you can cut it to a four day work schedule with thirteen team members unless you cut the whole thing back to

Yeah, it's it runs pretty well without me. Uh for additional context. I acquired the business about a year and a half ago and it was the owner was already fairly absent. He was in his nineties, believe it or not. Um, I took two weeks off for a paternity leave recently and then kind of worked part time during that time as well. And we had a record quarter.

So it we do have strong lieutenants here. Um I mainly focus on I do close the books, it takes me forty eight four to eight hours a month. And then I focus on strategic projects for improvement, but uh day to day stuff I'm not typically too involved in. So what is your income? Personal income out of it. My personal taxable income's about a million. This thing's got serious margin.

Okay. Um that is an additional context, and that does change the answer then, yeah. Um I don't see why you can't do this. I don't see a problem with it. Um, the only thing I'm struggling with is just the idea that you're thirty five years old and um You're gonna quit working.

Um that's just weirdly don't want to quit working. I it's my work is my favorite hobby. I love working. I love coming to work. But I'm at I I've realized recently that I think through conversations, introspection and conversations with my wife that

for the first time in my life, you know, it's my whole life it's it's you have the time but not the money to do things you want to do. And now it's it's flipped. I've got money but I don't have the time. And between my wife and I when our four children, which range from three months to nine years old,

It feels like we spend all our time working, which is me, raising the kids and and keeping up with household tasks and we don't spend enough quality time with each other. We don't see friends often enough and we barely pursue hobbies anymore. And other people do that with a forty hour week. It's true. Um maybe maybe it's part of the reasons we have twin three month old twins, but Yeah. But the uh but I mean of people have hobbies and friends and quality family time with a forty hour week.

That's eight hours a day out of twenty four, only five days. Um, and they have for decades and centuries. So, um I... uh... I d I don't know that this one day is going to get you what you've been wanting uh here and'cause I I don't I don't know Um, I I don't know what's going on exactly under the hood here. Uh you can afford it and I don't think you're gonna destroy your business. So if you wanna do it, it's fine. Um

But uh you got a house full of littles and you're gonna be home on Fridays. Um, I don't know how this is changing. all this thing I've got money and no time thing, um, that much. But if you if you know, it doesn't sound like it's gonna do harm to you, so if you wanna do it, I'm fine doing it. Um Yeah. If the problem has been clearly defined and you're really solving the problem, that's what's running through my head.

'Cause I'm not sure I'm grasping the problem or agreeing that there is as big a problem as you all seem to think there is. So um but that's really irrelevant to the question. Your question is can you pull this off? And yeah, I think you can pull it off based on what you've told me. It sounds like it's gonna work. So how about it, brother? And uh congratulations on a wonderful income at 35 years old. Wow, impressive.

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You need to define what winning looks like very clearly when you're making decisions about shifting your involvement with a business. I've run into too many people that thought the end game was a liquidity moment or a thing where they could step back. based on Brandon, our last caller, right? So a friend of mine built a started when he was sixteen years old and built a series of uh

stores. I I'll just leave it at that. And uh had all the real estate for all the stores and then a big company in that space came in and bought him out when he was thirty two years old and he had more money In a pile on his kitchen table that he never dreamed he would see. So he quote unquote retired at thirty two years old. Millions and millions and millions of dollars stacked on his kitchen table. And he went fishing and went golfing. And using his words, I got fat.

And I was miserable and I was depressed. So it turns out that retiring, meaning not working anymore at 32 years old, wasn't all it was cut out to be for him. And so he ended up going in a different business and then sold it and then went back into the business eventually that he had originally sold and helped run it for years. Uh and then went into other businesses. But he's never quit working again. He still vacations.

Fabulously and luxuriously and often, but he never quit completely working again because it just didn't do it for him. Now if you want to quit working again. You'd never want to work again a day in your life.

And that is your goal. Um, you can do that. And I'm not gonna be mad at you if that's your definition of success and you get there, you go do it. I'm just warning you that more times than not that I have I'm sixty five years old that I have run into people doing that and they call it retirement or they call it pulling back in the name of family life balance or they call it this or that, that it doesn't give them what they thought it was going to give them.

They don't come out smiling and happy and Skittles and rainbows. Ah, dan, dan, dan, dan. You know, so this idea that I'm sixty five years old, I'm in really good health. un you know, Lord uh willing in the creek doesn't rise, I'm gonna probably make it to ninety or more, you know, the shape I'm in, okay? And probably and my ha family history says it's probably true too. So okay, so For thirty freaking years I'm gonna do nothing?

For thirty years, your body and your spirit is not designed that way. And so it it's it, you know, and and that's where you run into people working a regular job who retire and and eighteen months later they're dead. And we've all seen that. So again, I'm not suggesting that you can't enjoy the fruits of your labor. I'm not suggesting you shouldn't go on a a month-long cruise around the world if you made$25 million. That's fine. Go do that.

But I am suggesting that living on a cruise ship uh for the next 14 months, it's probably not gonna be fun at some point. At some point it's gonna lose its sizzle. You know, sis and i if all you've got to do is look and so I I suggest that you carefully analyze if you're looking at something like that. Either a liquidity moment selling out completely and you think that's gonna bring you happiness, quote unquote, or pulling back and getting family

life balance is gonna bring you happiness, quote unquote. I suggest that you really Carefully analyze that and spend much more time talking about it because we set that up in America as quote unquote the goal that says I won. I rung the bell. And then it doesn't necessarily bring this sense of happiness. Um serving others is much more prone to bring happiness than consumption.

And and so finding something to do. And again, if you want to cut back and you've worked your butt off and you want to cut back your hours like that guy, that's fine. I'm not I'm really not mad about this. I'm not I'm not laying down a principle that you should never quit work. That's not what I'm saying.

But I am saying you need to really consider this because I I have I know several, several people that sold their businesses and they got a huge pile of money and then five years later all they're still talking about is Selling their business.

And they're they're just not they it didn't it didn't do it for'em, you know what I'm saying? So that that's what I really want you to consider is what's the next thing after you do this and what and what is it really going to bring you?'Cause I can promise you Going golfing, going fishing and getting fat is not gonna do it for you. To quote my friend. Okay. And that's a a direct quote, by the way. All right. A Eileen is with us in Columbia, South Carolina. Hi, Eileen. How are you?

I'm doing great, Dave. How are you? Better than I deserve. What's up? I've been waiting years to hear that. Um, this is like Christmas speaking to you. I'm so excited. Well, honored to have you. How can we help? Well, um, I'm the chief growth officer for a new company we launched in January. Um we started as two team members, the owner and myself. We are getting ready to add our fourth team member. Our gross revenue is one point five. Mm-hmm.

And going in we took we we we did very modest salaries and we've just been sort of hoarding money all year because we were sort of unsure what all of our expenses were. The question is, how do we structure profit sharing uh from like a bonus standpoint, um as we add team members. i going into next year specifically. I I would like to do it on a monthly or quarterly basis, but our income is a little unpredictable.

So I'm a little nervous and I wanted to get your advice. Okay. You've not had any well, I mean, once you got past the startup phase, are you gonna have any months that have zero profit? We should not have any months with zero profit. Okay. We should not. Okay, good. All right. And um I don't necessarily You know, if you got four people and you all are participating in the profits, I don't know that you have to add every employee to profit sharing when a company is this small.

Uh you can if you want to, but I don't feel obligated to do that at this stage. You could run it a while and get it a little larger before you start worrying about that. But what we do and what has worked well for us is we simply close the books at the end of the month. And we know what the profit was for pick a month. We'll call it March. Okay. So we close the books at the end of March so we know what the profit was for March.

And by the way, if there's profit, that money should be in the checking account, right? Mm-hmm. Mm-hmm. Okay. And so then we d have d pre decided before that what percentage of each month's profits are going to be distributed to each person. And so if Eileen gets five percent of the profits. Whatever the profits were for March, she's gonna get five percent and we pay that out on the fifteenth of the month following.

So if we close March's books at the end of March, April 15th, Eileen would see 5% of March's profits in her check. That puts the company in no cash flow bind. And if the profits are slim because it's uncause it's one of the down months. because there's some cyclical things, then your five percent's gonna be five percent of not much. Or if it was a great month because of timing and all the checks hit.

And not many of the expenses hit, so the profits are huge. You know, you're gonna get five percent of an artificially high profit number, but it's a real profit number. It's just not gonna be that way every month. So you don't have to smooth it out. You can just go, This is what the freaking profits were.

And we're gonna share five percent of that. Now we with we're we're doing that with Ramsey with hundreds and hundreds of team members. So we don't go on stage and go, this is the amount of profit dollars wise we made. We go on stage and say our profits are up fourteen percent over last month. They're up twenty-two percent over this month last year. And this is and and there's this many people participating in profit sharing, which is five more than it was last month.

or five less than it was last month. So the team is looking at it going, Oh, profits are better than last month. My check last month was X, so it's gonna be a little better than X this month. But they don't know exactly what their percentages are because we don't share their percentages. Right. Okay. And we do have some cyclical things. Like we have year long contracts that are paid to us typically in two payment installments or maybe three payment installments. But you actually get the cash.

We do get the cash, but we also have forward expenses and and so do we just hold some of that back and just Yeah, you should put that in you should put in your P and L before you calculate profit any um Any investment that you need to do in the future. And so if we've got a piece of equipment that we're buying, let's say it's a million dollar piece of equipment, we're setting aside$100,000 a month for ten months to do that. That comes out as an expense before we calculate this profit number.

Mm. Okay. And then that then that sets that hundred thousand over there each month as a little sinking fund. And after ten months we've got the money to buy the million dollar piece of equipment. Or if we've got a a contract that uh we've got some contracted uh software as a service stuff that we do that we have to pay annually or we pay semi annually. And we know that we got this big check we gotta write in August.

So or in January or whatever the date is, then we have to back out and go cash flow wise. We're gonna start taking that out because we don't wanna have this um We don't want to get hit and not have the cash in the bank because we've been distributing profit. Exactly. Yeah, that's that's been my concern is just making sure that we have Everything we need.

Yeah, so just just and you also oughta before you before you calculate this, you ought to be setting some money aside for retained earnings in general. I do have that. Okay. So you got retained earnings and then you've got systematized planning for upcoming expenses. And so you know, like for instance, we've got entree leadership summit. We're going to Disney in May. And so that's a huge expense month.

We're gonna be writing Old Disney a bunch of checks, right? And and so we got a big income month. leading up to that, but we also got this big expense down there. So we can't just uh destroy entree leadership's profits in a singular month or have the best year ever in a single month either. You know, all that kind of stuff. So we have to do some smoothing with that and that's done simply by You know, we're gonna st set aside each month

towards this upcoming expense that's very predictable because it's freaking contracted. We're gonna get it. Or we're gonna have to give it one of the two, whatever it is, right? So you're setting that money aside. So really good question, Eileen. Very cool. Congratulations on your early and quick success. Hope it continues and doubles and triples and rocks on, man. Hey, by this time of year you've set goals for your business, communicated them to your team, and are making them happen together.

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Our question of the day comes from Autumn in Richmond, Virginia. Hey Dave, there are so many marketing channels. Facebook, Google, email, local partnerships, direct mail. I feel overwhelmed. How does a small business narrow it down to the one or two channels that actually matter? matter. Well, um depending on how small we are, uh

You know, small, I guess, is relative in this case. But um the first thing I do and have always done, back in the day when we were tiny even, is I said, okay, where are my customers? The customer profile. Who is it I'm trying to get to? And where do they live? And so, you know, is a Google keyword going to lead me to that exact person, that demographic, that age group, that income, that level of education?

So on. Is email the best way to contact them? If you're looking for Gen Z, email's not going to be it. All right. If you're looking for uh direct mail, you know, there's only some uh only a handful of products that still do really well on direct mail, but direct mail's kind of made a comeback.

There was a couple of decades that we all kinda turned our nose up at it and told said jump in the creek, no direct mail, but there's some stuff that's actually moving right now really well with direct mail. But again, who is your contact point and what's the zip code you're dropping that direct mail into?

And what's the demographic of that zip code? You can get all that information. So identify clearly the persona of your customer. Our customer is a thirty-four year old, um, college educated female with two children and is married. If that's your c I mean, di dial that in. Is that who is your customer? Who are you aiming at? And then you you you may figure out real quick, okay, are our customer is an 18-year-old. Well, they're not on Facebook.

Don't waste a dime on Facebook if you want eighteen year olds. You might get on Instagram. You certainly are gonna be on TikTok. If you're looking at our eighteen year olds. But you they're they're not con or YouTube maybe, but they're not consuming. So, you know, Facebook is aging quick.

It's gotten down to my my my wife, the 65-year-old grandmother, trading pictures with the other grandmothers of the grandkids. And uh not quite, but man, I'm telling you, Facebook is not it it is not the babies. It's the i it's getting a little gray. So you gotta decide and you can learn that stuff. It's not hard to figure out, uh but get in there and figure out what your target is and where your target lives. And so

Yeah, I'll give you an example. The the in the old days, and we you wouldn't do this today, I'm and you didn't mention it, but I a way of figuring that out is, okay, if we were going to buy radio All right. Are we going to buy urban wrap? Is that where your customer is? Are we gonna buy country music? Is that where your customer is? Might be surprised, they probably are. You you if you're gonna buy seventies light yacht rock. Okay. Well that's where you'll find your boomers.

And you're probably not gonna get any eighteen year olds there, okay? So I mean, th the formatting on radio tells you where to go buy the ads in radio, if you were gonna buy radio ads. And that's a that's a clear example of what I'm talking about, although what we're talk what you're asking more about is a digital tool. And digital tools are the same way. They're bifurcated by, again, education, age, consumption, and those kinds of things.

So an ex uh another example is this. Average time spent listening on talk radio. is around what used to be around ten minutes. We had managed on the Ramsey show to get it up to about eighteen minutes. We do a three hour show, so that's kind of insulting. Average time spent listening is 18 minutes. You draw it over on the podcast, you know what your average time spent listening is? Almost a hundred percent. They consume the whole thing'cause they turn it on and off.

You guys don't listen to this in all in one setting sometimes. Sometimes you turn it on and off. You get it in and out of the car, it's on demand. You get in and off the treadmill, it's on demand. And so the consumption rate was almost pure on podcast and it wasn't on talk radio. So we knew when we were trying to get to our customers through our own broadcast.

That we're getting there. Oh, and by the way, podcast was a much higher educated, much higher income than talk radio was. The the consumer of it was. And probably still is. And so and YouTube, what are you gonna get on YouTube? Well, you know, I've learned a lot about YouTube that I didn't know over the years and now that YouTube is one of our big broadcasts you know, processes. So Spotify, what are you gonna get there that's different than Apple?

You know, and so all of those kinds of things. And there is a difference. It's a different consumer. It's a different person on the other end, different customer. And so who do you want to get and where do they live? Go where they live. You know, don't go looking for sixty-five-year-old white guys on urban rap. They're not there. Okay? And don't go looking for the cool kids anywhere except Urban Rap. That's where they are. And so go go get the cool kids where they are.

But who is who is it you're trying to sell to? And and if you do that it answers your question a lot. And then you can nar narrow it down and rule out some channels and then run some tests on the channels where you think they live. the processes that they live, but and then run some test markets on it and you'll see pretty quick what what your response rate is.

And uh then you've got the solve the attribution problem is can I actually say that's where that came from? But you'll have to talk to your customers a lot to figure out where they really did hear about you. And um So again, very clearly lay out your customer persona and then find out where they live and go done run some tests on those locations and that'll get you where you need to go. That's a good question, Autumn. I like that. I hadn't had that one.

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Sweet success process gets you up and running fast. Go to NetSuite.com/slash Ramsey for a free product tour and to schedule a time with a NetSuite rep. That's NetSuite.com/slash Ramsey. Thanks for joining us on Entree Leadership. If you want to help us out, consider hitting the follow button or the subscribe button. Leave a nice five-star review. And of course share this with a friend. Click the share button or cut the link out and send it to somebody. Go, hey, this is

This is actual real business advice. These guys can help you. They've helped me. Yeah. Sure. Tell people about us. We really would appreciate it if you did that. Rachel's in Little Rock, Arkansas. Hi, Rachel. How are you?

Hi, Dave. Thank you so much for talking to me today. Sure. What's up? Well, I'm calling I represent a painting company with an anticipated revenue of two point eight million dollars this year and we have nineteen employees. And about an eighteen percent profit margin, which brings us to around five hundred K this year. Good for you.

Thank you. My question is that I'm transitioning from corporate America to join my husband as an operations manager or administrator at the pink company he runs. He's been there for about six years. We're hoping to buy the company in the next year or two, and as we consider buying, aside from profitability, what are some things we need to look out for to ensure that it's what's best for our family? And also, how do I protect my marriage from becoming all about work?

Oh, there's a lot there. Okay. Um

Well what what we have done let's start with the last question, how do I protect my marriage from becoming all about work? What we've done with family businesses that we've coached and what we've done with our family Is that while we're at work, the title of the person is how they are treated. I'm the CEO. Rachel Cruz is a Ramsey personality. So is George Camill. And so George Camill is treated by me exactly the same way that I treat Rachel. He is also paid.

The same way Rachel is paid, on the same percentages. Now he might sell more or less books or whatever else, but he gets paid the same way. No special privileges. It's that's the way. And so when Rachel and I are having a discussion at work, she even calls me Dave at work, not dad. And so th translate that into your world, it's not honey.

at work, okay, or sweetie uh at work, or he can't turn around and look at you and say sweet girl or whatever it is, right? Okay, whatever the pet. No, I don't you know, all that. Don't get into all that. It's like, okay, you're gonna be running op And he's gonna be running X and he's the CEO and you're the other person and so you treat your CEO like you would if it was me. Okay?

And he treat and he treat and that that's with dignity and you still have the right to argue about something and push a point that you believe in, but at the end of the day he makes the call, he's running it, that's it, and that's his leadership.

And uh or if you're the president and he's s reporting to you and he's running the paint cruise, then he's gonna report to you and he's the president. You know, you see what I'm saying? So you treat that and then when you get home you change those hats out and now it's sweetie. And lovey and whatever else, right? And so we we're just we're and we don't talk about work over the dinner table.

And Ramseys don't. When we all get together for a family dinner, we talk about everything else. University of Tennessee football, politics, Rachel's latest conspiracy theory, whatever it is. We talk about something, but it's not gonna be Ramsey solutions. If we do want to talk about Ramsey Solutions, we have to ask permission of the rest of the family for a quick timeout.

And do that and we're and I'm not sitting there working on my iPhone answering Ramsey Solutions emails all through work, all through dinner with my family about work. So you need to be where you are. And that solves your role issue of how it doesn't take over your marriage. Okay? You treat him like a good husband, he treats you like a good wife at home. You treat him like the CEO, he treats you like the COO at work. And everybody's happy.

And by the way, I treat my people here at Ramsey really good. I mean, we're not we're not mean to people here. We don't yell and scream cuss at'em. You know, we don't do any of that stuff. So and you're not gonna do that at work, okay? So you don't have a big marriage fight at work for sure. That's a absolute no-do. Absolute no no. Because that's you having a temper fit and that's not gonna work. So okay, now, then on to the other stuff. You said

Uh i you said what was the other question? I got sidetracked with that one.

Aside from profitability, what are some things we need to be looking out for to ensure that purchasing the company in the future is what's best for our family? Yeah. Well, I mean, purchasing the company's fine as long as you run the company and it doesn't run you. And so your your your family's not gonna be in jeopardy on that. But the thing I'd look for is anytime I'm buying something, if he's been working there a while, and it sound how long's he been working there?

Six years. Okay. He already knows where the potholes are. Uh-huh. I mean, there's no secrets. It might be an employee that's a weak spot that's gonna have to go and the current owner hadn't had the courage to get rid of'em. It might be a um a a process that's not been instituted, so you've got a theft problem. It might be a process that's not been instituted. So the customer's not getting good communication.

All those kinds of things. So what's broken at this company? Well, if he's been hanging around six years, I hope he knows what's broken. Well, especially since the last two years he's been the one running it. So I sure hope so. And he should and and if he has if he has carte blanche to fix those problems, he should have been patching it up, right? And getting them fixed. So yeah, that puts him in really, really good shape.

And then the trick is just not to get yourself into a debt situation that you that that it steals the joy of running the company. And so we often have recommended here, is the current owner going to finance it for you all or how are you getting the money? Uh it will be a payout. We will not go into debt. It will be a payout over the course of several years from the company's profit. Okay. Okay. And what I would do is keep your all's salaries super low.

As low as possible and that payout as high as possible so that it ends as quickly as possible. I w I wouldn't hang around ten years with this around your neck. So get get get really aggressive with your numbers and knock it out. So if you set a set number, this is the number. I'm gonna put everything towards that number as fast as I can uh to get that number knocked out.

Um, but the most I'm obligated to is a percentage of profits. That way if there's a downturn, it doesn't bankrupt you and that's how you've that's how you've laid it out. So you've already learned our formula and have applied it. So very good. That's a good that's a good process. It's a good formula. Very good. Yeah, Rachel, I've got a feeling you guys are gonna do really well. You're asking absolutely phenomenal questions.

So really good. You've got your head on straight and it sounds like you got a real good uh by your husband having been there a long time and now running it, oh man, that just really puts you in a position to to not stub your toe on this and to really, really get a good purchase. Uh as long as you don't overpay for it.

And you get the old owner out of it as quick as possible. Um, I think you guys are going to really prosper from this because you're sharp. So very, very, very well done. Proud of you. Excellent job.

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 joining us on Entree Leadership. If you're a business owner who's been grinding it out and rarely gets time to step back and think clearly, I want to tell you about something special.

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