We Make $13 Million, But We Didn’t Pay Our Bills

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 thirty years of experience leading in the first time. In the trenches right alongside you. If you got a question you want to ask on the show, fill out the form on entree leadership.com slash ask or call and leave us a note at eight four four four four four four four nine four four.

ten seventy. That's eight four four nine four four four four four four four four four four four four one oh seven oh. Thanks for joining us. Andrew is with us in Dallas. Hi Andrew, how are you?

I'm done gay. Great Dave. Thanks for having me. I appreciate the time. Sure. What's up? I am the CEO and founder of a third party logistics company based in Dallas focused on e commerce and retail fulfillment. We have about thirty full-time employees, twenty to forty temps a day depending on upon the workload and the warehouse. Um we're doing thirteen million in revenue this year. We've got about one point two five in debt.

And I'm looking at doing a debt consolidation loan for our debts and I would love your thoughts on that. Why? Uh it would relieve a little bit of our finance. We have also we're handling with AP, obviously doing diff paying off multiple different collections on getting these debts down.

And then the second piece of this too is most of the 1.25 is between about three different suppliers and our services are paused with them. We don't need them, but it would be nice to have them and to be able to use their services.

They're polished because you haven't paid them? Yes, sir. Yeah. We're back. We're profitable now. We're we're m we have payroll. I'm sorry. We're paying them down now, which is about twenty thousand a week to each of those. And it'd be nice if we just got them all knocked out and get done right now. Mm. How long have you been out with them? How long have you been in collections? Uh about four months.

We moved this year and we had bad labor management on my part and also a move into a larger warehouse. So we forecasted about seventy percent accurately, which put us behind and w we've been calling'em ahead of time. We haven't been avoiding it. It's just as a pain struggle that we've been through. So twenty thousand a week is a million dollars a year, right? Yes, sir. Yeah. So you'll be gone in a year.

So um are they how how evenly distribu So give me the breakdown between the three of'em? One of them is about the three major ones, one of them about four hundred grand, one's about Three hundred grand, the other one's remaining about a hundred and eighty to two twenty five, I believe it's at right now. Okay. So that's gone in just a matter of weeks. It'll all be gone in a year. Yes, sir. Okay. And and you you said three major ones. Is there more? Those are the three major ones.

The one point two five is actually probably getting closer down to one million because we had a lot of these little ones that we were floating through and just asking them for another two weeks through the time period. As we get our cash flow, little cash flow positive back in January, all those limited ones are going to go away. And so cause we'll be back, we're back profitable now. So we'll be back managing and paying them on time.

These three major ones are these ones that are gonna be about it's gonna be about eight hundred, nine hundred thousand left between those three major ones for the rest of the year. Okay. And um How long have you had this business? We started in we started out of an existing parent company, but then we really started and broke away in January of twenty twenty one. Okay. So just a few years.

Yes, sir. Okay. So it's is it also safe to assume that um your cash and your um profits are not linear, they should be hockey sticking. Yes, they are. Yes, sir. We're we have ten X growth. pretty well revenue wise and then we've been profitable all of last year. No, no. We want to knock this out and get on at ASAP. Yeah. It's just a more of like you know, I've never had debt in my life. And so it's kinda like now we're in this position of building a business.

And not gr you know, less than stupid tax stuff we've done. And so it's like, all right, I can relieve our operations by having one main target with a little bit higher interest rate, pretty friendly, like it's no personal guarantees, or I can continue to deal with collections and And who's offering it? Uh we have a private lender here. Um they actually it's great partner actually. Um The friendliest terms probably you could get across when it comes to this type of debt reconciliation offer.

Oh, I'd say partner, just in my network of relationships I have. That's not a partner of anything. Oh, okay. It's a relationship. Okay. Yeah, good good relationship. There they're it's a private equity company that invests in faith driven, faith leadership business. Okay. Are they um taking an equity position for this? No, no, no, sir. There's no equity position. There's no hostile language. It is strictly going to be interest.

Um a high interest loans it's at nine sixteen to nineteen percent. We have a term sheet in front of us we're talking to'em. And then point five of any realized revenue over the course of the two year term that they're offering us. Nah, I'll pay us. What would be okay, I agree with you. I'm gonna submit to you. What's the what's the reasoning on your response there? Like what how would you interest rate is absolutely ridiculous.

And I would just call these three lenders and just start say and say, guys, look, we want to get you back online. and these vendors and and I want to get you back online and we're gonna commit twenty thousand dollars a month to this and um at a minimum or twenty thousand dollars a week get to this at a minimum and you're gonna see these healthy

payments coming in and if the healthy payments don't stick th then yeah you could pop us back offline again. But you you want our business. We want to work with you and we're gonna make good on this. Yeah. Yeah. And they see our financials and everything too, so they'll know they'll know what we're doing. Yeah, and and you know, we give them the nineteen the nineteen percent gets you out of this a month and a half sooner. Yeah.

Yeah, it does. Yeah, you y this is like a September horizon. I mean it's not a this is not a uh five or ten year program here. And so this is um you know, you s you Uh you stubbed your toe, uh you you didn't manage your cash flow well. Um, and like you said, you missed budget and uh grew too fast and it caused you to stumble. And and you missed your projections and we won't do that one again. I I've been there. Um but the uh um it's too painful and it's too embarrassing.

And um and that that's what this is more than anything. You you honestly, if I I've been there and and you want to get rid of the embarrassment as much as you wanna get rid of the um the actual debt'cause we're really not we're really slowing down how fast we get out of debt by this. It's not speeding it up. So, um no, I I think I would call them And depending on the nature Of the vendor and, you know, what they put

What was it they provided? Did they provide a service? Did they provide a good that had a low cost of goods sold? Um you might say, you know, under uh i i i if you were to give me a a discount on my balance, I might put you at the front of the line. And instead of paying them evenly.

Uh, if somebody gives me a twenty five percent discount on one of these because they to get me to get paid off and and to get back to get back to doing business again, to get cash flowing both directions again, um So even if it's the four hundred, I might put them to the front and say you get twenty thousand dollars a week until you're paid. I'm gonna put I and I'm gonna just let the others are gonna sit a little bit. Um somebody wants to do that and g get out of debt even faster.

I um I I would ask but I'm I mean not demand and not S not not say we're about to go broke'cause it's not true, but just say I I'm committing twenty thousand dollars a week to this process. We're gonna be done with all three vendors by September. If you would like to be at the front of the line on that, if you want to offer a di a substantial discount, then we can do that. Otherwise we're just going to run all three of you at the same time. And either one's fine with me. I don't care.

and uh see if somebody steps up and and, you know, s knocks another hundred grand off this or something, uh, which is entirely possible. Uh if I were on the other side of this I would seriously consider that if I were looking at you and and I wanted to get you back in the saddle as a customer and paying me again and buying from me again and doing business with me again and all that kind of stuff. So

So I I've I've done that in several different situations that were positive. So I don't know. But no, I I wouldn't no I wouldn't I wouldn't give somebody nineteen percent. avoid the embarrassment and to extend the pain one extra month. No thanks. If you're a business leader and you're constantly behind, here's the truth. You're doing work that shouldn't require your time. When that happens, most leaders look for speed, better tools, smarter software.

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Zach's in Atlanta. Hey Zach, what's up? Hey Dave, I just uh wanted to give you a call and ask uh a question that I've been I've been having trouble with for a while. I'm a power utility contractor in Atlanta, Georgia. Uh we run a debt-free business. We have 40 employees. And we did just over eleven million last year. Um, my question is how do I create alignment across my team uh that does construction work across the state?

They report daily to our customer directly and I find often that they form silos with cultures of their own uh that do do not line up with our core values. Why do they report to your customer daily?

So I guess for some context, um there we're contractors for the power company and we have dedicated contracts where we have uh crews anywhere from two to five men on a crew that are assigned to a region of the state with a director that assigns work orders to them daily and they they cover that region completing work orders uh as a contractor for the power company. Okay. So they're because of the daily communication and the uh isolation, they've forgotten who they work for.

Correct. That is exactly the problem. Yeah. That makes sense. It's logical. Um And I even find that the because they form strong relationships with the director that they work with, um, that sometimes the the director will almost help them get out of things that we try to do, like safety meetings, right? Um so they'll they'll almost come up with a reason to not be there. Yeah.

How how long do you end up having a relationship with that director? I mean, you're going back to them repeatedly, are you not? Yes. Yeah. I mean I I speak with most of them uh if not weekly, every several weeks. But I mean once that particular job or contract is finished, you're probably gonna sign up with them again for some more later, right?

Oh yeah, these are these are multi year contracts. I mean, we've been doing this work with these people for eight to ten years. Yeah. Okay. Well, I may need to retrain my customer too, then. Yeah, I think so. They keep their dadgum hands out of my business. They're the customer. They're not in charge of my safety meetings. They're not in charge of uh my guys. They're they're giving'em work and that's the workflow. Um

How cumbersome how many different crews? You got forty, so four. So you got ten, ten, fifteen crews, right? Yes, um about half of those are a different division that does uh a different service, but I have twelve employees that that this issue pertains to. How hard would it be for the work orders to come to you and you give'em to your men every day?

Um probably not easy. They uh we have a login on their internal computer system that where they do the work orders and things, so it um I know. They have not designed it to to come through me. I know, but you could log in. That's true, yes. And then you could hand out the orders. Your guys don't have the log game.

That's true. That's an idea for sure. You could centralize it and get the power off of them and then then they're no longer confused about who they work for. They're confused'cause they get their marching orders every day from somebody else. And then that guy sometimes steps in and circumvents other things you're trying to do.

So that's he's he's augmenting the confusion. So that I don't I don't know if it's worth all that effort or not. I don't know how much pain you've got. If if you're in enough pain from this lack of alignment uh then it's gonna be worth the ha extra hassle. to take the orders off the computer and distribute it to them yourself or have a manager do that for you every morning. And that just added to somebody's job every morning. Um and so they they check in with your computer.

And you move the you move the work order over onto your computer and then they log into you. They don't log on to the customer. Um and You know, that that's one way to do it. That's a bit that's cumbersome and a bit drastic. So I don't know how drastic we need to get. I probably would start with something else and just say, um, you know, so so who actually leads these twelve people. And you're right out.

I have this year uh promoted a manager uh that just he is just over those and um we've been working on putting processes in place for him to start making weekly site visits and um and grading them and scoring them on meeting the competencies and doing the things that we want uh to see repeated, right? Yeah, I think that's gonna I think that's gonna create a lot of alignment and'cause it's creating accountability.

And we're reminding who's you know, we're reminding who they work for. I mean,'cause it's it's very logical that they're getting confused in this situation. Even though intellectually I know that this guy doesn't but but you know.

He kinda I kinda do report to him'cause I have to get my work from him every day and then and then he's interfering in other stuff. So uh that's one thing I would do. The second thing I would do is if the instant one of these guys stepped between you and them on something like a safety meeting I would do a sidebar with that customer and say, We're not doing that.

Agreed. Yes sir. We're not doing that. Because this is important to our organization. My relationship with you guys is to serve you and get the work done, not to manage my people. And we're not we're not doing that. So we're not gonna do that.

Okay. And you know, it take thirty seconds, but you just sidebar with that guy and and you won't have to stop that but a couple times and it'll be done. You'll never hear from it again. Um because nobody ever told'em nobody ever told him it was wrong. That's all it is. And and if you do it you don't have to wait like thirty days and get all upset about it or something, just instantaneously.

Hey, I need to jump on the phone with you right quick. And 30 30 seconds later, it's over and you've moved on, right? And you just go, we're not doing that. These guys are my guys and it we demand that they do safety meetings and you don't need to interfere in our safety meetings. You're our our relationship with you is to get the work done and for you to deliver the work every morning, not to get involved in my company culture. Understand?

Got it. I'm retraining my customer. And I'd be pretty direct with them that way. Especially in that world where n where you don't want to be subtle. Right. And that's you know, and that's the biggest thing is like um the safety culture we have is paramount. I mean these guys work with voltage up to five hundred thousand volts. I mean safety matters, right? Uh yeah, it's death.

Yeah. Correct. It's this is not joking around. Well, whether it's safety or anything else, he's involving him himself in something that a isn't anything to do with him. Correct. You know, and inappropriately. So yeah, I'm gonna, you know, no, you don't get you don't get that option, you know. So uh, but just a little coarse correction and you don't have to be mean about it or anything, but I I would be very clear, very brief, and very direct and very instantaneous.

And very private, and and course correct that. I think that'll make that go away. Then you do the stand-up, do the weekly meetings, and you know, uh the more frequency you have with your guys. The more alignment you're gonna get. So, like in the restaurant business, every shift has a stand-up. All the employ all the waiters, the cooks,

The front of house, the wine steward, uh su everybody. Everybody stands up and we have a circle and we all get aligned and then we break the huddle and then we go serve the customer. And they don't do it once a day, they do it every shift. And so stand we do stand-ups at Ramsey. We come in, we're not sit it's not a sit down meeting, it's a fifteen minute meeting, and we just gather up, we huddle up and we break.

Right. We call the play, put the ball in the end zone today, that's what we're doing. Let's go. And um, you know, not not every one of our departments does that, but a lot of them do it. Every day. And they certainly do it once a week around here. So your guy's going to be on site once a week, but in the interim, uh, you could do every other day. We're going to do a five-minute Zoom gathering here.

Yeah, we we just talked about that this week. I mean I think the Zoom calls, if nothing else, it's just a point for them to see our face and a reminder of who they work for. I agree with you completely. Exactly. It doesn't take long. And hey, I'm here to help you. Got anything I can help you all with today?

Is there something going on in the field I need to interject and you know, are you li you got a supply issue, you got a safety issue, you got a problem with a customer? Is there something as as your leader,'cause my job is to make your life better. I'm I'm gonna knock down blockers for you. What do you got? And, you know, you're supporting them, but you're also staying aligned, which means we're course correcting as we go along, gently in public.

when there's three construction guys stand there, we don't take one of'em to task, right? But um good way to lose the whole team. But the uh um but yeah, j you know

Uh and and you just stay aligned and then you go, that's what we talked about yesterday. Y'all remember or we talked about that two days ago. Everybody ready? Okay. Everything okay with what we talked about? Yep, we're on track. Okay, here we go. Anything I can help you guys with today, hey, just want to check in, make sure everybody's good. Here we go. And the more that kind of the more touches you have, the more alignment you get.

And so um I was talking to the guy in a more of a corporate setting the other day and he said, I think my job is the C R O, the chief reminding officer. The chief repeating officer. I just remind everybody and repeat everything over and over and over and over again. Finally they hear it. You know? And that's how culture's built and that's how values are aligned. It's communication and then implementation and then accountability to the culture.

Yeah, you're doing y you know, you I think you got your finger on the pulse of this really well and I think you caught it before it's out of control. So yeah, let's let's back the customer off and put'em back in the customer's seat instead of the manager's seat just'cause he's issuing work orders. Put your guy out there once a week and then do an every two day stand-up for a little while. Let's see how that goes. Throw a couple things like that in.

And then um again, make sure the customer backs off. And then I think everybody's gonna remember yeah this there there he is. The guy on the zoom call. That's the guy who writes my check. Yeah, I remember him. Yeah. Be helpful. Yeah, very good stuff. Very good stuff. I love it. Very cool. Zach you're a good man. Keep it up, brother. Sales Gravy understands that managing a sales team is one of the toughest jobs in the business.

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Our question of the day comes from Ken in Kansas City. Dave, I promoted someone into leadership who is clearly in over their head, and the team sees it. How do you correct a bad promotion without humiliating them or losing credibility? Well, you've already lost credibility.

Um they know you made a mistake. Everybody knows you made a mistake. Probably even the guy knows you made a mistake. The person may as you made a mistake. I'm not sure. Depending on how self-aware they are, whether they feel like, oh, I am drowning over here. Um The problem is the humiliation and you may lose them. Um, you know, th this mistake may cost you a good team member. Because I mean, they've got to walk in the next day after they don't have the position anymore and do the walk of shame.

And I don't know how you avoid that. I don't I don't know. You can't you don't you don't want to lie about it and um butter over and act like, well, you know. So um If the team is sm the smaller the team is, the better your chance of pulling this off. Uh because you could sit down with everybody and just apologize to the whole place. There's seven of you, right? There's ten of you. And you just go, guys, I have screwed up. And John over here and I have talked about it.

I really thought, because John was so good at his job that he could do this leadership part and it's killing him. It's killing everybody. It's killing me. And I screwed up moving him into the role. John is a great guy. And he doesn't need to be in that role right now.

And so he and I have talked about it and he's gonna be back in his old role and we're not gonna go that way right now. Someday maybe there'll be a time when he is there or maybe someday there's a time when one of you are there. And every bit of this is not John's fault. A hundred percent of it's my fault.

Because I should not have as the leader made this decision. I goofed up the decision. And the problem is is that I've hurt John in the process because this is hard for him. And he's sitting there while you're saying all this. And you're just you because if you put all the junk on the table and people can all see all the junk, they're very forgiving of John. John's very forgiving of you. You're very forgiving of them. And you can you got a chance of pulling this off.

But if there's sixty people involved, it's gonna be hard to c transfer the feeling where John is not shamed No matter what you say. Because you're gonna be you know, i i it's just too big a group to turn this around. So you can go look This is his strength, so we moved him into this role. But the bigger the group, um, the harder it's gonna be. But I I think you take the whole thing on you. First, you sit down, talk to John. You say, John, you can't do this.

I goofed up. I'm so sorry. You know this is struggling, right? And we you know, I think we need to go back to where we were and and we'll look at it again later. Maybe there's a day in the future we can do this. But right now, I've screwed up and I I'm in the process, I've hurt you. and um embarrassed you and it's my fault and I'm the one that's embarrassed and I'm so sorry.

And I love ya and I'm glad you're here and I sure hope you'll stay and help us in that other role. And that's what I want you to do. Can you do that? And just talk just demote him, put him back where he was. And then I you know what, fifty fifty chance that works, right? But you don't blame him. You blame you. You don't go, you know, I thought you were smarter than you are. You're a doofus. No, that that won't work, okay? No, we're not talking about that. This is like

I screwed up. I made a mistake. Yeah. When you say I promoted someone into leadership who's clearly an over their head, you screwed up. So when the leader says that, when the leader says I was wrong, I messed up, I apologize. Most leaders don't have the backbone and the courage to do that. They're too small minded. So they're really just bosses. And if you can look at somebody and go, I messed this up, you'll get a lot of grace from people.

Now he's still got to come in the next day and not be the boss, not be in leadership anymore. And he's still got that walk of shame back to the desk, right? And all of that, and you've still got to walk through this. So it's still I don't know, what a fifty fifty chance you could keep the guy. But i and the team the team doesn't care because the team already knows he can't do it. And the team will gain respect for you when you say I

did this. It's not John's fault. I should have looked at this more carefully. I screwed up. I'm sorry. I've already apologized to John. And John and I have talked about it, and he's going to move back into this role. And he and it's embarrassing for him. And you guys, I'm so sorry. I want to tell John in front of y'all. I'm sorry, John. I'm sorry I screwed this up. And I'm sorry I put this put the put you in this situation. And but we're still gonna do it.

We're not gonna act like it didn't happen. And e even though everybody's embarrassed and we got egg on her face and uh red and the walk of shame and all that stuff is there, but we're still gonna do it. We're still gonna put the guy back where he needs to be. And then if it doesn't work, then your just your mistake costs you a good guy.

And that that's I've been there. Mishandled something and I lose a good person. I've been there. And it's a hundred percent on me when I do that. So a couple things there, just the authenticity Gentle conversations. First handle it with a guy. You take a hundred percent of it on you. Lots of apologies. Talk openly about embarrassment. Talk openly about a walk of shame. Talk openly about all that, then everybody hears it, everybody sees it and everybody goes, Yeah, man, that sucks.

But we're all okay now'cause at least we're not going to be able to At least old Ken, our boss, has a brain. And he's a big enough man to say what he screwed up and so I'm working with a guy who's a real guy. And he's gonna tell me the truth and he told me the truth this time and people people will rally around that, be loyal to that, they'll they'll push themselves through.

For somebody like that. That's good stuff. So very cool. Good question, Ken. Been there myself, brother. You'll get through it. I love entrepreneurs. Don't forget, guys, I started my company on a card table myself. So I know. What it's like to have people counting on you. Your team, your family, not to mention your customers. And when you're the one signing the paychecks, you can't afford to fly blind. But I'll be honest, early on, one thing that nearly sunk us was wasting time with

Spreadsheets that didn't add up because business units didn't talk to each other. I finally told my team just fix it. And they did. We got Netsuite. That was years ago, and we've never looked back. See, Netsuite isn't just for tech. Giants. It's built for growing businesses like yours. Over forty-three thousand businesses already run on Net Suite, including a lot that started just like you. And now with built-in AI, NetSuite is helping them even more.

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John is in Los Angeles. Hey John, how are ya? Dave under the wall, thank you. I appreciate you uh taking the time to talk today. Sure, how can I help you? Um so I've got a dilemma here. I'm uh I'm about the same vintage as you are. Get ready to retire, uh wanna retire. But some of us have an exit plan. I d I don't have any one. So I have a general contracting firm. We specialize in building uh custom homes and uh large remodels. Um I personally have uh eleven employees.

And we do about uh between five and six million dollars of sales a year. Um, we operate on about a twelve to fifteen percent profit margin on this. And I have uh of the eleven employees I've got uh two of my boys that are working. And uh one runs pretty much everyday operations. And um I'm trying to figure out what is a fair way to segue out. How old are you? I'm uh sixty four. Okay. Are you ill? I have another another month or two. No, I'm not ill. No. Okay.

Just uh I think more than anything, probably what's your what do the two boys do? One runs what? One runs operations, the other one does what? Everyday operations, the other one works in the field. Uh basically yes. Okay. All right. Cause you know if you're doing this much volume you're doing more than one job. Correct. Okay. Correct. All right. Huh.

So so it's the dilemma is uh one of'em is uh run every da operation does a phenomenal job with everything. He's super detail oriented, hyper focused. Um engaged, organized, everything you asked for, employee. The other one is not in the same category. But it's a family business. How do you you know, and then and you know, the one has been working for me for probably up to thirteen years now and uh you're looking to take it over. and I want to pass it off, but what we presently have, I bury'em.

And so you would bury him. Why why would you bury him? With just too much stress, too much pressure, uh not properly uh staffed or positioned. Uh so Okay, wait a minute, wait a minute. So he's r he's running operations for the whole thing. That's correct. And there's six or eleven team members. Correct. Um What's the difference in running operations and running the whole thing in an organization this size? Well, I'm I'm working on the whole backside dealing with the office and uh

uh bidding. So he's running production. He basically he has run production. He's not running operations, he's running production. You're running operations. Correct. That is correct. Okay. That makes sense. Okay. So you're you're sell you're doing all the customer interface. On the on the back side right now, yeah. So he's he's making the sale?

Uh he is making the sales right now. Oh. So someone somebody comes and wants to do a big remodel or wants to build a custom home. They they they're talking to your son. That is correct. Okay. So what is it you do? Basically I I I run the office, I do all the uh the billing, the ordering, um interaction with subs, contracts and the like. Subs. Subcontractors. Yeah, I know. But why are the subs not being run by the job?

It's mostly the paperwork coming through me. So I'm basically running the paperwork in the office for those guys. Okay. Yeah. Okay. Right. So it's really a matter of trying to figure out I mean I of course you got to do that. So what you you just need bench depth for what you're physically tactically doing.

And yes. So if someone was doing what you were doing and they worked for the president of the company who was your son and your son kept doing what he's doing now and had the title of president and they ha he had a C O O that did what you do. He could do the customer work.

the um the the job management and so forth. And then you'd have someone doing the accounting and the logistical sub operations out of the COO's office and you put them in there and you pay'em fifty or hundred thousand dollars a year to do that. Um and and that's somewhat we're we're trying to lean towards. But then I also have the situation of the I don't need to sell the business. I mean I I I you know, there's a value to everything, right? I mean it

I can't just slide the whole computer over with all the books and the and the and the bank statements and so on. So here you go, keep going. We're where his income is going to jump dramatically because I'll step out of the picture and won't be drawing an income. But the the the first subject is okay, there's three components. Th there are two components here that are very, very important. One is D for succession plan to work, you've got to have strong leadership that can run the uh organization.

We just discussed how to build that out. You're gonna have to bring someone on and you're gonna stay another 12 months and you're gonna get your bench depth covered and they're gonna do what you do, and their new position is gonna be COO and your son's gonna be president. And that's his day job, okay? That's your leadership team, his leadership team that can run the business for you guys. Then there's ownership.

Ownership is separate from working there. My oldest daughter does not work here, and she is one of the owners. Okay. Rachel Cruz is a Ramsey personality, and she's one of the owners. But she doesn't run operations. Her brother, Daniel, is the president that runs operations here. Okay? Runs the business. And so that's his day job. Her day job is Ramsey personality. You've got one son whose new day job is president, who has a COO reporting to him that does the job you used to do.

And you've got a son in the field that gets paid to do the job. Now your son, when he gets promoted to be president, you may give him a bit of a bump. You should, okay? And that's gonna lower profits. Then the profits are gonna come to the bottom line and you still own the business. But you no longer work there. Certainly. See how you separated the ownership versus work in there. So you've got a day job and then you've got an ownership. Then you get to decide.

Okay. Other out of these profits, how do I want to share it with these two boys, these two men that are my sons, um, as an ownership position. So you could give you know, five percent of the profits to the sun in the field. As an owner, but not because he's working in the field, just because he's an owner. Sure. And then you could give five ten percent to your son that's the president.

Of the profits. You don't even have to give the stock over for right now. And that's a first step or two. Later on, y you know, you could have just in your will that the whole thing goes to some mix of the two of them. Are that is that your only two children? I've got uh three others. Okay. What are we gonna do with them? Well they're not part of the business.

Okay. I mean they have two walk into it and are technically rewarded to some degree or compensated for it. No, they're compensated because they got a job. Certainly. That's why they got that's why they're compensated. So not because they not because they hit the DNA lottery. And and the ended up being your kid and there's and you're successful. So they got a job and that job pays you don't pay them more than they're worth for their job, do you?

No. Okay. No. No. So so y there's let if you keep this real separate in your mind, it helps you walk out of there. First thing is we have to create the leadership team that can run it with me being an absentee owner. just checking in with my president son and a couple of the other leaders and I could have a m leadership meeting once a month as the owner that doesn't work here with the leadership team that's running it and how can I help as the owner?

And then you do the books. They have the books done what by the COO and you review the books. We close the books and I take the profits and put'em in my pocket if I'm you. And then the next step would be to start to share the profits with the two that are there if you want to. And then the next step is to figure out long term, what are we going to do with the ownership as you age and or die?

How are you gonna break that up and how you gonna hand that off? You there and there's no wrong answer. You could choose to give it all to the president's son. You could choose to give seventy five percent to him, twenty-five percent to the one, the other one that's working. You could choose to give it Evenly to the rest of the kids, which would make it hard for the president's son to run, by the way. I wouldn't recommend that. Yeah. But um

So you got five kids, right? That is correct. Yeah, so you can figure out, you know, maybe President Sun gets fifty one percent and the rest of'em split up forty nine. I don't know. You can make it up, right? Or and all that means is not that they tell anybody what to do, it just means they get paid out of the profits.

Okay. That's uh I I I that's one one uh angle I never looked at it. Yeah. Yeah. So if you'll separate the leadership team and the operations of the business as one category and the ownership as another category, you can start to see a path. To create a one-year exit ramp or an 18-month exit ramp or whatever on your succession plan, and you'll get new energy from doing that. Um and you can telegraph that to the customers. Uh you can telegraph it to your sons or

Uh you can telegraph it that I haven't decided what I'm doing with the ownership aspects to the rest of to everybody. I'll let you know on that later. But I am gonna let you know right now that we're elevating so and so to president as I step away. sometime in the next twelve to eighteen months as soon as I get my bench depth done here I gotta train somebody up tactically to do what I do every day so they can report to the president's son.

the son that's the president, that guy. So cool stuff. You're a good man, John. You're closer than you feel like you are. You just need to treat this like a building project. We need a blueprint, a timeline. And and a budget, right? And let's lay it out and just execute. And then the you'll look up and the house will be built. And that that's exactly how it it's another it's just another project. That's all it is.

Folks 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 Entre 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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