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- [00:11]
A
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, well, you fill out the form@entreleadership.com ask or call and leave us a voicemail at 844-944-1070. We'll call you back and make you a caller. That's 844-944-1070. Jacob is in Chicago. Hi, Jacob, how are you?
- [00:48]
B
Hi, Dave. I'm doing well. Blessed to be on the show. How are you doing?
- [00:52]
A
Better than I deserve. What's up?
- [00:54]
B
Yeah, so I was calling, and my question is as, how do I step into a role in which I'll be managing those who are much more experienced than I, and how do I do that? With a Kingdom mindset.
- [01:07]
A
Okay. How old are you?
- [01:09]
B
30 years old.
- [01:10]
A
Okay. And the people you'll be leading are.
- [01:12]
B
How old they're going to be? Probably they're mostly in their mid to late 50s. Yeah, they've been with the company about. About 20, 15 to 20 years each.
- [01:23]
A
Cool. What do you do?
- [01:25]
B
So right now, I'm actually over the maintenance department, so I'm manager in our maintenance department. I work for a bridge and rail girder manufacturer, and we have about 240 employees. And I actually, the owner just recently spoke to me a couple weeks ago and actually brought me aside and told me, hey, our GM is retiring and next year, and I'd like you to train with him and become our next general manager of the whole facility.
- [01:49]
C
Wow.
- [01:51]
A
Good for you. That's wonderful. What a great promotion.
- [01:55]
B
Yeah.
- [01:55]
A
Okay, well, I think the. The best person to ask this question of is the old gm. Okay. And then secondly, what I think you would do is I would pick up Pat Linchini's latest book. It's called the Motive, and it basically says you're not a very good leader if you're in it for what you. You get out of it. Most of the great leadership minds, like John Maxwell and so forth, will tell you that the best leaders are leaders that serve. And you say, okay, how can I serve them? How can I care about them and what they want and simultaneously obviously get the work done right? But instead of it being about you, it's about them. And so what's your focus here? Your focus is how can I help them do Their job better be better men, be better husbands, have better lives. How can I be thinking about them, not about me? And that keeps us from. When you're a brand new leader, it's real easy for most people, me included, to, to step in and go da da da da da. I'm here with all the answers because if you look at it through the lens of service, you ask a lot more questions than make statements. And so I would go on a question answering asking tour, a question asking tour, not answering and just ask a lot of questions. What do you think the best thing we do around here is? What's some ideas you have to get things to be more efficient and better. What would you like to see out of the new gm? If you could design a new general manager and it was the one you wanted, not the person, but the way they acted, what kind of behaviors would you want to see out of the new gm? And I tell you the good news is a crusty old 58 year old guy who's been working like this, stuff like this, he'll tell you, probably won't hold back.
- [04:05]
B
You think, no, he's a straight shooter.
- [04:09]
A
Yeah, that's good news because that way you're not got somebody all white collared up and they're dancing around trying to be passive aggressive and play politics with you. These are the kind of men that won't do that. And I like that. That's good news for you. You may not like what they tell you, but you know, but they'll get used to that. But just ask a lot of questions and continually ask that. And what I tell our leaders around here is if there's someone in a position and they're having a personal problem, their kid's sick at home, their wife's got cancer and you don't know it, you have failed as a leader. You need to be loving your people. Well, and I don't mean in some kind of weird sappy way where they're rolling their eyes at you or something like that. They might do that anyway, but just they need to know that you actually care about what is best for them. It might be that what is best for them is they don't work here anymore, but I actually care what is best for you, you know, and you know, I've had people that I'm overwhelmed with anxiety, I'm having a panic attack every time I walk in the building. The pressure of this job is just too much, I can't do it anymore. And I'm like, well what's best for you. You know, if I was your dad, if I was your older brother, I would tell you to quit that job. It's going to kill you. And so it's probably best for you that you and me try to find you something else to do because this place is, you know, the position you've worked yourself into is killing you. And I don't want that for you. And that's an act of love. That's not just firing somebody because they got anxiety, right? So anyway, the motive, motive, motive, motive, questions, questions, questions, questions, and then go, okay, my job is to do, to knock down blockers. If there's anything blocking you guys from doing your job better, safer, more efficiently, faster. If there's anything keeping you guys from doing that, my job is to get that thing removed. And if it means I got to go upstairs and talk to the boss and say, boss man, we got problems down here on the floor. These guys deserve a better wrench to turn this with. They deserve a better tool than we're giving them. You know, we're making this too hard. Then I'm your guy. I'm your representative, you know, and I'm the guy that knocks down blockers. I'm the guy that says, you know, we're understaffed. These guys are all working 16 hour days. We've got to get some more staff in whatever it is. Your job is to knock down anything, any blocker that is keeping us from being better, bigger and badder. And that's all an act of service. It's all the way. You come at it with a spirit of service. And when you do that, Jacob, and you will do that, I know you will, because you're the guy that asked this question. The ones that won't do it are the ones that don't ask this question. They've already got all the answers. And they don't call and they don't ask a question like you're asking the humility you showed by asking me this question. When you show that humility to them with an actual spirit of, I actually, I'm not being manipulative. I actually do care about how this ends up for you, and I want to know what you think. And when they get that off of you and you're not wimpy, you're strong, but I'm here to help, I'm here to serve. When they get that off of you and people can smell a fake, then pretty quickly they're going to rally around and be really glad you're there. I would take all of that, listen back to it again on the podcast and listen to it again the first day that you go in and start working with the GM to be mentored. And then ask the GM that you're being mentored with what he thinks of my answer. And if he says I'm full of crap, then I'm full of crap. And you go with what he says. But I think that stuff will help you. It's how I would approach it. I've seen young leaders inside of Ramsey do this. They go on a listening tour and it's really a good way to get indoctrinated into a new team and to get people to trust you and believe in you. Rather than I'm going to come in and start with Bugles announcing that the new king is here. The boy king has arrived. Nobody wants to see the boy King, I promise you. And you know, and that's the way a 58 year old looks at a 30 year old, by the way. Hello. So now they're rolling their eyes going, I got socks all during this fart, you know, and it's just, no, you don't want that feeling. And so the way you get by that is you just come in asking, asking, asking, asking, asking. And then after six months or so, you'll have your feet under and then you can tell some people some stuff. But you don't need to tell anybody anything for a while because you don't really have anything smart to say for a while. Give yourself a minute to get there and you know that's when you'll get there. You will, Jacob, because your spirit, the spirit you carried into this call, is the exact spirit I'm talking about. So you're going to do great with this. I'm proud of you. I'm glad you got this opportunity. You must have obviously earned it with your work ethic and your character. Congratulations.
- [09:12]
D
This is the time of year when things can get crazy for small business owners. Or fun, depending on your definition of fun. Strategic planning, personnel decisions, next year's budgets. Oh, yeah, and everybody wants time off during the holidays. But in the midst of everything else, don't forget about payroll may not be glamorous, but it's 100% needed for the continued health of your business because your team members, they need to get paid on time. So if your current payroll provider isn't meeting your needs, check out payority. They make it easy to switch your payroll service. Just send peority some basic info and they handle literally everything else. Direct deposits, deductions, reimbursements tax filings, forms, they do it all. If Your business has 1 to 100 employees, payority is perfect for you. They're a comprehensive payroll company that aims to take the stress out of payroll and make switching easy, giving you peace of mind as you're heading into the busiest time of the year. Go to payority.com entree leadership today for a free consultation. That's payority.com entree leadership.
- [10:20]
A
Well, black Friday's almost here and we're offering deals so good that we won't advertise them publicly. It's a secret. The only way to see these deals is by joining our private Black Friday email list. You know what? That sounds like a trap. Step up on the trap door. Yeah. Now we'll get you on the Black Friday email list and then we'll tell all your secrets. No, I'm kidding. If you're not on that list, you're gonna miss out on the deals. Though it's funny, these offers won't show up on the podcast or the social media or anywhere else. You only get them on the Black Friday email list. That's so mysterious. So right now, go to octreyleiters Black Friday to join the list. And make sure you sign up today so you can be the first to know when our Black Friday email list comes out. And it'll give you that offers that no one else will know about. Cause they're a secret. Don't wait. I'm kidding around. But we really are doing this. And you can really get some bargains this way. And you really won't learn about them any other way. So go to entreleadership.com blackfriday today or click the link in the show notes. James is with us. James would be in Sacramento. Hey James, what's up?
- [11:30]
E
Hey Dave. Cool to talk to you. I've been listening to you for since 2018. So thank you for the good influence you've had on my life.
- [11:39]
A
Well, thank you, sir. How can we help?
- [11:41]
E
So I'm a general contractor and owner of an ADU building company. This year we're doing about three and a half million. Last year we did one million. And my question is, how do I properly pay? Set up outside sales rep. So I've been doing all my sales up until this point. Some quick context. I have been given advice from someone I really respect that says that outside sales should only be paid a commission when they both generate and close the deal. On the other hand, I'm thinking if the sales team is getting some of the leads that we generate, then the business would make more money. And when I've interviewed a few potential salespeople, they all seem pretty surprised when I explained that like they would need to generate their own sales. So I'm just trying to navigate correctly here.
- [12:36]
A
You want them to generate their own leads or their own sales?
- [12:41]
E
From what I understood, the advice I've been given is that they would do both. They would generate it and close the deal as outside sales and that's how they would earn their commission.
- [12:51]
A
So where do they get their leads?
- [12:54]
E
Well, so if.
- [12:59]
A
What kind of construction did you say this is?
- [13:02]
E
Yeah, so it's an ADU construction, which is. It's like a granny flat in the backyard. So it's a mini home up to 1200 square feet. And yeah, you just built, you could build it in your backyard. It's a secondary home, essentially. Now if, I mean, if I was a salesman trying to generate my own leads, I'd be creating networks with local engineers, architects, people that maybe real estate agents. That's where I would go. That's all in theory. I'm really just trying to figure what you.
- [13:38]
A
Where did you get your leads to get to three and a half million.
- [13:41]
E
Yeah, so I've been, I've advertised, I've. I just learned and self, you know, some advertising on Google and Facebook and that's where I generate all my leads. And then a little bit of word.
- [13:54]
A
Of mouth, but you don't have time to work them all anymore.
- [13:59]
E
It's getting more difficult. It's like you need to be running.
- [14:04]
A
The business instead of being the sales guy.
- [14:06]
E
I agree 100%.
- [14:08]
A
Yeah, well that involves that someone else has to take over the leads that you were using.
- [14:13]
E
Yes.
- [14:14]
A
And though. And you weren't generating them, you were getting them off of Facebook.
- [14:19]
E
Yeah, I would create the ad creative and set the ad budget and you know, got this far with that. But yeah, definitely everything. I shouldn't be doing that. I know that for sure.
- [14:29]
C
In the long run.
- [14:36]
A
In a retail B2C setting, you're selling direct to the consumer. You're not selling to another business. It would be. I like the advice, it would be really nice. But if they could generate their own leads and then close their own leads, that's a much harder hire.
- [15:01]
C
Right.
- [15:01]
E
I've come to realize that to find someone that has.
- [15:04]
A
That can do both of those things, it's a much easier hire if you say, here are the leads, you need to go close them and your marketing plan generates the leads. And whether you're Doing paid social or word buys or whether you're doing. Whether it's stuff off of the Internet or whether you've got some other methodology. You're running ads in magazines and people are calling in. I don't know what it is you're doing. A direct mailer. I saw somebody the other day and made some money with direct mail. I didn't know that existed anymore, hardly. But this guy claimed he was doing 2 million a year off of it. But I don't know what it is, but I think you've got to. You're going to have a much more effective sales force, a higher volume production if you generate the leads. Because here's the thing, you can. You can put together a marketing campaign that lead generates. They can't.
- [16:06]
E
Yes, true.
- [16:08]
A
And so the volume of leads that you could create would be like, let's just say 100, and maybe they generated 10 in the same period of time. They might have a higher close ratio on those 10 than they do on your hundred percentage wise. But total numbers would be up if you're generating the leads. Now, there was part of the way you phrased this at the beginning with the advice that I didn't hear generating the leads. I heard that they took the lead generation, sold it and closed it. And until it was completed, they didn't get paid. That part I would do. That part I would do. I would not pay them on a contract that you have received no money on.
- [16:53]
E
Sure.
- [16:53]
A
I would only pay them when you get money.
- [16:57]
E
Right. Yeah. I suppose if I were to rephrase it in a little bit or a little bit differently, I'm almost looking for the green light to give salespeople leads because that's the way I understood it should work.
- [17:11]
A
I think in a B to C relationship that's more efficient. Personally, I don't think there's a wrong way or a right way. It's just a matter which one works. Right. I think if you got 10 guys out there just knocking doors, so to speak, they're not going to generate the same volume as if you got 10 guys closing massive numbers of leads that you send them.
- [17:31]
E
Yeah, that's a much harder way to go. Yeah, I agree with that.
- [17:35]
A
I think. I think you. But it's. And so you do some campaign marketing that is lead magnets and generates leads. And you know, and you know, I'd be okay with having two commission structures. One when you close our leads and one when you go talk to the engineers and they start giving you leads and you go get your Own leads and I'll pay you more on those than I do on the ones I spoon feed you.
- [18:00]
E
That's actually, I wanted to quickly ask about that. If we have a second or two. Yeah, yeah. Like a proper percentage. What you.
- [18:13]
A
There's not a set percentage. It varies industry. It depends on your margins. I mean, obviously you can't give up your entire margin in sales commissions. And you've got cost of goods sold. You got hard costs. You've got cost of this campaign now that they didn't do the work. You had to pay for this marketing that brings them the leads in. And so that they're gonna get me at a lower percentage on all of that for that reason, because I got to cover my costs and you're one of my costs. And so I don't know what your margins are and all that. You've got to figure that out. Here's the thing I would do. I would put in place a commission structure that if you ever had a salesperson that made $500,000 income that year, that you made so much money as a result of that, that it makes you really glad to pay him 500k. Agreed.
- [19:03]
E
I mean, that'd be nice.
- [19:04]
A
Yeah, it's happy. Happy comp plan. You're happy, they're happy. But I have done them a couple of times where they started making a bunch of money and I had structured it wrong and I wasn't wanting it. Got to the point I didn't want them to sell more because I was like losing 20 cents a watermelon because I'd put the thing together wrong. And you don't want to get a bigger truck when you're los 20 cents of watermelon. So that's the thing. So you got to be real careful with that. And I think I probably. Let me tell you what else I would do on comp plans. I always do it here now because I have done it wrong a couple of times. This is how we're going to start the comp plan. If when we get into this a year or two, I'm not going to change the comp plan just because I'm greedy. But I might change it where you make more as I look at it further. And I might change it where you make less because you might end up making more than me. And I own this place and that's not going to happen. So I've got to have a little flexibility to look at this thing when we get further into it because there may be some things I didn't foresee that are in this and I'll talk to you about it. But I'm not going to rip you off. But I can promise you after a year, we are going to revisit these percentages and we might have to change them, but we're going to start it off this way. And I'll never change the percentage just because I think you're making too much money. That's not going to be the reason. But we are going to have something that's equitable for both you and me. And if it's not doing that, you're not making enough. I'm going to change it where you make more or I'm not making enough. We're going to change it where I make more. That's pretty well. And I'm going to lay that out ahead of time. That way they don't go well as soon as I start making money. They ripped me off. You don't want that one. Okay. And I did do that a couple times. I didn't rip them off, but that's how they felt because I didn't set the table properly initially on the way in. That's the thing. So. Good question, James. I think you're gonna do really well. Feels really, really good.
- [21:02]
F
If you've ever looked at your calendar and wondered when you actually get to lead, you're not alone. Most business owners aren't out of ideas, they're out of time. Somewhere along the way, growth turned to grind. You hired more people, added more meetings, and somehow ended up with less focus than before. That's the growth trap when success starts slowing you down. So here's the truth. Leadership isn't about doing everything yourself. It's about building systems and trusting people so you can lead strategically, not reactively. That's where Belay comes in. Belay will get to know your needs and pair you with US based executive assistants, accounting specialists and marketing assistants who take things off your plate so you can focus on what actually matters. So stop trying to outrun your own calendar. Start building the systems and support you need to lead from a position of strength, not exhaustion. Download Belay's free resource, the ultimate guide to stopping executive Burnout today. Just text ENTRE to 55123. That's ENTRE to 55123.
- [22:03]
A
If you've not listened to entree leadership for a while, you might not have caught the vibe. The vibe is this. I am a capitalist pig. I love capitalism. Capitalism and the free enterprise system is the best system on planet Earth. And it has always been among the economic systems, socialism sucks because eventually you run out of taking money, other people's money away from them to give it to people who don't do stuff. Communism sucks because it puts four people in the whole country rich and everybody else poor. And it doesn't work. I love capitalism at this time in human history. It amazes me the few times that I turn on social media and look that some of these little turds on TikTok are out there saying, America is dead. Capitalism is awful, we need a universal wage. They've been trained thoroughly by their communist college professor to think that this is the worst time ever in American history. Now I'm 65 years old. I'm the old guy says get off my lawn, right? I'm that guy. I'm the grouchy old boomer. I get it. I got no issue with that. I'm very comfortable in my own skin in that regard. I will tell you though, I've been doing business now since I got out of College at 22. So 44 years ago, 43 years ago, I got into the business world. Oh, by the way, I was selling real estate 60 hours a week while I was in College, beginning at 18 years old. So you know, I'm in my 50th year of business in America. Five freaking decades. So I have something that some of the you little tiktokers don't have. It's called perspective. And let me tell you, when we started Ramsey, we were putting our lessons on these things called VHS tapes. And what that meant was I had to pay someone tens of thousands of dollars to go into a studio and bring in friends and family for free and sit them in uncomfortable chairs for four hours while I did a talk. And we recorded it. And it costs so stinking much money to produce a four hour lesson. Tens of thousands of dollars. The cameras that we used were 150 to $200,000 cameras. The lights were expensive, the floor and the paint was expensive. Everything about the processor was expensive. And you know what else it was? It was slow. We shot the first set of stuff and it was six months later before we got it out of the edit bays. Oh yeah, we had these huge computers that we downloaded this tape into and then they would edit it and then they would download it onto more tape. And then we had to send it to another city and they would duplicate the VHS tapes by running one tape to another tape machines all night long, over and over and over and over again to get two boxes of them. And so they ran Them continuously for months on end until we had enough stock to actually go to market with this product. And I made millions of dollars off of that. Even as slow, inefficient and expensive as it was helping people. I helped people. I gave them direction and hope to change their lives. And it changed their lives. And I made a lot of money if I was going to do that today. The camera is 2,500 bucks. The studio is anywhere I want it to be. The editing is done. By the time we finish shooting, we'll live, switch it, and then we'll drop it in an edit bay. And before I get up the next morning, they've got the stinking thing edited. And you know what? We don't have to send it to another city to get the tapes duplicated. We pop it on an email and it's in your inbox a day and a half after we shot it. And you get helped. And my cost of goods sold is almost zero versus massive cost of goods sold. My time to market is almost zero versus months and even years to get to market. And if it's wrong, we'll just change it and do it again tomorrow versus having to throw five tractor trailer loads of VHS tapes in the dumpster because I said something stupid on the tape. And that happened, by the way, not five tractor trailer loads, but one tractor trailer load. This is the best time in America today in the history of the human race to take an idea and decide, I now own a business. I'm going to take this idea and I'm going to put it out in the marketplace. And you can do it when you're 19 years old, and you can do it when you're 59 years old, and you can do it so freaking fast, so efficiently, and almost no cost of goods sold. And you can just deliver it. And you've got wonderful distribution platforms for that are free. And you can put your stuff up on YouTube, it's free. You can put your stuff up on Spotify, it's free. You can put your stuff up on Apple, it's free. You can submit an app that you wrote over the weekend with AI's help and to Apple. They approve it and four days later it's on their app store, the largest distribution of technology in the history of mankind. And you can do it in moments. This is the best time in the history of man to start and run a business. If you can't start and run a business and make a profit now, there is no time in human history, no system in human history that you would have been successful. This is the easiest. It's a hot knife through butter, child. Seriously. The last thing you need to do is be dancing around some bush whining about capitalism right now. What you need to do is get off your assets and go to work and go do something. You need to get up, leave the cave, and digitally make something happen instantaneously and deliver a product to someone that helps them and serves them, and solves a problem for them. And capitalism will kick in and people will send you money for that. For God's sake, sit around and suck your victim thumb in the corner, crying about how the system is broken while everybody else goes at the best time in the history of human mankind, everybody else goes and lives their best life and becomes prosperous while you whine and declare yourself a victim. Absolutely not. Get up and go do it. Right now is the best time ever. My career as the CEO of Ramsey is coming to a close over the next 15 years. I'll be on the air here doing this, but my career as the CEO running this place, you know, I'm 65. I'm not gonna. I'm not gonna be running it when I'm 85. That would be dumb. Okay? And so we've got the leadership team here is young, vibrant, and let me tell you, I started from a card table in my living room. I took this to 300 million. If these guys running this in the same period of time don't take it to 3 billion, there's something wrong with them because the opportunity is so freaking huge. And they are smarter than I was. They've got the benefit of learning from all of my 30 years of mistakes. So you'll make some mistakes. You'll do something dumb, but fail forward. And for God's sakes, get out there and experiment. Try something. Try something. Try something. Try something. 100% of the people that don't take the shot don't score. So you might miss, you might not score. But I promise you, if you're sitting on your mama's couch in your mama's basement whining about capitalism, you ain't scoring on nothing. And that includes you ain't even gonna get a date. Cause no girl wants to go out with that loser. So get up and get it done, man. This is the best time ever to be in business right now. Get it, baby. Get it. Get it. That's how it happens.
- [31:12]
D
Get it.
- [31:12]
A
Now's the time. Don't whine. Get it. You wouldn't build a house without a blueprint, so why Are you trying to scale your business without one? Here's the truth. Without a plan, you're just reacting, not leading. And if you're always reacting, you can't build the momentum your business needs to grow. That's why we're giving you Entree Leadership Elite's strategic planning template for free. This is the same template my team uses every year to plan for the next 12 months of growth. And you'll also get the course that shows you how to use it. In under 30 minutes, you'll know how to build a clear plan to grow your business so you can finally get out of reactive mode. No more flying by the seat of your pants. Just clear, practical steps that take you from putting out fires to actually growing. Go to entreleadership.com strategy to get the free strategic planning template today or click the link in the show notes. Trenton is in Pittsburgh. Hey, Trenton, what's up?
- [32:23]
B
Hey, Dave.
- [32:24]
C
Thanks for having me on. I appreciate it.
- [32:26]
A
My pleasure, sir. How can we help?
- [32:29]
C
Yeah, my wife and I, we own a coffee shop and roastery. We have about 10 employees between part time and full time. Last year, we did about $500,000 in revenue. And I don't know if you've been following the news at all. The cost of our green beans has risen significantly, especially this past year. So my question to you is, do you have any advice for me on how to navigate those conversations with customers as we need to adjust our pricing. We want to be fair to our customers, but we also need to be fair to us to keep our business healthy.
- [33:12]
A
Well, Trenton, I think we live in an environment where every thing has price increased, right?
- [33:18]
C
Yeah, absolutely. And so if I walked into a.
- [33:22]
A
Coffee shop and randomly the price had gone up, I wouldn't be going, oh, Trenton got greedy. I'd be going, man, his costs probably went up. Like, his labor cost probably went up, which he probably has. And your bean costs probably went up. I mean, I don't think. I don't know that you need to communicate it necessarily.
- [33:45]
C
I think in asking that I'm thinking more about, like, our wholesale customers that we provide to restaurants, other coffee shops, and, like, grocery stores. And so we want to maintain, like, relationships with them. So it's more so.
- [34:02]
A
Yeah, but all of their other suppliers have gone up.
- [34:06]
C
I. Yeah, I agree with that. I think maybe some of my fear is coming through knowing from our end, you know, all of our supplies are going up to.
- [34:18]
A
Okay, so when someone increases their price on a bean that you're buying, what did they tell you?
- [34:26]
C
They didn't tell me anything. And I guess that's kind of where some of my frustration comes in. I, if, you know, one of our suppliers has to adjust pricing, I just want them to be upfront, say, hey, this is coming down there. I just wanted to give you a heads up. So, you know, I'm not necessarily expecting them to just eat their costs. Yeah, yeah. I just want to be given a heads up and just kind of be upfront about rather than just.
- [34:53]
A
So if you said, if you said, a, I'm going to give them as much lead time, notice as I can and B, the reason for these increases is not to line my pockets. It's because my costs have all gone up. Is that enough?
- [35:11]
C
I think so. I guess my fear is, you know, some of the customers that, you know, we've recently picked up, up, they have talked about pricing is kind of like a pain point. So I don't want to say, well.
- [35:24]
A
Listen, if they, if they, if the only way you keep them as a customer is you lose money, then we don't need them as a customer. It doesn't work anymore.
- [35:32]
C
Yeah, that's also correct. Yeah.
- [35:34]
A
If that's, if that is required for the relationship that you lose money, then this is not a relationship anymore. Yeah, absolutely. Something that didn't work. I mean, because here's the other thing. They're not buying coffee from anybody else that didn't go up. Everybody went up.
- [35:52]
C
Yeah, absolutely. 100%.
- [35:53]
A
Everything in their store has gone up in the last three years. If you didn't go up, you're the only one that didn't really. Don't you think? Am I right?
- [36:05]
C
Yeah, that's 100% right. Yeah.
- [36:09]
A
So I think, I think that's the environment we're in. If the environment was that the economy was stagnant and prices were not going up and you were the lonely guy who jacked your prices 25%, then you would stand out in a negative way. But you're passing on your hard costs. Hey, guys, my labor costs have gone up substantially and my price of goods sold has gone up substantially. Okay. And so, you know, in the next 90 days or so, expect to see some price increases or 30 days or so, or whatever the number of days is. And I'm just giving you a heads up. And it's not to line my pockets. And I'm sorry, I wish I didn't have to do this. I'd like to be the cheapest guy, but I also want to stay in business and this is what I got to do. And something that simple is all I would expect.
- [36:59]
C
Yeah, that's fair. And if I agree with what you said, if someone has, you know, if that's a deal breaker for them, ultimately that's probably not a customer or a relationship that's salvageable anyways.
- [37:10]
A
Yeah, I'll give you an example too. In our world, all right, we have the exact same thing with books. All right, 2019, the typical hardback book sitting on Amazon, selling entree leadership books or building the business you love book would have been 22 or $24.
- [37:33]
C
Okay, okay.
- [37:35]
E
Yep.
- [37:36]
A
Today they're 34. Cost of goods, paper costs during the pandemic, paper skyrocketed, it doubled. And there was a shortage. You couldn't even get it. Then the supply chain crap got straightened out and they never went back down on their prices. Paper still real high. And so our cost of goods sold to produce that book went up substantially. And here's what's weird. We were looking at the thing. Cause books are a small percentage of our total gross sales out of the 300 million that we do. So we weren't watching it close enough. And we looked up and the publishing was starting to lose money. I'm like, why is it losing money? Well, the cost of goods went up and we didn't change the prices. Our prices were still down there. And so we did a quick study of the market and we were the only ones that were not $32 and $34 going up from 22 just four or five, six years before. Right. But books went up more in that four or five year period of time than in the history of me doing books in 30 years. So it's kind of shocking to the system and we didn't keep up accidentally. And when we moved ours up and were the same price as everybody else in the market, we got not a single complaint. Oh, Dave's trying to rip off everybody. Because anybody with two brain cells to rub together can look on Amazon and go, all the books are priced about that price. I mean there's some small books that aren't, but I mean the general trade paperback or trade hardback book, that's the price range for self improvement books. So if you're reading Simon Sinek or Pat Lencioni or Dave Ramsey or Henry Cloud or any of these people, Jim Collins, good to great, you're going to find about the same pricing on all these books. And we were the only one that was lower. So when we came up, everybody else looked and went okay, and we did. The reason I was asking you about all this is the. The communication that we did to the marketplace was zero. We didn't say a thing. We just raised our price and nobody complained because of the environment that we were in. Kind of signaled to the customer that obviously our costs had gone up and everyone else had gone up. And so it wasn't like we were the only ones at $34 and everyone else was at 22. You see what I'm doing?
- [39:54]
C
Yeah, absolutely. And I think that's fair. I mean, as far as coffee, like, the markets were kind of at a record high in February. They're at an even higher point now, and everyone is increasing their prices accordingly in order to keep their doors open.
- [40:11]
A
Yeah. And most of the time, a coffee place like yours is not in the price business anyway. You're in the unique value business. You're not competing based on price. You're competing based on your brand differentiation, your unique selling proposition, your usp, which is the flavor, the organic, the experience, the brand association. You're not trying to win by being the cheapest coffee. That's some of the big boys.
- [40:42]
E
Yeah.
- [40:42]
A
And we all know if we want to drink cheap coffee, we're going to get what we pay for.
- [40:47]
C
Yep, that's also true.
- [40:48]
A
Yeah. It's like cheap beer. No, thank you. Right. Yeah. You don't want to be the natty light of coffee. Right.
- [40:55]
C
And so definitely not.
- [40:56]
A
Yeah, you're not. You're a craft brewer. Right. That's the thing. And so that's where you want to be. You're in that world, and I think you're in good shape, man. But you're concerned about it, and that makes you a good business guy. Makes you a guy with a good heart. You're not doing this out of greed. I think your customers are going to feel that off of you and feel that off your brand. And so, yeah, give them a heads up. My labor costs and my hard coffee costs have gone up, and so I've got to raise my prices to stay profitable. You'll be seeing those in X number of days, and they're gonna go, of course we knew that. We're a little shocked you hadn't done it before and that. And you're gonna be just fine. You got nothing to worry about. Trent, you're a good man. You're the kind of people that win in business because you care about the customer. You care about the perception of your brand. You want it to be a brand of character. And thank you for that. Thank you for who you are and for what you're doing there, 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 entree leadership.