How to Accurately Forecast Business Growth

Summary

Episode Summary: How to Accurately Forecast Business Growth

Introduction In this episode of The EntreLeadership Podcast, hosted by Dave Ramsey of the Ramsey Network, listeners dive deep into the intricacies of accurately forecasting business growth. Released on March 17, 2025, this episode features real-life scenarios and expert advice aimed at helping business owners navigate the challenges of scaling their operations effectively.

Guest Spotlight: Jacob's Journey to $4 Million The episode begins with Jacob, the CEO of a materials testing and inspection firm from Idaho, sharing his impressive growth story. Starting his business in 2016, Jacob has successfully expanded to over 20 employees and is on track to reach $4 million in revenue this year, boasting a remarkable 25% profit margin.

Understanding Accurate Forecasting Jacob poses a critical question to Dave: "How do we more accurately plan and forecast for the upcoming season and year?" (01:32) Dave emphasizes the foundational aspects of forecasting, suggesting that businesses typically rely on historical data trends to project future growth. He advises using the previous year's performance as a baseline, adjusting for known variables such as increased costs, loss of clients, or the acquisition of new ones.

Key Strategies for Reliable Forecasting Dave outlines a systematic approach to forecasting:

1. Historical Trend Analysis: Examine the past few years to identify growth patterns.
2. Baseline Establishment: Use the previous year's data as the starting point.
3. Adjustment for Changes: Modify forecasts based on anticipated changes, both positive and negative.
4. Deep Dive into Client Acquisition: Understand the sources of your clients to make the pipeline more predictable and replicable.

Jacob highlights the volatility in his line of work, particularly in the engineering and construction sectors, where project sizes can fluctuate unexpectedly. Dave underscores the importance of transitioning from reactive to proactive forecasting by thoroughly understanding client acquisition channels and developing a repeatable model.

Notable Insights:

• "Your forecast is a guess. It's not even an estimate. It's just a guess." (02:23) — Dave Ramsey
• The longer a business has been operational, the more accurate its forecasting becomes due to established patterns and customer behaviors.

Caller Jen's Dilemma: To Grow or Let Go Later in the episode, Jen from Canada shares her struggle with her growing business. After leaving a successful 20-year career to focus on her side hustle, Jen expanded her operations but now faces financial strain and debt without drawing a personal income.

Dave's Guidance on Business Viability Dave advises Jen to evaluate the profitability of her business critically. He presents two options:

1. Pivot for Profitability: Revamp the business model to ensure it generates enough revenue to cover expenses and provide a reasonable income.
2. Closure and Debt Clearance: If profitability isn't attainable despite efforts, consider closing the business to eliminate debt and explore other career opportunities.

He emphasizes the importance of not treating the business as a hobby but as a profit-driven entity designed to support both the owner and employees.

Notable Quote:

• "Sanctioned incompetence is when you're too weak-kneed to face the person that's not doing their job." (17:38) — Dave Ramsey

Dave on Team Unity: Overcoming the Five Enemies Interspersed with guest stories, Dave delves into the critical topic of team unity, outlining the five enemies that can undermine a cohesive work environment:

1. Poor Communication
2. Gossip
3. Unresolved Disagreements
4. Lack of Shared Purpose
5. Sanctioned Incompetence

He stresses that eliminating these factors is essential for fostering a productive and harmonious workplace. Effective communication and a shared vision are paramount, while addressing incompetence decisively prevents disloyalty and fosters respect within the team.

Caller David's Experience: Managing Growth Stress Towards the end of the episode, David from Virginia calls in to discuss his deck-building company, which generated $1.4 million this year with a 12-member team. Despite recent growth and improved performance after attending a summit and engaging a coach, David feels overwhelmed by the stress of managing his team and ensuring consistent payroll.

Dave's Solution to Scaling Without Stress Dave reassures David that the stress isn't inherently from the size of the team or revenue but stems from managing underperforming employees and unprofitable projects. He advises:

• Focus on Quality Hiring: Implement a robust hiring process to ensure new team members align with company values and performance standards.
• Identify and Eliminate Problematic Clients: Recognize patterns with difficult customers and avoid engaging with them to reduce unnecessary stress.
• Scale Smartly: Continue growing the business by replicating successful models rather than expanding indiscriminately.

Notable Quotes:

• "The stress came from the underperforming people and projects, not the fact that you merely had payroll." (43:16) — Dave Ramsey
• "Business is awesome till people get involved. The greatest blessings in your life are your great team members. The greatest curses in your life are the crappy ones that got in the door." (44:25) — Dave Ramsey

Conclusion: Mastering Forecasting for Sustainable Growth This episode provides valuable insights into the art of forecasting business growth accurately. Dave Ramsey emphasizes the importance of understanding historical trends, establishing a reliable baseline, and adjusting forecasts based on informed variables. Additionally, he highlights the necessity of cultivating a unified and competent team to support sustainable expansion. Through real-life examples and practical advice, listeners are equipped with the tools to forecast effectively and lead their businesses towards enduring success.

Key Takeaways:

• Leverage Historical Data: Use past performance as a foundation for future projections.
• Understand Client Dynamics: Deep dive into how and why clients choose your services to create a predictable pipeline.
• Prioritize Team Quality: Focus on hiring and retaining competent team members to reduce stress and enhance productivity.
• Address Business Viability: Be willing to pivot or close operations if profitability isn't achievable.

By implementing these strategies, business owners can navigate the complexities of growth with confidence and clarity.

Transcript

[Dave Ramsey]

Hey, business owners, today is the day to pre order our new book, build a business you love. Reserve your copy from the Ramsey store and get more than $350 in bonuses for free. Go to entreeleadership.com build or click the link in the show notes from the headquarters of Ramsey Solutions. This is the Entree leadership podcast where I take calls from leaders like you about what it takes to win at any stage of business and leadership. I'm Dave Ramsey, your host with over 30 years of experience leading in the trenches right alongside folks like you. If you want to submit a question, well, you go to entreeleadership.com ask or leave us a voicemail at 844-944-1070. That's 844-944-4070. Jacob is with us in Idaho. Hi, Jacob. Hi, Dave.

[Jacob]

Thanks for having me.

[Dave Ramsey]

Sure.

[Jacob]

I'm. I'm the owner, CEO of a materials testing and inspection firm. Started it back in 2016, and this year we have just over 20 employees, and we're on track to end up right at $4 million.

[Dave Ramsey]

Good for you. Well done.

[Jacob]

With a 25% bottom line on that, which is awesome.

[Dave Ramsey]

Wow. That's amazing. Good for you.

[Jacob]

My question is, how do we more accurately plan and forecast for. For the upcoming season and year?

[Dave Ramsey]

Well, I mean, I think it's obvious that generally forecasting is based on the last few years as a trend line. Right. And so if we go back, you know, what did you do in 2022, 2021, 2020 might be weird, but the, I mean, what's your trend line on that and what information can you gather from that that informs this year? Right. And so we're always doing that. And so your next year is always like the year before, plus or minus the things that are given. I mean, we know we've got increasing cost, or we know we've got this customer is going away, or we know we've got a new customer coming online that we didn't have last year. So we can add that to the forecast. But you take last year as your baseline, and then whatever differences there are, we add and subtract those to try to come up with this coming year. And the, the longer you've been in business, the more accurate you'll be able to forecast. The longer you've had that product line or that service, the more accurate you'll be able to forecast the first year you're doing it. Your forecast is a guess. It's. It's not even an estimate. It's just A guess. You know, it's based on numbers, but it's. I guess we're going to sell this many units for this much revenue, and I guess we're going to have these expenses and. But you're, you're forecasting your first two years, as usually should be the most inaccurate of your entire business career. After that, it should get better and better and better. But you're probably already doing all of those things, aren't you?

[Jacob]

Yes, but my, my issue comes up of. So last year we did 1.6.

[Dave Ramsey]

Whoa.

[Jacob]

And then we jumped. Yeah.

[Dave Ramsey]

So what caused it to more than double?

[Jacob]

Well, that's kind of the part of my issue is that we are, you know, so we're working in construction.

[Dave Ramsey]

Right. We're.

[Jacob]

I say that we're akin to a trade, but we work more into the, on the engineering side. Yeah, but, but I have. We're the last thought on whether it's a contractor hiring us or an owner developer. We're the last thought. Like I've had times they're breaking ground and then they call us, hey, we got this project for you. And it turns into much bigger than we ever anticipated. But I've also contacted some of our larger clients that are, you know, year after year, and I'm like, hey, what do you got coming up? And there's crickets because of their internal lack of communication. And so that's where I'm just trying to get better ideas of how to communicate with, with some of these clients of ours of so that we can.

[Dave Ramsey]

Out of $4 million, how many clients are you running?

[Jacob]

Oh, 60 to 80amonth. We had the month where we were on 100 different projects.

[Dave Ramsey]

Well, that's a pipeline. That's not. That should, that you ought to be able to say, okay, what did I do to get 60 in the pipeline versus 30 in the pipeline? That's not, that's not based on their whim. You've done something that's caused you to get 30 in the. I mean, two years ago you had 30 and now you got 60, right?

[Jacob]

Yeah.

[Dave Ramsey]

If it was three, I could see the volatility because it would just, you know, it's on their whim and crap. I don't know what that one's going to do. And that's one third of the forecast. Right. That, that, that makes it inaccurate. It's very difficult to put pen to paper on that one. But where you're going from 30 to 60 or 30 to 70, you're doing something there that's different projects, different customers. Right.

[Jacob]

Some of it is, yes. And honestly, we don't do any advertising. It's, it's all word of mouth, you know, and which is amazing. And it does speak, and I do understand that speaks volume.

[Dave Ramsey]

How wide is your geography footprint? How far out are you going from Pocatello?

[Jacob]

We'll, we'll travel about two hours. Any direction, sometimes more, just depending.

[Dave Ramsey]

Okay, what's the, what's this market cap out at for you?

[Jacob]

Who that I don't know, because right now we've got a lot of heavy highway projects from the infrastructure bill that are happening and will continue for the next couple of years. But we've had just a lot of developers and development here in East Idaho happening. And you know, I know some of my competition in the area, we've now kind of exceeded some of their offices, but I also think they're probably at the 6 to 8 million dollars range.

[Dave Ramsey]

So you, the idea that you could, you know, you've been taking some of their business here and there, you would end up taking more of it. Then there's plenty of market cap. I mean, you could take this to 20 million hypothetically and not ever leave your, your geographical footprint. Right.

[Jacob]

I wouldn't say quite that much. But there can be, you know, we could probably 3 to 4x.

[Dave Ramsey]

What we're at now with additional 4 would be 16. Yeah, okay.

[Jacob]

Yeah, Yep.

[Dave Ramsey]

All right, that makes sense. Well, I think what we've got to determine is where the customer base is coming from and can we predict that that is replicatable? Can I continue that or am I just totally going to be guessing for the rest of my life? I don't like guessing. That scares me. That's not forecasting. So, but basically we've got to say this revenue stream, what have we got to do to feel good that when we say five, it's going to be five. And that represents 100 clients a month. And we know what it takes to get a client in the pipeline. And we've got to do, we've got a staff to make sure that that happens. And we've got to put resources and technology and marketing dollars or whatever to make sure that that happens. I think you've got to get under the hood here and not just say, okay, these clients are just generally, you know, they're just walking in, they're staggering in and dying in our lobby. We didn't kill anything. No, you need to go, you need to figure out how this is occurring so that it's predictable, replicatable, sustainable, and then you've got a forecastable model, but where you don't have the sense that you're controlling or contributing to the creation of a client directly, then it makes it very, very hard to forecast and very hard to do that. So I think you need to get under the hood and figure out where these clients are coming from, and then that'll help you lay your revenue model out. And of course, you can back into expenses after you lay your revenue model out. And I, but I think you're doing something more than you realize you're doing that the organization is doing something to put these things in half. Maybe you need to go back and survey. If you're doing 70amonth, you need to go back and survey a couple of hundred of these people and say, okay, how did you choose us? What was the process? How long is the pipeline? Where'd you hear about us? What was the brand differentiation? What was the value proposition? Why'd you choose us, in other words? And how did you hear about it? And then, you know, you start to put together a marketing plan based on that, because then your customer starts to have a Persona. They start to be that our general customer comes to us this way. It takes five months to develop them from initial contact. And then I've got a predictable environment that I can create a forecast out of. And you know that that's going to be the route I go if I'm in your situation. You just got to get under the hood and figure out where, where the money's coming from and create a predictable model and then you can forecast accurately. But it's and it's worth doing because it's gonna drive you nuts. Otherwise you're gonna feel like you're at the whim of the wind blowing and that'll drive you bananas. This is the Entree Leadership podcast. What does the future hold for business? Ask nine experts, you'll get 10 different answers. Economic growth or a recession? Business taxes will go up or down. AI will help us work or replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite and you should, too. Whether your company's earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities with one unified business management suite. There's one source of truth for the visibility and control you need to make quick decisions. NetSuite's real time insights and forecasting help you see into the future with actionable data. And when you're closing the books in days, not weeks, you spend less time looking backward and more time focusing on what's next. And speaking of what's Next, download the CFO's Guide to AI and Machine Learning at netsuite.com Ramsey. It's free at netsuite.com Ramsey have you given up on the freedom you dreamed of when you first started your business? Does it feel like your business owns you instead of you all owning it? Well, get ready to transform your business because our latest book, Build a Business, you Mastering the five stages of Business is now available for pre sale. In the book, we teach you how to implement the Entree leadership system in your organization. This proven system is what we use to build Ramsey Solutions. From a card table in my living room to a $250 million company, you'll learn the five stages of business and the unique challenges you'll face in each stage. Plus, I'll show you how to solve the problems at the right time in the right way using the six drivers of business. Now's your chance to be one of the first people to get a copy. Build a business you love is the essential guide for a business owner like you who wants to grow yourself, lead your team and scale your business. To place your pre sale order, go to entreeleadership.com build or click the link in the description. If you're listening on YouTube or podcast, Jen is in Canada. Hey Jen, welcome to Entree Leadership Podcast. What's up?

[Jen]

Well, that sounds like what I need because I'm looking at my business and going should I stick with it or should I let it float over here at the side? And I go back to my day job. That's where I'm currently at. I left my career of 20 years where I was always very successful and turned my side hustle got so big that it became my full time job and now I've since taken it out of my basement. I've got a bricks and mortar location. We're doing about $870,000 worth of sales a year, but I'm still not paying myself since getting the bricks and mortar location and I have an opportunity to go back to work in my previous field, you know, make 100 grand again and get back to earning for family instead of now having what feels like my business just drain me. You know, when I I'm staring at the debt that the business has, I'm staring at, you know, all the expenses of having this overhead now and just thinking, like, every. Every payroll, I go, oh, will I pay myself? No, no, no, no, no, don't do it this week. What does.

[Dave Ramsey]

How much debt did you take on for this?

[Jen]

Well, we have the. We bought the building, so we've got the mortgage on the building and then we've got some renovations that we had to do and some costs. So I would say we probably owe 450.

[Dave Ramsey]

What's the building worth?

[Jen]

I'd say probably we paid 390 for the building and the place next door just sold in the sixes. So I'm confident that if we sold it right now, we'd get at least, probably 550 for it. So I think the building is an investment, I guess. But that doesn't help the mortgage payment every month.

[Dave Ramsey]

So if you didn't have the building, your business would be profitable.

[Jen]

I think our expenses every month are about $20,000 that's payable.

[Dave Ramsey]

Then you'd have rent. If you didn't have the. If you didn't have the mortgage, that's it.

[Jen]

I think it would be a wash. I honestly think that the mortgage every month isn't what's bringing us down. I think that, like, overall sales are kind of tight or tighter than when we first, like 875 is what we did last year. I would say we're down to 550. We're on track to make 550 this year. And I think that's just. I think that's like economy and people doing just shopping less. That's what I'm seeing. I don't see us doing a whole lot different. We used to do a lot, a lot, a lot of online courses. And now everybody wants to come in person. So Covid was great for us doing online. We had a lot of online revenue and now people are like, well, we'd rather come in person. And well, you can only fit 10 people in a classroom where you could do the course before for 100 people. And so we try to now do online and in person, but people want in person and you just can't. You just can't do as many, it seems. So my question really is if I'm trying to adhere to the baby steps at home, which I am, but I'm never bringing in any income. Should I allow my business to run as is?

[Dave Ramsey]

No.

[Jen]

Without me here every day with the.

[Dave Ramsey]

Money that I trust, it's not making money. There's no point in keeping it. I'll just shut it down. Sell the building or you've got to see a way to make it profitable. One of the two. If you can figure a business model that gives you hope. A business model shift, a pricing shift, a delivery of product, shift, whatever it is, the way you're doing, the classroom thing to where you actually are making a profit and you are paying yourself, and you can see your way to that. If I try these three things and they don't work, then I don't know what to do. Then I need to close it. If you've tried everything and you don't know what to do and you're just waiting on lightning to strike, then it's time to close it. You close something, you end a relationship or you end a business, you end a job. You bring an ending to something when you lose hope that it's gonna get any better.

[Jen]

What's your opinion on it? Making enough to pay the employees?

[Dave Ramsey]

No, thank you.

[Jen]

Not enough to pay me too.

[Dave Ramsey]

No, thank you. It's not a hobby. It's a business. It's not your job to do. Only create jobs. It's wonderful that you create jobs. And that's a cool thing. But, you know, you're supposed to be making money owning a business. That's the point. It's not a hobby. And so you need to have a way to get this profitable, or you need to close it and sell the building and get out of the debt. And I don't know which one. I don't hear the idea floating in our conversation that saves this, but it may be there. I just don't know what it is.

[Jen]

No, I don't know what the idea is either.

[Dave Ramsey]

I think I would sit and spend some time in prayer. Spend some time maybe even with your leadership team. If you're married with your husband and talking about this and saying, okay, before we close it, is there anything else we want to try? And if we try those things and we can't get it profitable, we don't see a way to scale this. We don't see a way to break this log jam. Then me working for free, me owning a business and being $450,000 in debt to make zero money is a bad idea. Yeah, that needs to go away. And the great news is it can go away. And you can clear the debt and maybe put a little money in your pocket and restart your career. But I'm gonna try to figure out a way to deliver this service in a way that I can get enough scale to it at enough price that, you know, if the people want to come in, there's only room for 10, then maybe your pricing is too low per unit. If we raise prices, will we have the same number of customers? I don't know. I'm amazed at what people will pay for small group engagement situations versus being in a, an online setting and for the personal attention of, you know, it's almost like having a personal one on one coach because there's only 10 people in the room, you know. And so I'm amazed that that price point and what it will do in some areas, it might not do in your area. It might be the area of business you're in, what you're teaching or how you're doing it. It might not work for you, but. So I'm going to give myself. You've got a lot invested in this emotionally, financially and everything else. So I'm not going to close it today. I'm gonna give myself 30, 45 days to come up with an idea, maybe to try a couple of things and, you know, once I have exhausted all reasonable possibilities and then the conclusion is, is that I'm going to stay $450,000 in debt to break even and no, no, thank you, and make no, you know, no, I'll just close it, sell the building and go get a job. And you'll make a lot more for your family, a lot more for your family in that whole process. And that's, that's exactly the, you know, the route I would go with that. So, wow, I feel for you. I wish I had the perfect thing. I could just throw at you and go, just do that. But I don't understand enough of what you're doing to throw that at you. I'm sorry. This is the Entree Leadership Podcast.

[David]

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[Dave Ramsey]

This is the Entree leadership podcast. One thing I am sure of as a leader, that when you have a team that is not unified, not all dancing to the same sheet of music, not all aligned and heading in the same direction, it is almost impossible to create a productive, profitable environment that people love working in and that the customer loves doing business with. And yet, very few teams are actually unified. People get away with it all the time. They seem to outearn their stupidity on this subject. It's crazy. And I have looked at unity and studied the power of unity for a very long time. The power of synergy, the power of when three people are agreed on something, when five or more are agreed on something, and we're all aimed at that direction and we're all pulling out all the emotional and spiritual stops to cause it to happen. It's amazing what you can pull off with a team that's doing that. And I really don't know after 30 years of doing this, what creates unity. But what I do know, and what I recognized a long time ago, is what destroys unity. And one of the things we teach in entree leadership are the five enemies of team unity. And what I have discovered at Ramsey, and many of you have discovered after I taught it to you, that when you fight back with everything that's within you against the five enemies of unity, when the enemies of unity are all put outside the walls of your building, then unity will occur. But these things will. They're poison. They're acid in the system. And as long as it's in the system, you're gonna struggle. The first of the five enemies of unity is poor communication. When the right hand doesn't know what the left hand is doing, you can be guaranteed somebody's pissed off. It frustrates things. It's hard to move forward. And when people don't know what's going on, they will write a script in their head or with their mouth that makes the situation much worse than it really is. So communicate, communicate, communicate. Communicate over. Communicate over. Share share your story with your team. Collect weekly reports from your team so you know what's going on with your team. You know, push, push, push, push, push, push, push. Through all of these things. Absolutely vital. Keep talking, keep talking, keep talking, keep pushing. Have staff meetings, have anything you can do to create wonderful communication. It's absolutely necessary. Have something like a vision statement. Have something like a mission statement. This is who we are when we're not doing this. We're not a we. This is who we are. Communicate, communicate. Communicate, communicate. If things are going bad, tell the truth. Tell people what's going on now. Don't make them worse. Don't be super negative ninny about it. Don't be Debbie Downer, but tell them we're not profitable this month because we had this problem. You know, when things are going great, tell people, Tell them what's going on. Tell them about the future. Tell them what you believe about good, about what's going to happen and what's happened. You know where we're going from here. Communicate, communicate. Communicate. Communicate, communicate. George Bernard Shaw said the biggest illusion of communication is that it has actually occurred. And Andy Stanley used to say, you have to tell people something 21 times before they hear it. Talk about everything over until you're sick of it. Over and over and over and over again. The second enemy of unity is gossip. We have a core value at Ramsey that we have a zero tolerance for gossip. It's not actually true. We actually will have a little tolerance. We'll warn you one time before we fire you, hand your negatives up. You're going to have negatives. If you weren't here pushing things, if you weren't here moving things around, if there wasn't friction, you probably wouldn't have a job. So expect problems, expect frustrations, expectations, expect speed bumps. And when you have a problem, not if you have a problem, hand your negatives up to someone in leadership that can do something about it. Don't spread your negatives all around. If you hand your negatives down or spread them around, we will warn you one time and then we will say, you know, you can't gossip and be here and you can't talk negatively about other people. You can't do anything. You can talk to leadership about anything. You can vent there. You can't be belligerent, but you can bring in a concern. You can talk about this situation with this person, this relationship breakdown, anything you want to do. And so we're going to fire you. If you gossip at Ramsey. And by the way, if you were to take a poll or a survey, which we have done of the people at Ramsey, it is one of their favorite reasons for working here. They work in a non gossiping environment because gossip destroys the environment. And the worst form of gossip in my mind is where you're running the company down, you're running the leadership down, you're running the ownership down. And my friend Henry Cloud says, I don't understand people peeing their own cereal and then gripe because it tastes bad. You work there. This is where your money that feeds your family comes from. Your children have food because of this place. And then you are tearing down the place. What kind of moron are you? I might not even warn you once for that one. I might just fire you for that one. Because that's not only gossip, it's disloyalty and it's a lack of integrity. But you know, depending on the situation and how extreme and so forth, we're there. But you know, well, I hate this or I hate that or whatever, that's fine, talk to leadership about it in a non belligerent way and you're safe to do that here. But we have a zero gossip policy at Ramsey. That simple. The third enemy of unity is unresolved disagreements. Where you have a disagreement with someone, someone has a district, two people on your team have a disagreement and they do not come to closure. Healthy conflict, mental health, closure on that disagreement. It just boils and festers inside and becomes a splinter in the organization and eventually infects everything because it will spill out of their mouth as gossip. Eventually it will spill out of their mouth as some kind of negative situation. So teach the idea that good organizations, my friend Pat Lingione talks about this. The best organizations learn how to do conflict. Well, it's mental health, it's organizational mental health to learn how to do conflict. Well, we do a lot of conflict at Ramsey, but we're not destroying the human beings that are involved. We're destroying bad ideas. We argue about which play to call to win the Super Bowl. We do not argue about whether so and so is capable or not. That's a different discussion. And that's not an argument. That's deciding whether somebody can stay or not based on competency. But this idea that you can just, everybody can disagree, everybody can not like each other, everybody can disrespect the value system of the other person and still have productivity and still have unity is crazy. So you gotta have difficult conversations. You've got to bring stuff out, you gotta talk about it. I had one person come in my office and say, well, I need to tell you this about so and so, but you can't tell them where it came from. You don't need to tell me anything. Then if you can't stand behind your words Then you don't need to come in my office and tell me something. You're just whining. So if you don't feel strongly enough that this matters for the good of the person you're talking about, the good of the company, the good of the organization, that you can stand by your own words, then you don't need to utter those words. That's cowardly because I've got to go deal with it once you tell me, and I'm not going to go deal with it with an anonymous source. How cowardly is that? An anonymous source came to me and told me that you were doing, oh, bull. What a wuss. So, you know, don't come in my office and tell me that. Just say, hey, got a problem with so and so. I heard so and so. I don't know how to talk to him about that. Can you help me? What do we do? Say, I'll talk to him about it. I'm going to tell them that you heard this and I may call you back in here and we all may all sit here and talk about it, but we're going to have a resolved conflict, not an unresolved disagreement when we finish 100% of the time. Had another lady came in and she said, well, I've got to talk to you about my leader. They're incompetent this way. They're incompetent this way. I said, yeah, I understand, and I appreciate you bringing that to me. And actually, a couple of points you brought up are not right. And I told her why. And a couple points you brought up are right. And we're working with your leader on that. And we're, you know, no one in the building is perfect, but we're working with them. Thank you for bringing it to me. I appreciate that. And know that, that this is a project that's underway. Well, three weeks later, she's in my office with the exact same issues. And I'm like, I told you we're working on this. And she's like, well, it's still there. And I'm like, well, I know it's still there. It was three weeks. It doesn't, you know, it's not like you're gonna fix this in 20 minutes here, you know, ride with us on this ride. It's, this is a process where we don't shoot our wounded. We work with folks and bring them back to wholeness and move on to the next thing. And three weeks later, she's back in my office again. And I said, look, now you're not questioning that person's competence. Now you're questioning my competence. Bringing the same thing in here three times after I've explained it to you is now you're saying I'm not competent because I haven't fixed it at the speed at which you think it should be fixed. So now you and I are starting to have a problem because you can't think I'm incompetent and work here. That won't be okay. I'm the owner, and she ended up leaving, which is okay. It's perfect. That was a resolved disagreement. The fourth one is lack of shared purpose. The team needs to know what your desired future is. We help you with that in entree leadership. The team needs to know what your defining objectives are. We help you with that in entree leadership. We work you through all of these processes. The team needs to know what's going on and be aligned. And this is where we're going, and this is how we're gonna get there. These are the processes, and this is what winning looks like. This is what the end of the year, we need this many numbers on this revenue on this sales units, whatever it is, and we're all aligned on that. We have a shared purpose. We're not running in 14 different directions. If you run in 14 different directions, all you do is destroy the wagon. You don't pull the wagon. You just tear it apart. We have to pull the wagon up the hill, and we have to be walking in the same direction and aligned in our steps and in our processes. And that comes from communication, and that comes from having a shared purpose and then aligning everyone to it. So when the right hand doesn't know what the left hand is doing because they don't know what they're doing because nobody knows what they're doing, there is not a shared purpose. You can't win if we can all agree that we're trying to score a touchdown and what a touchdown looks like. There's a line over there. When you get the football across that line, then the only thing we've got to fight through is what the most efficient way to get that ball across that line is that we have a shared purpose. It's a clear goal that we're all aligned to. And then the fifth enemy of unity is sanctioned incompetence. This comes from my friend John Maxwell, and it's a really nice phrase, sanctioned incompetence. What it means is when you are a weak leader and you allow people to continually not do their work for whatever reason you give everyone else permission to not do their work and to not be unified because they don't have respect for that person that's not doing their work and they don't have respect for you as a leader because you're weak. You're not willing to step into the conflict and require excellence of the team. And when you're not willing to do that, when you're willing to go along, to get along well, so and so gets a pass because they're a friend, well, you're screwed that you're not going to have team unity around that. Team unity comes when we expect excellence of ourselves and of everyone around us consistently, all the time. The only exception to that is if someone's going through a hard personal time, their child is ill, well, they're not going to be excellent when their child is ill and you're giving that person grace and someone comes to you and says, well, you know, so and so's not pulling their weight. Yeah, I know, but they've got a personal issue at home and we're giving them some grace. So we've all got to cover for them right now until they. And then when they get past this thing, then they'll be back in the, back in the harness again with us. But right now we're picking up their slack. That's not sanctioned incompetence, that's grace. Sanctioned incompetence is when I'm too weak kneed, too wussified to face the person that's not doing their job and call them out in a kind way, in a very clear way and have the uncomfortable conversations that say you have got to get aligned to excellence again or you're not going to be here. And that's a process too. So those are the five enemies of unity. When you toss them over the wall outside your organization, well, then you're going to start to see unity occur. When you've got good communication instead of poor communication, when you've got no gossip, when there aren't unresolved disagreements, when we learn how to do conflict well and come to good mental health, organizationally we have a very clear shared purpose. And when the leadership is not wussified and they are actually addressing incompetence for whatever reason other than a grace, pass on something. When you do those five things, you're going to see the whole air change inside your organization. That's how it works. The five enemies of unity must be removed. Organizations are never limited by their opportunity. They're only limited by their leader. Which is why it's so important to invest in your leadership through life changing experiences like Entree Leadership Summit. You'll be poured into by top leadership experts so you can catapult your business forward in 2025. To join us in Denver, Colorado, May 18 through 21, go to entreeleadership.comsummit or click the link in the description if you're listening on YouTube or podcast. I'm Dave Ramsey, your host. This is the Entree Leadership Podcast. Thank you for joining us. We could use your help if you will follow this show. Click the follow button, the subscribe button. It helps us a bunch. Leave a nice five star review and share the show. Share the link with someone or click the share button. However it is your particular platform allows you to do that. It's a big help to us and we need it. Please. It has made a lot of difference in the numbers since I came on the air with this a couple years ago, taking over this old podcast that we've had a long time and took it to this caller driven format. The numbers have gone way up but they didn't go up because of me. They went up because you guys told people about it. Thank you for doing that. David is with us in Virginia. Hi David, welcome to the Entree podcast.

[Caller]

Hey Dave, is a honor to talk to you. Longtime listener, first time caller.

[Dave Ramsey]

Thank you. How can we help?

[Caller]

I am an owner of a deck building company. We did about 1.4 million this year and we have about 12 members on our team. We went to summit this year, got all hooked up with a coach and advisory group and we've been killing it this year. Question I have for you is I want to keep growing but I'm struggling with feeling the burnout of having so much stress of having so many people on the team. Now I know it's just 12, but it's 12 families that we're close with and they depend on our company for their livelihood. So how do I weigh when is growing enough and how much do we keep growing?

[Dave Ramsey]

What's the stress from?

[Caller]

Well, we.

[Dave Ramsey]

How is the team causing you stress?

[Caller]

Right. We there. I've become the chief accountability officer and that's not exactly my strength.

[Dave Ramsey]

Accountability for What?

[Caller]

For their KRAs. They're hitting their numbers, profitability training and it's we, we hired up a lot of guys this year and then we had to let some go and now I think we're in a good place now. But it's still we got a very young team.

[Dave Ramsey]

What's the stress again? Where's the stress Coming from really, it's.

[Caller]

It'S the payroll every couple weeks. You know, it's heavy payroll every two weeks.

[Dave Ramsey]

Are you not profitable?

[Caller]

It's tight. We're getting, I think the last three months we have, we've really got to the, got to a good place.

[Dave Ramsey]

Have you hired too many people or did you lose jobs? Why would your, I mean, at a given payroll at 1.4 million with 12 people, you should be profitable.

[Jen]

Yeah.

[Caller]

Over the summer we hired too many and then we let some people go in the last three months and we actually saw our revenue increase. And so it was kind of like relieving pressure on like lower performing jobs, taking too long callbacks.

[Dave Ramsey]

Okay. So what I think I'm hearing is that the size of the team is not stressing you, the payroll is not stressing you. Underperforming team members and underperforming jobs that you went through as a learning experience in the last 12 months brought you stress. But it's not the 12 people that are there now and it's not the revenue that's there now. That's all running fine, I think.

[Caller]

Right, Right. So I'm looking at if I want to keep growing, doing that again next year is overwhelming.

[Dave Ramsey]

Why would you do it the same? What you've got today is working. Right?

[Caller]

Right.

[Dave Ramsey]

If you had double the number of people that you have today and they were all the same quality of the people you have today and you had 3 million in revenue, there's no downside to that. There's no stress to that. The stress came from the underperforming projects and the underperforming people, not the fact that you merely had payroll.

[Caller]

Right.

[Dave Ramsey]

So my point is you're assigning in your brain this stress or burnout or uncomfortable feeling to the wrong thing. You've assigned it to team size and to revenue size or payroll size. And that wasn't what was causing you stress. What you told me was causing you stress was crappy people and crappy jobs.

[Caller]

Right.

[Dave Ramsey]

And if you keep doing the same crappy people and crappy jobs over and over, well, you would deserve the stress. But that's not a reason to downsize. You wouldn't do that. That'd be silly.

[Caller]

Right.

[Dave Ramsey]

So why is it you would think that I have a thousand people and I'm not stressed?

[Caller]

You have awesome team members.

[Dave Ramsey]

Uh huh. Why else?

[Caller]

They're great at what they do and.

[Dave Ramsey]

They plenty of revenue to pay them.

[Caller]

Right? Right.

[Dave Ramsey]

We don't know. We don't hire more people than we have revenue now. The Stress that I do have, you know, can come from the exact same places you had last year. It can come when crappy people get in the building. And removing crappy people is a stressful process. Right. Removing the donkeys because I accidentally hired one, or we accidentally hired one. Wouldn't be me, but we accidentally hired a donkey instead of a thoroughbred, which what happened to you? Or we have a business unit that is not performing and the revenue starts getting tight. And always the biggest line item in a business unit, expense wise, is going to be payroll, just like you have. You know, when things are screwed up, it's the screwed up stuff that causes stress. It's not the scale. That's my point.

[Caller]

Right, right.

[Dave Ramsey]

And that's manageable because I can do something about the screwed up stuff and. Okay, find out why crazy got in the building and close that door. Crazy can't use that door anymore. And so we, you know, we add an element to the interview process to keep the nut burgers out of the building or at least attempt to. Right, right, right. And because I got to tell you, man, you got 12 people, one or two bad ones out of 12 people can screw up the whole. I mean, it just takes all the fun out of the business.

[Caller]

Yeah, yeah, we.

[Dave Ramsey]

Because they take up all your. They burn all your calories and they're 10% of your people and they burn all your calories because they're doofuses. And it's just a pain, you know, that's the reality. It's, you know, business is awesome till people get involved. The greatest blessings in your life are your great team members. The greatest curses in your life are the crappy ones that got in the door. And that's where it comes from. So, no, I wouldn't. I think you're calling out downsizing for the wrong reason because you've assigned the stress to the wrong thing. You've said it's payroll size or revenue size. It's not. If you could do 10 million, if you could do 10 million and you had 50 people, you'd have an incredible life. But they had to be the right 50 people.

[Caller]

Right.

[Dave Ramsey]

If you got 10 bad ones out of those 50, God, you got nightmare. So, no, I think you need to scale the business. I think you need to continue to grow your business. But what you're learning is a hiring process that, that keeps problems away. I'll bet you've even run into that. How long you been doing this?

[Caller]

We're just finishing up our third year.

[Dave Ramsey]

Okay. Have you, have you seen. Have you Noticed a pattern with the customers that are crazy.

[Caller]

Yeah, for sure.

[Dave Ramsey]

Yeah. To where you can say, I see that one coming. I'm just not going to take that job. This is more trouble than it's worth. Oh, yeah, yeah. So that lowers your stress. When you, when you identify a pattern with crazy customers, you go, ah, the last time someone acted like that when we were signing them up, they were a pain. The last three times someone acted like that, they signed up, they were up, they weren't worth the trouble. We ended up losing money on the job and they still were pissed when we were done. I don't want them as a customer. And you just go, you shut your notebook and go, you know, I'm sorry, we're not going to be able to do this particular deck for you. You're going to have to get someone else. And you leave that high maintenance problem customer on the curb and you go pick up four more good ones with less energy burned than that one crazy one would have burned. Once you identify the pattern of how you acquire a crazy customer and how a crazy customer acts in the initial interviews, and we don't do business with them, they take up too many calories. Hiring a team is the same exact thing. You're gonna get better at it. I'm a lot better at it than I was in the old days. I used to use a mirror and if they fogged it up, we hired them. That's how bad I was. I was dumb. And man, you want to talk about getting some idiots in the building, that method right there will do it. And you got a problem and you're trying to herd cats and they're all crazy cats, you know, it's just a mess. So, David, I think you're better at this than you feel like you are. And your lack of confidence, I think you've learned more in the last 18 months than you're giving yourself credit for. I don't think you're ever going to have the exact same mistakes again. You'll have new ones, but you won't make the exact same mistakes in hiring or in crappy projects that aren't profitable that you did in the last 18 months. I don't think that cause of stress will reoccur. You'll have a different one later. But it is not associated with the size of your payroll and it's not associated with the size of your business. That's not causing your stress. The fact that you're assigning that is caused by you got some of your confidence stolen when you got your nose bloodied on those other two things. And now when I look up, I go, gosh, I don't know if I've got what it takes to do this. Well, you do have what it takes. I can tell by talking to you you've got the right stuff to do this. I think you've just framed it wrong. And once you reframe it and say, okay, I am not a guy that has a bad team. I have a good team. I had a couple of bad ones, but that's not who I am. And now I've learned from those bad ones. And I may get other bad ones in the future, but I won't get them for the same reason. And I'm not a guy that has bad projects that take too long and aren't profitable. I know exactly what caused that. And we won't do that process again. To create that style of business again, that's no fun. I'm going to pass on that. You're a good man. You need to keep fighting, brother. Remember, better a weary warrior than a quivering critic. This world needs more high quality leaders. Take courage and lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast.