If We Don’t Get $1,800,000 Our Business Is Finished

Summary

Podcast Title: The EntreLeadership Podcast
Host: Ramsey Network (Dave Ramsey)
Episode Title: If We Don’t Get $1,800,000 Our Business Is Finished
Release Date: December 16, 2024

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Introduction

In this episode of The EntreLeadership Podcast, Dave Ramsey tackles intense financial distress situations faced by business owners. Drawing from his extensive experience as a CEO and leadership coach, Ramsey provides actionable advice to help entrepreneurs navigate through bankruptcy threats, operational inefficiencies, and strategic growth dilemmas.

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Caller 1: Jessica from San Antonio [00:00 - 09:40]

Background: Jessica owns a family-run HVAC commercial company, a three-tier subcontractor with revenues of approximately $2.5 million last year and a team of 32 employees. Her company faced a severe financial hit of $1.8 million when a client, a general contractor, filed for Chapter 11 bankruptcy. This situation has left her company burdened with significant debt from an SBA loan and a credit line.

Key Discussion Points:

1. Bankruptcy Impact and Response:

   • Jessica's Dilemma: Losing $1.8 million due to a client's bankruptcy.
   • Debt Obligations: Significant SBA loan and credit line debts.
   • Current Financial Management: Jessica handles finances without prior experience, leading to overwhelming stress.

2. Ramsey's Advice:

   • Immediate Actions: Hire an attorney promptly to protect creditor rights (Timestamp [02:47]).
   • Challenging the Bankruptcy Plan: Object to the current class placement in the bankruptcy to potentially increase recovery from less than 10% to a higher percentage (Timestamp [04:12]).
   • Operational Overhaul: Address internal issues such as payroll, estimating, project management (PM), and office efficiency to restore profitability (Timestamp [09:40]).

3. Strategic Recommendations:

   • Legal Intervention: Engaging a lawyer to dispute the bankruptcy classifications and improve recovery rates.
   • Operational Efficiency: Reducing payroll costs, improving job estimation accuracy, and enhancing overall business management to ensure sustainable operations.

Notable Quotes:

• Dave Ramsey [02:52]: "You need to hire an attorney. You have a million dollars on the line."
• Dave Ramsey [04:19]: "What's the payout for the unsecured class that you're in? What percentage? Not even 10%. It's pretty laughable there."

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Caller 2: Christine from Baton Rouge [16:02 - 25:11]

Background: Christine runs a fence installation business with around 13 employees, including her wife. Her business generated $780,000 in revenue last year, with projections nearing $1 million for the current year. Despite profitability, Christine struggles with managing the financial aspects of her business and is considering whether to involve her wife in accounting or hire a professional.

Key Discussion Points:

1. Financial Management Challenges:

   • Revenue vs. Payroll: High payroll costs consuming a significant portion of revenue.
   • Lack of Accounting Expertise: Christine manages finances without a formal background, leading to inefficiencies and stress.

2. Ramsey's Solutions:

   • Hire a Controller: Employing a professional controller to oversee finances and provide strategic insights (Timestamp [19:49]).
   • Role Clarity and Accountability: Implementing detailed accounting practices to identify profitable jobs and areas needing improvement (Timestamp [23:03]).
   • Elite Program Enrollment: Offering Christine enrollment in Ramsey’s elite program to receive structured business coaching (Timestamp [25:09]).

3. Operational Improvements:

   • Detailed Job Analysis: Using accounting data to evaluate each job's profitability and refine estimation processes.
   • Cost Management: Adjusting payroll and operational expenses to enhance profit margins.

Notable Quotes:

• Dave Ramsey [19:20]: "You obviously need an accountant. You don't need to be doing it."
• Dave Ramsey [23:53]: "When you start doing that detailed analysis on a regular basis, it's gonna make the quality of your estimating go up."

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Caller 3: Entrepreneur Owning Indoor Playgrounds [41:02 - 43:36]

Background: An entrepreneur owns an indoor playground catering to children aged 0 to 8. Since opening the first location in June 2020, revenue has grown to approximately $250,000, with a recent second location added in August. The entrepreneur aims to expand further but lacks the necessary capital to do so as quickly as desired and is contemplating whether to pursue franchising or seek investors.

Key Discussion Points:

1. Expansion Challenges:

   • Scalability vs. Capital: The business model is scalable, but capital constraints limit rapid growth.
   • Growth Strategies: Considering franchising with investors versus organic, corporate-owned expansion.

2. Ramsey's Recommendations:

   • Organic Growth: Encourages growing the business at a manageable pace using internal cash flow rather than relying on external investors (Timestamp [42:22]).
   • Avoiding Franchising: Advises against franchising due to its complexity, high legal costs, and potential relationship strains with franchisees (Timestamp [43:35]).
   • Operational Control: Emphasizes maintaining control over each location to ensure consistent quality and profitability.

3. Strategic Growth Plan:

   • Profitability Focus: Ensuring each location is profitable before considering expansion.
   • Operational Templates: Developing standardized operational procedures to streamline opening new locations without franchising.
   • Financial Autonomy: Relying on cash flow from existing locations to fund new openings, thereby avoiding debt and investor dependencies.

Notable Quotes:

• Dave Ramsey [42:21]: "Third option is grow slower and I guess that would be corporate owned if you want to call it that, but not investors."
• Dave Ramsey [43:35]: "Franchising can be a huge deal. It can be a boon for the franchisee, it can be a boon for the franchisor. But those are some of the negatives that people don't see going into it."

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Closing Remarks

Dave Ramsey wraps up the episode by reinforcing the importance of financial acumen, strategic legal actions, and operational efficiency in sustaining and growing a business. He underscores that while challenges are inevitable, proactive measures and informed decision-making are critical to overcoming financial crises and steering businesses towards long-term success.

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Key Takeaways

1. Legal Action in Bankruptcy: Promptly hiring an attorney when dealing with client bankruptcies can significantly impact debt recovery.
2. Operational Efficiency: Streamlining operations, managing payroll, and improving estimation accuracy are essential for business profitability.
3. Professional Financial Management: Employing experienced financial professionals, such as controllers, can provide valuable insights and alleviate managerial burdens.
4. Strategic Growth Planning: Opting for organic growth over franchising can offer greater control and sustainability, especially for businesses with limited capital.
5. Leadership and Accountability: Clear role definitions and accountability structures are crucial for maintaining a productive and motivated team.

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Resources Mentioned

• EntreLeadership Summit: entreviewardership.com/summit
• Role Clarity Template: entreviewardership.com/role-clarity

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This episode serves as a vital resource for business owners facing financial turmoil, offering practical solutions and emphasizing the significance of professional guidance and strategic planning in achieving business resilience and growth.

Transcript

[Dave Ramsey]

You've got to be at Entree Leadership Summit this spring. And if you get your tickets this December, you'll even be invited to an exclusive Q and A lunch with me at Summit. So go to entreleadership.com summit today. 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 you. If you've got a question you want to ask on the show, we'll fill out the form on entreleadership.com ask or call us at 8449-441078-44944 1070. Jessica is in San Antonio. Hi, Jessica. Welcome to the Entree Podcast.

[Jessica]

Hi, Dave. How are you doing today?

[Dave Ramsey]

Better than I deserve. What's up?

[Jessica]

So I am currently working in a family business. My father's the owner. We have an H vac commercial company. We are a three tier sub. We revenue at about 2.5 million last year and we have a team of 32. Currently. My question is, one of the companies that we worked for went bankrupt, causing us to lose about 1.8 million. We have a significant amount of debt with our SBA loan and our credit line. I was just seeing what needs to be corrected to get back on the right track or if we need to file for bankruptcy. I currently handle the business finances by myself with no previous experience, and it's starting to get a little overwhelming at this point, I bet.

[Dave Ramsey]

Wow. So you have a creditor, a builder that hired you and owes you one point. What?

[Jessica]

1.8 million.

[Dave Ramsey]

1.8 million. And they filed a chapter seven or a chapter 11.

[Jessica]

11, I believe.

[Dave Ramsey]

Okay. And have you filed, have you hired an attorney and filed your creditor response?

[Jessica]

No. This was the first time that we've ever dealt with something like that. We understood that we were protected with the lien rights, but we weren't because they were filed incorrectly. So all of this has just been a huge lesson learned, but we are starting to feel the repercussion of it and it's a little scary to see these numbers come in and still have this much that we owe to people.

[Dave Ramsey]

Have you, have you hired an attorney?

[Jessica]

No.

[Dave Ramsey]

You need to. You have a million dollars on the line. Okay. And who told you the lien was filed incorrectly?

[Jessica]

The general contractor that filed bankruptcy? No, we are a third tier sub. So the mechanical is the one that we did the work with mechanical contractor.

[Dave Ramsey]

Okay. Well, I'm not sure the general contractor gets to decide this. I think my attorney wants to look at it. And I may enforce the lien even if it was filed incorrectly? I may take that stance because In a chapter 11, there are classes. How long ago was the chapter 11 filed?

[Jessica]

This? We're going on about a year and a half now. It's. It's been. It's been a while.

[Dave Ramsey]

Okay. You're really late to the party. Okay.

[Jessica]

Yeah.

[Dave Ramsey]

You should have hired an attorney the first day. Okay. To protect your rights in the chapter 11. Because chapter 11 has 120 days to file a plan. And the plan would make each of the creditors, of which you are one in a class, and they'll have several classes of creditors. Have they put you just in the unsecured class? Is that where you are?

[Jessica]

Yes.

[Dave Ramsey]

What's the payout for the unsecured class that you're in? What percentage?

[Jessica]

Not even 10%. It's pretty laughable there.

[Dave Ramsey]

Okay. Do you know if the flint. If the plan has been confirmed by the court?

[Jessica]

No, it hasn't.

[Dave Ramsey]

Okay. Hire an attorney and object. Object to the plan being confirmed until you get put in a different class, a class of secured creditor due to the fact you had a lien that was filed improperly, but it was still a lien, and you're a lienable. Typically, you're a lienable creditor in this situation. So you should move up in class, which will move you up in percentage of payout. Do you follow me?

[Jessica]

Yes.

[Dave Ramsey]

So if your attorney's able to do that and they get you three times as much money and they cost you 20 grand, it's worth every penny. You follow me? That's what we need to be doing. We should have been doing that from day one, but I'm not sure you can pull this off. But I'm not going down on 10 cents on the dollar just because I was passive. I want to be aggressive if I'm in your shoes now. So let's pretend that you get 50 cents on the dollar and it still takes another year. That doesn't solve your cash flow problem that you called about. You're still in a pickle.

[Jessica]

Yes.

[Dave Ramsey]

So you did two and a half million dollars, but 1.8 with a single job.

[Jessica]

So this one, this is from late 22.

[Dave Ramsey]

Okay. But you did 2.5. You did 2.5 the following year?

[Jessica]

Yes.

[Dave Ramsey]

Okay, so you're back to paying your bills?

[Jessica]

Yes. Yes, sir. So that's where the SBA came in. The SBA loan.

[Dave Ramsey]

You went and got an SBA loan to turn the corner.

[Jessica]

Yes. Which was not the right move.

[Dave Ramsey]

Okay, and how much debt is there on the SBA loan?

[Jessica]

The SBA loan is 2 million.

[Dave Ramsey]

Good God. You only. We had 1.8 whole. Why'd you take 2?

[Jessica]

Yeah, there was issues since before that. I think this is just magnifying everything that was already going left. Pretty much, yeah.

[Dave Ramsey]

On 2.5, is there a profit? Not counting all this other crap? I mean.

[Jessica]

Very little. Very little. I think it's 5%, if that. So there is a lot of issues with company, but right now they think this is the main one. But there was issues, I think, since before.

[Dave Ramsey]

Did they post collateral for the 2 million? I'm sure they did, yeah. What is it?

[Jessica]

It is the owner's properties, pretty much home rental properties.

[Dave Ramsey]

Oh, well, if you do not find, if you do not pay the sba, the owner, your family does not pay the SBA because they file bankruptcy. The SBA will get permission from the court to take those properties. That's. That's the purpose of taking a lien. And I promise you, their lien is perfected.

[Jessica]

Yeah.

[Dave Ramsey]

So if you file bankruptcy, those rental properties are gone. You know that?

[Jessica]

Yes. Yes, sir.

[Dave Ramsey]

Okay. If you file bankruptcy. Really, in this case, you're probably just closing, aren't you?

[Jessica]

Yeah, realistically, yes, sir.

[Dave Ramsey]

Okay. Well, I think, man, I'm sorry, this is a terrifying. How old are you?

[Jessica]

I am 28.

[Dave Ramsey]

Man. This is a terrifying place for you to be. The whole family history and this business is resting on your moving this money around, trying to keep this thing afloat and make these decisions. You need to get, you do need to get some outside coaching and counsel, but you need an attorney if you're not going to file to fight the bankruptcy that we were talking, the people that filed on you guys. If you are going to give up, if your owner is going to give up and walk away, then they're just going to give up and walk away. Why would they not do that? They would not do that if they saw a path to profitability. But if this is your wake up call and you say, okay, we can do two and a half million next year on a 20% margin by doing these four things, whatever these four things are making this up. Okay, that gives you a path out. Right. And a reason to stay open. But if we're going to do two and a half million and break even and lose everything, what's the point of keeping it open? None. Okay. So if you guys can Sit down and look at this together and say, all right, we've got to get this business redesigned in such a way that we're happy, we own it. And then if you can get the profitability on the flow of business coming through, then you've got something to try to pay off the SBA loan. You know, you'd have a reason. For instance, you could sell all the rental properties and pay off the sba.

[Jessica]

Yeah.

[Dave Ramsey]

And that's probably what I would do, but there's no point in doing that. Well, you. Yeah, you probably do that anyway. It doesn't hurt anything that gives you a shot at turning things around or sell off enough of them to pay off the sba. I don't know how many rental properties they've got, but I want to get the business model that's broken. Like you said, this has exposed other things that are wrong. I want to get the business model corrected to where we're estimating our jobs properly, where there's a margin on them and we don't take jobs where there's not a margin. You guys are racing with other subs to the bottom on these narrow margins, and it's not worth it. You're better off to do other types of jobs or do less jobs and make more money.

[Jessica]

Yes, sir.

[Dave Ramsey]

Yeah.

[Jessica]

Because when we. When this was first started, and I think we didn't start feeling it probably to about five years ago, the profit and the margins were a lot bigger than what we're seeing now.

[Dave Ramsey]

Why.

[Jessica]

We. From what I've seen going back to everything, there is a discrepancy in the way that we are managing things. People that we've promoted inner inter. Management, we've been paying out to certain employees thinking that they're getting stuff done, but they're not. It's just. It's a. It's a little bit of everything across the board. I think we probably.

[Dave Ramsey]

Unproductive employees aren't the thing. If you did two and a half million, it used to be profitable. Now you do two and a half million, it's not profitable. That might be because of increased payroll, Is that what you're saying?

[Jessica]

Yes, sir. Yes. Increased payroll. And we're having issues on the estimating side, we're having issues on the PM side, we're having issues on the office side. So I think it's just a co culture that we need to kind of revamp if we do want to continue.

[Dave Ramsey]

Yeah, yeah, I think you've got. Okay, now. So now we know how to correct it. Right. We've Got to lay a couple of these high dollar people off that aren't ROI ing. We raised their salary to the point we can't afford them anymore, and we're going to go back to being scrappy again like the old days and get crap done around there with the people that we have. And everybody's going to start playing for a win instead of just mailing it in. And the ones that get to stay, that's what they're going to do. We're going to get our payroll down, our efficiency up, and get our estimating straightened out. And then we get our margins back. Is that what you're telling me?

[Jessica]

Yes, sir.

[Dave Ramsey]

Well, if they're not willing to do that, that's not in your control, then they probably are bankrupt. But it's not because of this bankruptcy filing on them. It's because they're poor operators. You know, the filing, as you mentioned, you were wise earlier when you said the filing just revealed the bad practices that were there. It exposed them. They were there all along. The thing had slipped away through their fingers and they didn't realize it, but this put a big highlighter on it, so. Ouch. Man, I'm so sorry, Jessica. Wow, what a tough one. Yeah, Well, I think this is the leadership team of the family, the owners. What is it you guys want to do? I mean, do you want to clean this up and get it profitable? We can. And if we can do that and we sold enough rentals to pay off the 2 million SBA, we got our life back and we keep going. Hire an attorney, try to get some more of the 1.8 than just 10 cents on the dollar. Maybe we can get 20, 30, 40 cents on the dollar by landing in a different class of creditor, given that we lean. But the general contractor said it wasn't done properly. Okay, so who's liable for that? That's interesting. Okay, now I got to mess around with some people here for sure. There's a million reasons to do it here, 1.8 million reasons to do it. But that, all of that's not going to help you if you don't fix the operational problems. So we've got to get down under that and get to there. That's where we're going. So tough. Tough sledding, Jessica. Stressful situation. You're a champ for sticking in there with them on this. I hope they sit down, do the right thing, and turn this business around. Sounds like it's viable. Just gotta have the energy to do it. This is the Entree Leadership Podcast.

[Colton]

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[Dave Ramsey]

It'S your job to set expectations for each role in your company and make sure those expectations are met. But you can't hold your team accountable to something you didn't communicate. Our free key results areas template will help you set expectations and create role clarity for every member of your team. You need to do this so you feel confident that everyone is working on the right things to drive your business forward. And we all have a clear definition of what forward is and where it's taking us. Go to entreleadership.com role clarity to download the template for free and start setting some clear expectations for your team. Colton's in Houston, Texas. Hi Colton, how are you?

[Christine]

Hi Dave. I'm doing well.

[Dave Ramsey]

Good. How's your help?

[Christine]

So I have a business of about at the moment it's 13 people who work for me. That's including my now wife. And the question I have for you is I'm getting to the point of where I am just struggling to keep up with the numbers aspect of the whole business. And I am wondering if I should invest in my wife and have her go to or get some type of accounting degree so she could be my accountant or if I should look elsewhere, have her do what she wants to do. If she wants to do something else. Well, really, she kind of does. But what if I should look elsewhere and get somebody else to work for it or work towards that.

[Dave Ramsey]

What's your top line?

[Christine]

Say that again, I'm sorry.

[Dave Ramsey]

What's your gross revenues a year?

[Christine]

This past year I brought in there were the business brought in 780. And then this year I'm. What we just projected is probably going to be just under a million. I think it rot out to 977.

[Dave Ramsey]

And you got 13 people full time.

[Christine]

Yeah, full time.

[Dave Ramsey]

Is payroll not eating all the million?

[Christine]

Well, so the payroll it. Well, sorry, I. Thirteen not full time. Ten or full time. Three are part time. No pay. Payroll is not eating the whole million. Actually, I think our highest paid employee at the moment is 80 and he's been with us for about four years now. And then our lowest paid is 61. Let me look at this. Yeah, 61.

[Dave Ramsey]

Well, seven times ten is 700 and that's your average.

[Christine]

I know.

[Dave Ramsey]

700 out of a million is perils eating all your million.

[Christine]

Yeah.

[Dave Ramsey]

I mean are you, are you profitable?

[Christine]

Yeah, we're. I mean I'm doing well for myself. It's.

[Dave Ramsey]

What do you guys do? What kind of business?

[Christine]

We are fence installers.

[Dave Ramsey]

Fence installers?

[Christine]

Yes, sir.

[Dave Ramsey]

So the million includes the purchase of the raw goods to build the fence too?

[Christine]

No, no sir. Million is straight profit for everything.

[Dave Ramsey]

Oh, I asked you what your gross revenues are.

[Christine]

Oh, I'm so sorry. Here, let me look at this. It is. One second. It is 1.1.75 for the last year.

[Dave Ramsey]

Now I can breathe.

[Christine]

Okay, okay. I'm sorry.

[Dave Ramsey]

Okay.

[Christine]

I didn't.

[Dave Ramsey]

It's okay. Yes. You obviously need an accountant. You don't need to be doing it.

[Christine]

Oh yeah, I have been. Yeah, I have been nervous off.

[Dave Ramsey]

That's okay. That's all right. I'm messing with you. But yeah, yeah, the accountants will help you with the difference in gross and net and all that. Or gross profit and net. So gross revenue is the total dollars brought into the organization minus cost of goods sold is gross profit. Minus all expenses is net profit. That's your terminology. Okay.

[Christine]

Oh, okay. Okay.

[Dave Ramsey]

All right. Now the. So what I would what I did at your size and it was an excellent move and it was 26 years ago and she still works for me. I hired a controller.

[Christine]

Okay.

[Dave Ramsey]

Which is not as high a person as a chief financial officer, a cfo. You're not at a level you need a cfo, but you need something more than just a quote unquote bookkeeper. You need upscale bookkeeper, which is a controller. Does that make sense? This is probably a $70,000 a year position. In your company, I'm guessing, but you can do a little bit of investigation as to what it'll take to hire a good controller in your area. Now, they will do the books, but they'll also come in and make suggestions to you and say, okay, we're not making good margin on this item. This item is very profitable. We ought to do more of it. We've got too much payroll. No, we shouldn't hire somebody else, that kind of thing. Okay, Right. And so are you paying your wife a salary?

[Christine]

Not technically, but I just added it to mine because of the weird way that Texas does it.

[Dave Ramsey]

I got you. So you've added how much to yours for her?

[Christine]

60 something, I believe.

[Dave Ramsey]

Okay, so when she goes and does something else, is that inside the company for the same amount or does. Is that, is that money going to help be gone and she's going to be working somewhere else?

[Christine]

I think she's wanting to work somewhere else or actually, I know she's wanting to work somewhere else.

[Dave Ramsey]

Okay. Yeah. If you got a, if you got a controller for 60 or 70 and you could reduce your cost that you're paying your wife by 60 or 70, then you kind of broke even, so to speak, does that make sense?

[Christine]

Yes, sir, it does.

[Dave Ramsey]

And then your wife gets to go do what she wants, your household income goes up because she's gonna go bring in more money.

[Christine]

Right.

[Dave Ramsey]

At the other thing, I hope. And then you've got this going. And then. Yeah, it's the thing that I find with people in and around the construction world, which is where you are, you're building fences. Okay. Is that if you start doing your accounting like your life depended on it. If you start pushing every little freaking detail and managing every little thing, the numbers will talk to you about the weaknesses and the strengths in the business, the areas you should expand, the types of jobs you should never do again. And you'll probably end up installing some basic estimating software that treats each job as a separate profit and loss to where you can tell from each job. Okay, we estimated it at this. We thought we were gonna make profit of X, instead we made profit of Z. And here's what happened. Cause you're looking at that job as a standalone job. Does that make sense?

[Christine]

Yes, sir.

[Dave Ramsey]

When you start doing that detailed analysis on a regular basis, it's gonna make the quality of your estimating go up. Because the mistakes that you're making and estimating are going to be revealed in the completed job. And you'll take that piece of accounting information from this controller that I'm talking about and use it to adjust your processes that you're using on estimating because they forgot to put in whatever X or Y or they forgot to put in something into the estimate. And so the job ends up not being as profitable because it should have been a little higher price. And so then the next job is profitable because you put in the proper things. And you learned that from the last job that didn't go well. You're not getting any of that information now because you're running this thing out of your hip pocket.

[Christine]

Yeah. A lot of this estimation comes from me going out there and just writing it down on a piece of paper, what I'm looking at.

[Dave Ramsey]

Exactly. And your gut instinct is good because it's gotten you to a million seven. I mean, you're doing a good job.

[Christine]

Oh, yeah.

[Dave Ramsey]

So that's that there's not. I'm not criticizing that. But what I'm telling you is your profitability on no more dollars will go way up simply by managing the accounting better because the accounting will speak to you. I think sometimes looking at a P and L or looking at an estimating the data that comes off an estimating software is like reading the tea leaves. It's like, oh, well, look there. There's where we are. I had no idea. I sort of thought I knew, but now I really know. And now we're not anymore. And no, we're, you know. And you may want to change even some comp plans where people get compensated a little differently on based on the job. Once you've got this stuff dialed in, it's a lot of fun to do that. So I'll tell you what I'm going to do. I'm going to stick you into our elite program for one year as a gift. Because I really like where you are right now, like where your head is. And they're going to help you complete the things that I just recommended and make sure that that stuff gets in place. Okay.

[Christine]

All right. I really appreciate that.

[Dave Ramsey]

Sure. Entrez. Leadership elite, folks. It's 250 bucks a month is all $3,000 a year. But you get plugged into our whole entree leadership system and it's going to make sure that all of you are doing the right things. You're doing at the level you are to level up to the next level. Because what happens in business is the more efficient you get, the better you get at running the business. Not only the more profitable you are per unit, per dollar, your margins go up, but also the joy and the lack of stress. The joy goes up, stress goes down. And so that's what we want for all of you out there. Certainly want that for Colton today. And he has no idea how awesome his life is going to be when he actually gets the accounting working because he's completely running this thing on a guess. And that's just. It's going to kill him eventually. But right now it's causing him stress that he doesn't even realize is there. But man, when you start getting those reports and you start looking at them, you start understanding them, say this is where the money's going, this is where the money comes from. Then you go, oh, wow. It starts telling you how to run your business. It's very, it gives you insights, business insights. So it's absolutely vital that you really do the details on your accounting, folks. It's a big, big deal. So very, very cool. Love it. Love a guy like Colton out there in America making it, getting it done, man. He's not unemployed. No. He employs people. He builds fences in Houston, Texas. $1.7 million worth. Well, that's a stud. Well, if you're looking for a job, I know some folks that are going to be hiring. Not only Ramsey, we're hiring, but that's a facetious joke. So Amazon. This is from Inc.com Amazon employees fume at its five day return to office rule and they fume anonymously. News that Amazon will require a full return to office RTO regime landed hard, making many employees unhappy about losing the option to work from home two days each week. Now new poll results reveal the magnitude of workers displeasure with CEO Andy Jassy's mandate as well as the risks of that resentment undermining the online marketplace's staffing stability. Wow. Can you tell the reporter has an opinion about this differs from mine. The anonymous professional networking platform Kiss my butt. I mean blind reports that fully 91% of the 2,585Amazon employees it surveyed described themselves as dissatisfied with Jassy's September 16th RTO return to office announcement. It extended the company's current three day in office requirement to five starting January 2nd. In addition to returning to pre pandemic working arrangements, Jassy's memo also said staffers will have to work at pre assigned desks just like the old days, screwing that lid on even tighter. God, this reporter. Amazon also reportedly informed workers that their arrivals, departures and time spent in company buildings will be checked by monitoring their swipes of corporate badges. Well, that would be like normal in other words, 2025 RTO will join RTM on really tight monitoring in the house that Bezos built. Jesse says the return to the five day weekly office requirement would benefit the company and the people working for it. Having everyone present in the same place makes it easier for our teammates to learn, model, practice, and strengthen our culture. Collaborating, brainstorming, and inventing are simpler and more effective. Productivity goes up. This is something I said three years ago, and everyone's like, dave, you need to get with it. You need to be more flexible. No, I'm not stupid, so I'm not going to be more flexible. I am well aware that human beings do better in proximity with each other, physically. Zoom your butt out. I'm done with your zoom. Okay? We returned to the office as quickly as we could, all of us at Ramsey. And no, we don't have anybody swiping badges. If I have to monitor you to figure out if you're working or not, I'll just fire you because you're useless. We don't do that. We hire actual humans that care about the place, care about the outcomes, care about the customer. They come in and they work because they believe and they care. And we have a quality culture. We have incredible productivity, which is what the CEO, contrary to what this reporter. The blind poll found 73% of Amazon professionals saying they were considering looking for another job. And I have been quoted in the press as saying, don't let the door hit you in the ass. That's what I would tell them if I was the CEO, because it's what I told our people. We're going back to work after that virus thing and the Fauci pandemic. Right? We came back to work after that and some people were upset and I'm like, I understand. You don't have to work here. It's not. It's not. It's not Russia. You're allowed to go work somewhere else. If you don't like Amazon asking you to actually work in the their offices and they pay you five days a week. Don't let the door hit you in the butt. Go find something else. That's what you should do. It's America. You are not trapped there. They have not screwed you over. They simply ask you to work in the building that they own. And for some of you snowflakes, that's too much to ask, including the reporter that wrote this crap. So Jassy says the requirements would benefit the company. Of course it'll benefit the company. So listen, I gotta tell you, if you're a leader. You figure out what you think is supposed to happen. You talk to your key people and say what is best for the organization, what is best for the future of this place, what is best for the customer. And that is highly productive, creative, synergizing, collaborating, bright team members. And all of that is increased when they're physically in proximity to each other. If you make that decision and you own the place or you're tasked with being the CEO to run the place like this gentleman is, you make that decision. You're not really taking a poll. And I'm not taking a poll with cowards that won't sign their name to their negative opinion. So let me tell you what, Glass Door is a bunch of crap. You know what? You have Glass Door posting on you. People out there listening, and on mine too, posting that Ramsey's a horrible place to work and they never worked there. They lie when they do the post. As a former employee, da da da da da happened, and they never worked there. It's like saying, I ate at this restaurant and you do a negative Yelp review, and you're actually the competitor across the street saying, this restaurant sucks. Like, I went over there and got a steak. My steak was cold and the service was bad. The whole thing's a freaking lie because Yelp doesn't track whether they're actual customers or not. It's like an Amazon review on a book. You haven't really read it, but you just hate the person that wrote the book, and so you put a negative review on there. Amazon doesn't take those off. And so your translation, your anonymous professional networking platform, is freaking useless because it's spineless. And hat off to Andy Jassy for having the backbone to run the business as he sees fit instead of trying to keep 2,300 snowflakes happy. If you don't want to work there, boys and girls, you don't have to work there. I think it probably would be an awesome place to work because I think this leader probably has some chutzpah. He's actually leading against the grain, knowing that it's going to be very unpopular. Oh, kiss my butt. Seriously? Really? Who gives a rip? So if you want to work for, like, a strong leader and you want to work in the building five days a week, I think I know who's hiring Amazon, because some of the 91% of the 2,585Amazon employees that surveyed find themselves as dissatisfied will leave. Hopefully. Hopefully they'll leave. If they don't leave, hopefully Andy Jesse will fire their butt. Because you don't want people coming in with their lips stuck out whining about how inept management is the whole time they're supposed to be working because you're paying them money. God, this is so bad. Bruce Crumley at Ink. You should be ashamed of yourself. The way you've set this up, you should be saying, andy, Jesse is the hero, not the villain for asking these poor little snowflakes to actually come back to work. Because on the two days a week that they're not, three days a week or whatever it is, they're not at work, you know what they're doing? They're not working. Work from home actually means not much work from home. That's what it actually means. And so the number of people that work more hours on their projects while working from home than they do at the office is precisely zero. That's just bull crap. Okay, I'm sorry. You don't put in eight hours a day solid when you're working from your bedroom. You're outside raking leaves and bull crap and taking the trash out and going and shopping for your darling spouse and whatever else you did. Oh, and I'll stop here and do a few emails. I'm sorry, boys and girls. We really know what's going on and that's what's really going on. And Amazon has figured out their productivity sucks, their synergy sucks, their creativity and collaboration sucks because they're doing it all by zoom and these people are not. They're working part time jobs and getting paid full time salaries and the CEOs had enough. But Inc Magazine takes the left wing communist view and actually goes on if you read way down in it. God, this really pisses me off. You didn't print the whole thing off, did you? There was. I was reading this earlier. They had the call to ask a couple of legal experts if this was legal. You've got to be kidding me. So wait a minute. I own a business and I tell you where to work and you don't think that's legal? You don't have to work there. That's the part where the legal. Okay, you can quit, but you don't have a federal Department of Labor law that says you get to work from wherever you want to work. Come on. God, these people are asinine. So aggravating his cred. Sorry boys and girls. Got an opinion on this? Did you notice? I'm firmly. I'm a firm believer that when high quality people are in the same room together and they care deeply about the outcome, that your results are astronomically higher than when they're doing it from their bedroom three hours a day with their little zoom thing. Geez, you're killing me here. Well, at least you know where I stand on this. I wouldn't want you to be confused, Andy. Jassy don't know you, brother, but touchdown. Way to go. This is the Entrez podcast. You can't hold your team accountable to expectations you didn't set when you try. Everyone's confused. You need a way to clearly define roles and responsibilities for every team member on your team. And our free key results area template will make it easy. Go to entreleadership.comkra right now to download it for free. Did I mention it's free? Or if you're listening on Spotify or podcast, click the link in the description. Thanks for hanging out with us, America. I'm Dave Ramsey, your host. If you want to be on the show, the phone number is 8449-4410-7844-9944. 1070. Now, regarding the last segment, I will put out a disclaimer. If you own a business and you want your people to work from home, that's fine with me. I'm not mad at you. I disagree with your conclusion that it's going to be better for you. But you're allowed to do that, and I'll still support you, and that's fine. I got no problem with it at all. But if you are doing it because you're a wuss as a leader and you're caving to cultural inputs from snowflakes, then you're gonna lose your position as leader because you're a wuss. Because the whole thing's gonna go down the tubes because you're a wuss. So, you know, make decisions from a position of backbone that's good for the organization and good for the organization's customers. If you're making that decision and for you, you feel like it's just fine for folks to work from home, then I'm all for you. That's fine. I disagree with you, but I'm okay with that. But for God's sakes, don't call yourself a leader when you're caving to cultural inputs. The culture does not get to tell a real leader what to do. Real leaders tell the culture how it works. And that doesn't mean I don't take input from my senior people, my leaders, and so forth. But, you know, if you want to fill out an Anonymous thing on Ramsey that says you want to work from home. You know what that's going to get you? Nothing. Nothing, honey. That's how that works. It's a cereal. Nothing, honey. This is what you get. Christine is with us in Baton Rouge. Hi Christine. Welcome to the Entree podcast.

[Unknown]

Hi Dave. I just wanted to first thank you so much for this podcast. It's giving me such a good insight into so many different situations that come on this show. So thank you for that.

[Dave Ramsey]

Well, thank you. How can we help?

[Unknown]

Yes, I own an indoor playground geared for ages 0 to 8. We host birthday parties, walk and play events and just a lot of community activities. We are doing a revenue of about 250,000 since 2020. So we opened our first location in June of 20 and that was unintentional. We made it through and we just opened our second location this past August, which is about 45 minutes south of our first location. Goal is to have another two locations in and around the Baton Rouge area. But after those initial four open, I'm struggling where to take the business from there. Our business model is super scalable. It's easy to open up but I do not have the capital to be able to grow as fast as I would like. So I'm trying to figure out if I should focus more on corporate owned with investors or maybe look at the franchise route.

[Dave Ramsey]

Okay. I have chosen to do neither instead.

[Unknown]

Grow slower.

[Dave Ramsey]

Yeah. Third option is grow slower and I guess that would be corporate owned if you want to call it that, but not investors. And so we grow with the speed of organic cash. And if these things are carrying no debt and they're all profitable, five of them are going to generate enough to open another one ever so often. Ten of them are going to generate enough to open another one every so often. That's half that time. Right. So the cash flow is going to have your expansion for you once you hit some critical mass on the numbers. And you will have to obviously create an operational template that looks like franchising but it's just for your corporate operation that does that. And you could cut your general manager or whatever their title is at each location in on the profits from that location as part of their comp plan. As a matter of fact, I would. I'd want them to have a true self employed mentality and run a P and L on each location and let them participate in their location's profitability.

[Unknown]

I like that.

[Dave Ramsey]

And that makes them feel partner esque but not that are not technically a legal partner. But I wouldn't use investors to grow that I would let each I would let do what you've done before and that's organically cash flow, your expansion, avoiding debt. The franchise side, we can address that. We work with a lot of franchisees and a few franchisors in the entre leadership brand that do very well. And you can go that route. Typically the model is on something like you're doing that you, as the franchisor will receive an upfront check per location to open up, you know, 20, 50,000 bucks, 100,000 bucks, whatever. And then you would receive a percentage, seven and a half, eight and a half percent or something like that of gross revenues as a royalty. And for that they get your name and your operational template and any operational things you have that are proprietary. You know, if you've got some software or you've got a marketing thing or something that's different. So you know, the. And the smaller you are, the harder it is to sell a franchise, you know, so getting a hundred franchise, the first hundred franchisees is obviously the most difficult thing and then taking it huge is the next thing. But at that point, you're no longer in the playground business. You're now in the franchisor business. Your job is not to manage playgrounds anymore. Your job is to manage the relationships with the franchisee. And franchisees and franchisors have a love hate relationship. It works like this. The franchisee buys the franchise from you in order to get your name, your operating template, and to live their dream of operating a small business. And they think that you have some special sauce that's going to help them have a higher likelihood than if they did it on their own of being successful. And so they love you and you love them because they give you money up front and then they give you eight and a half, five years later, if they're unbelievably successful, they think it's because of them, not you. And they start to resent the eight and a half percent royalty that they're paying you. And you think the reason they're successful is because of you, not because of their hard work. And the truth is it's both. They're successful because of you and because of their hard work. And they should honor their deal and keep using your name and keep doing this. But they want to get out of the franchise agreement and go open their own because now they're an expert playground operator and now you get into all that junk, right? So that's part of the franchisee franchisor process. Is, it's just there's a lot of relational management and you have to hold them accountable for sticking to the standards of your brand. You don't get to build a Subway sandwich two different ways. There's only one way to build a Subway sandwich, right? And so, you know, you're managing all of that. I will also tell you that the setup of becoming a franchisor and starting is super expensive. You've got these franchise disclosure documents that are as thick as an old fashioned phone book, and they cost you hundreds of thousands of dollars in legal fees to get that set up and get it ready. Or 50,000 bucks in legal fees to get it set up and get it ready. And it basically says all through this document all the different ways the franchisee is going to lose money. And they have to sign this disclosure because there's been so much fraud in this space. And so the Fed. The feds are up in your business all the time while you're dealing with this Federal Trade Commission. So franchising can be a huge deal. It can be a boon for the franchisee, it can be a boon for the franchisor. But those are some of the negatives that people don't see going into it, that I'm well aware of because we've walked with people through them in every one of those situations. So if I'm you, for that reason, I'm going to avoid that. If I'm you, I'd rather just own it. I can control it. I can fire the guy if he's not running it, and I can get the thing back on track and, you know, or we can close an unprofitable location because it's a bad location, that kind of thing. And I don't need partners reading my mail every week trying to figure out how I'm running something. The only ship won't sell is a partnership, and that's what an investor is. It's an unsaleable ship. So I'm gonna. I think you got a great idea. I think you trust you and you grow you. That's what I would do if I were in your shoes. But of course, you get to do it either way. And we're gonna love you and help you whichever of these three routes you choose to go. We don't mind. I don't. I don't think you're horrible if you do any of them. But I'm just telling you what I have done, what I would do. And I'm an expert on my opinion. So that's our whole process there. Proud of you, Christine. Sounds like you got a good business and good business head. You're doing some great things there. Keep it up. Never, never, never quit. Push on, baby. Push on. Hey, remember, folks, better a wary 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 listening to the Entree Leadership Podcast.