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- [00:10]
Dave Ramsey
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 want to submit a question, go to entreeleadership.com ask or leave us a voicemail at 844-944-1070. We're glad you're here. Levi is in South Carolina. Greenville, to be precise. Hi, Levi. How are you?
- [00:42]
Levi
Hey, Dave. Thank you for taking my call.
- [00:44]
Dave Ramsey
Sure. What's up?
- [00:46]
Levi
So I'm a senior project manager at my family's construction business. We do commercial drywall and painting. We've got about 30 employees, and last year we did about 13 million in revenue.
- [00:56]
Dave Ramsey
Way to go, man.
- [00:58]
Levi
So we've been in business for about 28 years, and our reputation of, you know, speed and quality and doing good for the general contractors has been what's got us contracts over the years. And so lately, our competition is spending money taking the general contractors, you know, on hunting trips, fishing trips, golf trips, and stuff like that. We have never had to do that. And so my question is, at what point does doing that become unethical? And if it's not unethical, how do you play that game?
- [01:37]
Dave Ramsey
Well, it's not unethical. And the way you play the game is you take them on hunting and fishing trips. But the purpose of the trip is not to bribe someone if it's done ethically. It's just to build relationships. And it's standard practice in the subcontract world with commercial contractors. And so, you know, I built a building that I'm sitting in here. There's three buildings we built on this campus for a total of several hundred million dollars with a commercial contractor. I am very sure that the commercial contractor went on trips with some of the subs, but I also saw the competitive bids with the other subs, and also we talked through the reputation for delivering. So all the hunting trip did would be if it's done ethically, meaning if it's not bribing someone to do something they shouldn't do is to keep their name on the list, and then they've still got to win the bid with their production and with their pricing. And that's the ones I'm aware of that are done ethically. It's a relationship building thing for someone that's a good customer that's been with you for many, many years. So if a GC uses you guys and gives you guys. You did 13 million top line, and you got one GC that you did $2 million with last year. If you took them on a trip, that's just a thank you. And you're not doing it with any expectation that they owe you the next job. You've still got to earn it with pricing and with service. That's. That's ethical. But now if someone's going on a trip and they get the job even though they're overpriced and don't and. Or don't deliver quality, and the only reason they got the job was a hunting trip, then that's a bribe. Agreed?
- [03:27]
Levi
Yes, sir. I guess that was my question is kind of, where was the line?
- [03:30]
Dave Ramsey
Yeah, the line is the intent, and the result is the intent to. I mean, if you take them on the trip and then you expect them to give you the bid on the next job no matter what, Even though you're 20% over the other people because of a hunting trip, well, that's unethical.
- [03:48]
Levi
Yes.
- [03:48]
Dave Ramsey
But if your expectation is, these are good guys, I work with them all the time. They give me a lot of business. I want to say thank you. I mean, we've taken advertisers to, that have advertised and spent millions of dollars with us to a World Series game. We've done as thank yous. We've taken people to baseball games or football games or whatever, stuff like that. But these are people that are big customers. But then when we get home, the advertising still has to work for them and we still have to get paid for it. You know, nothing changed in the formula, but it's just a. It's a tip of the hat and a grin and say thank you. And. And again, there's nothing unethical about that at all. But if the only reason you got business was because of the trip, then that's just bribery and that's where the ethics breaks down. So it does sound like you probably need to add that to your line item in your budget to take some of your biggest customers and do some nice things for them or with them and maybe do something different than other people do. But, you know, I've been on pheasant hunts in situations like that, and there's nothing. There wasn't anything torrid or bad going on as a result of it. And, you know, and again, it has to do with the result and with the intent. Is the intent to create an entitled situation? Well, that's unethical if the intent is just to say thank you for a quality relationship that's ethical. If the result is you get a bid you shouldn't have gotten without the hunting trip, then that's bribery and that's unethical. And in some contract situations it could be illegal technically then. And I'll go so far as to say this, purchasing agents that buy for companies like say Walmart and stuff like that, most of those people are, it's a corporate rule. They're unable to accept gifts just so there's never any hanky panky going on because they're doing stuff at such scale that they can't monitor if something's turned unethical or not. It can't be weird, right? And so, you know, I mean they, and like I've sent somebody a pizza or something and they send me an email and say thank you, but I can't take the pizza, I had to throw it away. I mean they're that careful. They were that weird about it in some cases. And again, I wasn't bribing them. I was just saying thanks, you know, thanks for the business and thanks for a 10 million dollar order, for God's sakes or whatever it is, you know, and, but again, in your world, I'm familiar enough with it to go. It's pretty standard practice. And yes, sometimes it does probably go over the line, but you don't have to in order to use this as a relationship builder in this particular situation. Yeah, that's the plan. This is the Entree leadership podcast.
- [06:43]
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- [08:03]
Dave Ramsey
Well, if you missed out on attending summit this year, but you're thinking about next spring, we'd love to have you. I want to give you one of our free one of our most popular talks from Summit for free. When you watch it, you'll get fresh leadership strategies that'll make a difference in your business this week. After you watch it, ask yourself, what would four days of content like this do for our business and for our leadership? To watch this popular talk for free, go to entree leadership.com sampletalk or click the link in the show notes. If you're listening on YouTube or the podcast. Micah is in Phoenix. Hey, Micah. How are you?
- [08:39]
Micah
I'm great, sir. How are you?
- [08:41]
Dave Ramsey
Better than I deserve. What's up?
- [08:44]
Micah
So I work in a fast food business in Phoenix, Arizona. I'm the director of development. We have about 110 employees and we do. Last year we did about $13 million in sales.
- [08:57]
Dave Ramsey
Okay, cool.
- [08:59]
Micah
My question is, how can I inspire leaders to hold our team accountable and help them to make proactive decisions?
- [09:07]
Dave Ramsey
Help them make what decisions?
- [09:10]
Micah
Proactive. And that we tend to make reactive decisions.
- [09:15]
Dave Ramsey
Okay. It starts at the hiring. And as you're hiring, you say here, the leaders in this organization are proactive and they are accountable. And so we have a regular meeting rhythm. And you need to establish a regular meeting rhythm with your leaders where you hold them accountable, where you support them, where you help them knock down problems that they have, roadblocks that they have, and where you hold them accountable for being proactive and accountable for production and accountable for behavior and accountable for being a quality leader. Right. And those meetings are where you mentor them, where you help them. Sometimes they'll bring something to you they can't fix without your help. And that's fine. Nothing wrong with that. That's your job as their leader, is to knock down roadblocks. My job's to pave the road for my other leaders. That's my job. And so you take that real seriously. You take an interest in their personal lives, you take an interest in their personhood and you love them well and you're there for them if they're having a bad time at home, you're helping them if the kid's sick, you help them any way you can. Whatever it is that's going on and we're going to be held accountable. We're going to talk about it not once at an annual review and not once at a culture or not at a quarterly culture meeting or training or something. No, we're going to meet every week or every other week until as long as you're here and have a talk about this. And so I have one on ones with key leaders here at Ramsey weekly. And so. And then our president, my son, does as well. And then each of the leaders in the organization does. And each of the leaders of leaders does. And so on all the way through. Through this place. We've got a standard rhythm. We don't wait until once a year to do some kind of corrective action. But you start with setting the table at the higher. This is what we expect. You may not want to join us if you're not open to this idea of initiative and being very proactive and open to us working as a team, which looks like this. We're going to be in this regular meeting rhythm of once every two weeks, one week, whatever it is, where you and I sit and talk for an hour about how things are going everywhere. And you're telling me help spots that you need. And I'm telling you, you know, I'm telling you where corrective action needs to take place, what's going on with this or that. And. And you coach them through some of the drama of the people they're leading. Because there's always drama when you're leading people. I mean, it's just part of it, right?
- [12:01]
Micah
Absolutely.
- [12:01]
Dave Ramsey
Yeah. So how many direct reports do you have?
- [12:05]
Micah
Our leadership structure isn't as defined as I'd like it to be. It's. I would have responsibility for the leaders. And there's probably somewhere about 15. 15 to 20.
- [12:22]
Dave Ramsey
Okay. Who do you report to?
- [12:25]
Micah
My executive director. He's the co operator of the store.
- [12:29]
Dave Ramsey
Of a single store or several stores.
- [12:32]
Micah
Yeah, a single store. I work at a Chick Fil A, so we just have our location.
- [12:36]
Dave Ramsey
Oh, okay. Okay. Well, Chick Fil A does a pretty good job at this. They've been training people to do what I'm talking about for years. So. But I think you sit down with your executive director, which is the partner in the store, right?
- [12:49]
Micah
Yeah, yeah, he's the operator's son. He's been at that store for 20 plus years.
- [12:53]
Dave Ramsey
Okay, cool. They know what they're doing, as you know. And so I'm Gonna sit down with them and go, okay, how can I do this? And I'll give you a suggestion to bring up with him. I don't know their internal store organizational structure. We've done a lot. They're family's friends of ours. We've done a lot of work with them over the years. We've helped them with things. They've helped us with things. We're a big customer. We eat this stuff all the time. But the. Anyway, having said all of that, I don't know what I'm talking about. But in general, a 1 to 15 reporting structure is too much.
- [13:28]
Micah
Okay.
- [13:28]
Dave Ramsey
In general, Most people say 1 to 5 to 1 to 7, something like that. Yeah, that's in general. The military, for instance, use a one to five ratio in most of their org charts. And because the problem is you can't heavily invest in 15 people at once emotionally and everything else. And you have 15 leaders in one store. These are like shift managers or something.
- [13:57]
Micah
Yeah, shift managers. Because we're. We're six days a week. That was part of. While you were talking, I was wondering how I can connect with all of them. Because they work 5:30 in the morning to 10:30, 11 at night.
- [14:09]
Dave Ramsey
Yeah, you're gonna have a hard time doing that. And partly because there's 15 of them. But, you know, it might be that you and the partner split these two things up. It might be that they can report to you, but you are only doing the accountability rhythm meetings with them once every two weeks with only seven of them. And he takes seven up.
- [14:27]
Micah
Okay.
- [14:28]
Dave Ramsey
Or something like that. I don't know. Y' all talk about it and figure it out. I'm not going to die on this hill. But it's just. It's very difficult to. With especially as hard as you guys work and the hours being so wild that it's very difficult for you to stay, to spend enough time to hold someone accountable. And other than just hit or miss as a drive by. And sometimes that can get a little bit sloppy or a lot sloppy. So yeah, I prefer a standard meeting rhythm for accountability proactivity, investing into the leaders. How can I help? How can I serve you? And then you can just say, it's my pleasure. I love. Doesn't get any better than that. I love it. So fun stuff. That's a great company to work for, by the way. They're good people. This is the Entree Leadership podcast. I've been running a business for over 30 years and technology has changed a lot. Now the hot topic is AI and I understand it might be intimidating, but like a lot of other tech that took some getting used to, AI is just a tool to help us work faster and smarter. So you'd better get on board, otherwise you're going to get left behind. NetSuite by Oracle offers AI powered tools that help small businesses improve efficiency and make smarter decisions by bringing all major business processes into one platform with one unified business management suite. There's one source of truth for the real time data you need to take advantage of opportunities. Then you can forecast better, scale more efficiently and streamline manual tasks that take too many resources away from what your business actually does. So join the more than 41,000 businesses, including Ramsey Solutions the Trust NetSuite to help tackle some of their biggest challenges. And right now you can download the CFO's guide to AI and machine learning at netsuite.com Ramsey it's free at netsuite.com Ramsey thanks for hanging out with us. This is the podcast where small business people and other leaders tune in to learn how it's really done. Because I'm not about theory, I'm about practical. Practicality. I do this personally every day and I have almost 40 years now run a business and so yeah, I do know what I'm doing. And it's not theory. I make payroll. I know what it's like. And we get payables paid and receivables received. I mean we know what it's like, we know what the drama is, we know what the how the pizza's made, baby. And so we're here to help you with real stuff. If you want to talk leadership theory, you're going to have to go somewhere else because I'm going to teach you what to do and maybe why to do it, but generally what to do, just go do it, shut up, get it done. And that's going to be me. So glad you're here. Thank you for being with us. If you want to join us, we'd love to have you. 844-944-1070 is the number. Thanks for hanging out. Chris is in Waco, Texas. Hi Chris, how are you?
- [17:44]
Chris
Hello Dave. Thank you so much for taking my call today Chris. I really appreciate it.
- [17:49]
Dave Ramsey
Sure. How can we help?
- [17:51]
Chris
Yeah, so my question for you today is, is it time for me to leave? My am the president, owner of a property maintenance and landscape business. We have about 18 employees and a few handful of subcontractors and we do about 1.7 $1.8 million a year in revenue. And yeah, so Long story short, I'm just really seeking some guidance here. I'm. I don't know if it's time for me to leave, because it's just one. One event after another. I started this.
- [18:33]
Dave Ramsey
Well, I thought. Did you not just tell me you're the president and the owner?
- [18:37]
Chris
I am, yes.
- [18:39]
Dave Ramsey
So you're wanting to fire you?
- [18:43]
Chris
Yes, that is correct, Dave. That is correct.
- [18:45]
Dave Ramsey
What did you do wrong?
- [18:48]
Chris
I know, right? That's a.
- [18:50]
Dave Ramsey
That's a.
- [18:50]
Chris
That's a good question.
- [18:51]
Dave Ramsey
But, I mean, if you're in control, what is. What is driving you out of this thing? I don't understand.
- [18:57]
Chris
Well, yeah, that's a great question. And I have some context to that. So it was actually a family business that started in the early 2000s that was kind of founded by my father. It was just an opportunity that fell in his lap. And it was very lucrative. It was very lucrative for the family, and it required minimal effort. In fact, it was able to send me and my other siblings to school. We were able to get an education. And as I was in my career, I saw that the business was still, you know, fairly lucrative with minimal effort. And I thought to myself, I said, hey, you know, I really think if we actually put some, you know, some effort into this and really get some things systematized and some policies and procedures in place, I really think that we can do well for, you know, for the family and leave a legacy. And so I was. As I was wrestling with that decision, I honestly asked God for some. And as I was on my way to work, a random man came up to me, and he pretty much told me, again, I don't know this person from a can of paint. And he told me, he said, young man, it's time for you to leave. And I took that as my. My sign to leave and join my family business. So, in short, I left my. My. My career. I joined the family business. And as I got involved with the family business, I just saw so much mismanagement, Dave. It was unbelievable.
- [20:28]
Dave Ramsey
Let me fast forward to today. Okay?
- [20:30]
Chris
Yeah, okay, for sure.
- [20:31]
Dave Ramsey
Today. Today you own it, for sure.
- [20:34]
Chris
Yes.
- [20:34]
Dave Ramsey
And today you're the president.
- [20:36]
Chris
Correct.
- [20:37]
Dave Ramsey
Okay, so if something's broken, why don't you fix it?
- [20:42]
Chris
So that's the thing. So I have been really doing my best to put. To fix the issues that have been in place, but for whatever reason, it just seems to just always be these. The circumstances that I find myself in that are just black swan events, for the lack of better words. Just for example, I landed a few jobs Things are going well, and as soon as I land a job, you know, maybe my client or something, they may reduce my offerings, and I have to take a significant pay cut in terms of the amount of work that I'm supposed to provide to my clients. And that leaves me in a very tough situation where I have all of these fixed costs, but I don't get the expected revenue that I. That I have in front of me. With that being said, too, my labor rates just astronomically went up about 30 to 40% within the past six months just due to some prevailing wage requirements that I have absolutely zero control over. And it just caused me to have to back pay employees. And it's just something that. It was just completely unforeseen and not much that I could really.
- [22:01]
Dave Ramsey
Sorry. What wage requirements did the state of Texas put on a landscaper?
- [22:06]
Chris
So I do a lot of governmental work.
- [22:10]
Dave Ramsey
Oh, you don't have to.
- [22:13]
Chris
I don't. I don't. And again, I.
- [22:16]
Dave Ramsey
There goes your wage requirements. The government doesn't get to tell me what I pay people. Screw them. I'd rather not have them as a customer.
- [22:23]
Chris
And that's where I find myself in this place. You know, I have obligations now.
- [22:28]
Dave Ramsey
I'm not gonna. I'm not gonna build. I'm not gonna. I'm not gonna cave to the wage requirements. I'm gonna cancel the contract and go get a contract with somebody and tell me how to run my own business.
- [22:37]
Chris
And that leads me into a situation now, because I've thought about that. I've wrestled with that. But if I decide to cancel that contract, that exposes me to some monetary and monetary damage.
- [22:50]
Dave Ramsey
No, not if they're gonna. Not if they're coming in and telling you to change your wages. They've canceled the contract. You don't get. I have a contract that says, I provide this for you and I don't have a wage requirement. And then you come in and superimpose a wage requirement on that. Screw you. We don't have a contract anymore. You need to get a lawyer, dude.
- [23:08]
Chris
And this thing. I have one. And that's what my legal team kind of told me, is that I can be liable and he'll, you know, for liquidable damages if.
- [23:17]
Dave Ramsey
How long did you sign a contract to cut the grass for the government?
- [23:21]
Chris
Well, it's facility maintenance with. With grass cutting. But this contract is for four years, and I'm in. I'm will be concluding year one this upcoming July, so I'm on the hook for another three more years, and I'm trying.
- [23:35]
Dave Ramsey
After you sign the contract, they came in and superimposed wage requirements. The Fed. The feds.
- [23:41]
Chris
Is a little bit more complicated than that. But in short, the wage requirements that they had. The state did not give me accurate wages. And what happened was.
- [23:52]
Dave Ramsey
Oh, it's the state.
- [23:53]
Chris
Correct, Correct.
- [23:54]
Dave Ramsey
Okay.
- [23:54]
Chris
They didn't, they didn't give me current wages at the time where my, my. I submitted my bid. And prior to me submitting my bid, I'm asking, I'm calling the Department of Labor. I'm calling everybody.
- [24:07]
Dave Ramsey
Okay, so you did, you did 1.7 million. How much of this is that crap?
- [24:12]
Chris
About 1.2.
- [24:14]
Dave Ramsey
Oh, Jesus. Okay, so you got to go get a bunch of private business gathered up to offset this mistake until this mistake goes away. Yeah, because you devalued the business. You, you, you know, you ran your expenses up without. Because you didn't read your contract, didn't know what the RFP was and you didn't understand the request for proposal gave them the ability to run your business for you. Which I would have told them to get screwed and drop the proposal. No, thank you. I don't need them in my business. Only the government going through my underwear drawer. No thank you. And they'll screw up Christmas. State or local or feds, if they were brilliant, they'd be doing something else. So. No, we're not. Yeah, I'd get out of that. So, I mean, you may be on the hook for that, but I'm going to provide minimal functional and get through that thing and I'm going to go back to them and ask them if there's anything they'll do to release me from the contract because the wage, the wages that they superimposed are killing me. And I'm going to ask for mercy and ask to be released. Meantime, I'm going to go get a bunch of other business. It's not stupid government stuff. You thought you hit the lottery and instead you got sucked in to a mess.
- [25:33]
Chris
I mean, you hit the nail on the head with that, with that synopsis, Dave.
- [25:36]
Dave Ramsey
Yeah, and then that took your hope away and now you want to just give up. Yeah, don't give up. Fight, fight, fight. Get your business back. Don't let them close you down with one bad decision. You can push your way through this. Go get $4 million worth of other private yards to cut or whatever it is you're doing. Facility management. That is not superimposing wages on you build a set of wages around that with a separate division of the company. That's not superimposed by the government and then run this government contract out or ask them to get out of it and get out of it and keep running the thing, man. Keep running it. But, yeah, what made it complicated was you when you involved the bureaucrats.
- [26:14]
Chris
Yeah.
- [26:15]
Dave Ramsey
And that is. That's the end of peace. Peace leaves my life when I have bureaucrats enter my life. Things were going good until the bureaucrats showed up. I was kind of having fun until the bureaucrats showed up. Yeah, the bureaucrats really showed up during, like, Covid. They all sudden thought they had all kinds of power that they didn't have, too. That was fun. That was fun to get to. Tell them to stick it. And it's the reason I have my name on the side of the building so I can tell you stick it. You can't do this. You don't get to tell me what to do here. It's not how this works. And you kind of got to get that thing going. That arrogance. If you want to call it that. I don't care if you call it that or if you call it confidence or if you call it courage. It's the reason I work for myself so I don't have to put up with people like that. Good God. I don't think we want to be associated with a company that doesn't require masks. I don't think I want to be associated with a company that wants me. Wants to tell me how to run my business. You got confused. I was simply providing you with xyz. You don't get to come over here and dictate policy inside these walls. You duber. Cancel that one. 1.2 million. Cancel that one. 3 million. Cancel that one. I canceled a bunch of them. It was just glorious. But it hurt the old pocketbook. But it reminded me who was in charge. Me and God. Not the bureaucrats and not some woke idiot at another company dictating to me how I'm gonna pay wages or how I'm gonna do what. Here, I'm gonna abide by the federal law, but that's all I'm gonna do. And that's the maximum I'm gonna do. The rest of it is get your filthy hands off my stuff. And that's why I own my own thing, guys. Cause I'm that kind of. I'm that old grouchy dude. I'm that guy. I'm the Oscar Street, Right? I mean, that's it. So. But it's also what caused me to be able to grow this thing and not give up so, Chris, get grouchy, buddy. Get pissed off about this, about people trying to run your family business. It was going good till the government got involved. I mean, good Lord, Ronald Reagan used to say that. He said the scariest words in the world are when someone says, I'm from the government and I'm here to help. Yeah, that's the scariest phrase on the planet. So I'm sorry you got caught up in that. I hope you can find a way to get out of that contract and turn that crap back over them so they quit running your business or find a way to survive it and not just collapse under the weight of this one error that you made. And, brother, we've all made bigger mistakes than that one. I definitely have, and I've survived them. That's how this works. Wow. You're a good man, Chris. Keep fighting. Don't, don't, don't bend, man. Push your way right through it and learn from your mistakes. And next time, you won't sign one of those contracts without actually knowing what it says. All that kind of stuff. Ouch. Big news. We just launched entree Leadership Summit 2026. It's happening next May 17 through 20 at Disney's Coronado Springs resort in Orlando, Florida. And now's the time to get your tickets. When you register this month, you'll be one of the first to lock in the best seats near the stage. And you'll get first dibs on the on site Disney hotel rooms. To get your Tickets, go to entreeleadership.com summit or if you're listening on YouTube or podcast, click the link in the show notes. Thanks for joining us. We're glad you're here. I want you to keep in mind 54% of the gross domestic product in America's economy is produced by small businesses with 500 or fewer team members. That means over half of our economy is generated by those of you that own and operate small businesses. And yet it feels sometimes like you're out here alone. Well, you're not. There's a bunch of us and you're not. I love you. I got your back. I'll fight for you. I think you're the best. I think you deserve to win. I think you're. One of the things that makes America great is people starting something new, people fighting to keep something free. The free enterprise system, it's like liberty and stuff. The free enterprise system represents free Americans, right to go do something. You live in one of these other stinking communist countries. You can't do this. You can't just decide one morning I'm in business. My dad gets his lawnmower and starts a family Lawn business in 2000. And now here I am, 25 years later, he was saying, running this thing. And now the government gets involved and takes away my freedom and starts telling me what to do. That stuff pisses me off at a personal level because it's happened to me and it's happened to you guys, too. You operate in America. This is the land of the free. Oh, and by the way, in order for it to be free, it's the home of the brave. So be brave. Be courageous. Fight for your freedom in the marketplace. I'm not talking about physically fighting. I'm not talking about bringing a war or something, but it's a metaphor to tell you, to remind you that it's tough out there in the market. And sometimes we step on our own toes and bruise them. I've done that more times than other people have stepped on mine. The biggest mistakes at Ramsey have been my fault, not somebody outside this place attacking us. It's just been stupid butt stuff I've done. So you're your own worst enemy most of the time if you're listening to this. But that's okay. You can even survive that stupidity. But you learn from it and you go on and you're courageous to keep going. This is the land of the free and the home of the brave. So fight. Roll up your sleeves, throw your shoulders back, push through. Because you represent over half of the economy. And more than that, philosophically and economically, you represent freedom. When you decide, I'm gonna start my own business and run my own business, and I'm gonna make payroll and I'm gonna provide jobs and I'm gonna treat the people that work at my place right. I'm gonna take good. Takes good care of their own people. They don't piss on them like corporate America does. Corporate America will set you on the sidewalk just to change their stock price. And then your house will be in foreclosure. We don't treat our team that way. We fight to protect our team. We keep them too long when they're screwing up. We're too graceful, too merciful with them. Corporate America doesn't do that. Corporate America slit your throat just to see if you will bleed. And we all know that everybody walking around got walking around since knows what I'm talking about. So here's the deal. It is worth fighting for, but it is sometimes lonely. You feel like you're by yourself. You're not by yourself it is. Sometimes you live with a regret of the stupid stuff you've done that's still in the rear view mirror. But thank God the rear view mirror is smaller than the windshield. That's called grace. My sins are in my past. I got new ones in my future. New things I get to try and do and be in my future with the wisdom that came from the scars from that mistake I made or mistakes I made. And that's what we do when we're running a business, boys and girls. If you thought this was a hockey stick, up into the right and easy. You read the wrong book, honey. This is hard. It's just worth it because you get to maintain your dignity and you get to maintain your freedom. Jennifer is in Knoxville. Hey, Jennifer. How are you?
- [33:54]
Jennifer
Hi. I'm great. How are you?
- [33:56]
Dave Ramsey
Better than I deserve. What's up?
- [33:59]
Jennifer
I am a dentist and I own my own practice. We made about 1.2 million last year.
- [34:05]
Dave Ramsey
Good for you. How many employees? Yes.
- [34:09]
Jennifer
Five.
- [34:09]
Dave Ramsey
Five. Excellent. Wow.
- [34:12]
Jennifer
So I. I'm in a sort of a duplex that I own, and my tenant recently left. I have about5.500,000 left on the building, and I want to expand into that other space and use the cash reserves in my practice to pay the loan off. If I do that, it'll leave me with about two months of cash reserves left. So I'm.
- [34:36]
Chris
I'm.
- [34:36]
Jennifer
I really want to do that, but I don't know if it's wise or.
- [34:40]
Dave Ramsey
Give me the numbers. How much is in the bank right now?
- [34:44]
Jennifer
So I have 690, and the loan.
- [34:48]
Dave Ramsey
Balance is what, 500. Okay. So you. You'd have to. You'd have 200 grand. And. And you're making 100,000amonth, top line?
- [34:59]
Jennifer
Yes, I'm saving. I'm putting in my cash reserves close to 40 to $50,000.
- [35:05]
Dave Ramsey
Wow. You're not taking much home.
- [35:07]
Jennifer
Yeah.
- [35:08]
Dave Ramsey
Okay. All right. And so we're dealing with 700 and we owe 550 or 590. What was it? Five what?
- [35:16]
Jennifer
500. I owe 500.
- [35:18]
Dave Ramsey
I wrote it down so sloppily, I couldn't read my writing. Okay. 500. Okay. Yeah. I'm paying off that loan.
- [35:25]
Jennifer
Okay. Even with just two months left.
- [35:27]
Dave Ramsey
Yeah. And then. And then, you know. And I'm okay with not expanding the practice until you build it back up a little bit, if you want. What's it going to cost to build out the space for you? Because the equipment's expensive as crud.
- [35:40]
Jennifer
Isn't really is, but it's already. It turns out it used to be a dental office, so it's already plumbed and ready to go. So I just have to.
- [35:48]
Dave Ramsey
I'm so confused. You had a dentist next door to a dentist?
- [35:52]
Jennifer
He's a specialist. Yes.
- [35:53]
Dave Ramsey
Oh, okay.
- [35:55]
Jennifer
Yep. And it's just been an admin building for a long time. So once I found out that there were three treatment rooms, it basically doubles the size of my practice. And then I can have an association.
- [36:05]
Dave Ramsey
Chairs and all that junk. I mean, to equip this, what's it going to cost you to get it up and running?
- [36:12]
Jennifer
Probably another. I've factored in just regular renovations into the numbers I gave you, and then probably another 50 to finish it out.
- [36:20]
Dave Ramsey
Okay, I'm sorry. So the 500 is not the loan amount?
- [36:25]
Jennifer
The 500 is the loan amount, but I factored into the amount of savings that I have.
- [36:30]
Dave Ramsey
Oh, you've already reduced it by the renovation cost.
- [36:33]
Jennifer
Correct.
- [36:34]
Dave Ramsey
I see. Okay. So how much do you actually have in cash?
- [36:40]
Jennifer
I'm close to. Close to seven.
- [36:44]
Dave Ramsey
You're going to do the renovations for 10? Thought you told me you had 690.
- [36:49]
Jennifer
No, I do have 690, but in my expenses, I've already have. I already have money set aside. I've already kind of paid for some renovations to happen.
- [36:59]
Dave Ramsey
Okay, where is that money out of your monthly budget or your operating budget?
- [37:05]
Jennifer
No. Yes. I took it out of my. I already took it out of my savings. I've already started renovating. The question is, I just don't know if I need to take out, if I need to pay.
- [37:15]
Dave Ramsey
Are you hiring another dentist?
- [37:17]
Jennifer
Yes.
- [37:18]
Dave Ramsey
Have you found that person?
- [37:21]
Jennifer
No, but I've been to the school, and I have a few that I'm interviewing.
- [37:27]
Dave Ramsey
Okay. So it's. There's no. This train's left the station is what we're saying. The only question is the loan.
- [37:36]
Jennifer
Correct.
- [37:40]
Dave Ramsey
Okay, so there's two. There's two options. In either option, we're going to finish the renovation with the cash you've already set aside, and we're going to hire a dentist, and we're opening up as soon as possible. And what's the timeline on all of that?
- [37:57]
Jennifer
Probably three months.
- [37:58]
Dave Ramsey
Okay. And so probably be making cash flow by the end of the year on that, on that new dentist and on those new hygienists.
- [38:10]
Jennifer
Correct.
- [38:11]
Dave Ramsey
You got to get them hired, get them in there, get them trained. And you think you have enough customer base to add to it pretty quick?
- [38:18]
Jennifer
Yes. We're booking out three months as it is.
- [38:21]
Dave Ramsey
Yeah. So yeah, you do. Okay. So what I'm trying to figure out is when this thing's going to quit bleeding and start supplementing the rebuild of your cash base. That's what's running through my head. And I'm trying to measure that against the 200, and I'm trying to measure that about how much risk we're really taking by going ahead and paying this off. Because you could either pay it off today or you could wait three months and then pay it off. And you're probably sitting in a different place then.
- [38:48]
Jennifer
Yes, definitely. But my loan is at five years, and you have to renew it every five years. So I'll have to sort of start over with the loan anyway.
- [38:59]
Dave Ramsey
Oh, it's coming up in the next three months. Okay. That's information I didn't have earlier. Wow. We painted ourselves into the corner. We get one choice, really. I don't think it's a bad choice. It's not the end of the world. I just. I love being debt free and I love being debt free with a big old pile of cash. More. And so that's what I'm trying to work on in this. In this scenario. It's what's running the math back and forth here. But, yeah, I'm paying it off. I'm paying it off. And then you're just going to have to really concentrate and spend a lot of your calories getting the new people making an roi. Making a return on investment.
- [39:44]
Jennifer
Yes, sir.
- [39:45]
Dave Ramsey
Because otherwise this, this, the 190 that's left could start to burn on you. And if that starts to burn now I'm getting scared.
- [39:55]
Jennifer
Yeah, it's just tight. But paying it all, like, not being able to pay it all off. I'm also going to be paying rent, which I'm paying rent to myself. So I have that money to. That can come back to me.
- [40:05]
Dave Ramsey
It doesn't matter. That's just a. That's just the shell still got a pee under it. It doesn't matter where it comes from. It's like putting a payphone in your own house. It's the same thing, right?
- [40:18]
Jennifer
Yep.
- [40:18]
Dave Ramsey
Yeah. So, yeah, that. That's just. That's just a way to keep books and taxes and so forth. But you're still. It's still. Your money is still cash flow or it's not cash flow. One of the two. Yeah. I pay myself rent, too, but it's. But that's just because I've got. Oh. Anyway. All right. Yeah. Yes, I'm going to do this, but I'm going to manage it. And here's the thing. I also am counting on the fact that I, in talking to you, you are very impressive in how dialed in on this stuff you are. You're a detail person and you've run these projections back and forth, back and forth to the point that you've done them right before you go to sleep, and you're doing them right when you wake up. You're really focused and accurate. And I think that's going to add to how quickly quick this thing turns and how good this is going to be. If you were sloppy running around chaotic in our conversation, I'd probably tell you to hold off and redo the loan, but you're not. You're so precise that I think that you probably even got other wiggle room you hadn't even told me about. And so I think you're going to be fine because of who you are and how detailed you are. Very impressive, Jennifer. Very impressive.
- [41:30]
Jennifer
Thank you so much.
- [41:32]
Dave Ramsey
Thank you. We appreciate you calling in. It's very, very cool stuff. Hey, man, it's people like that. It's what makes the world go around. Shut up, baby. Hey, remember, better a weary warrior than a quivering critic. This world needs more high quality leaders, so take courage and lead. I'm Dave Ramsey, your host. Thanks for listening to the Entree Leadership Podcast. It.