Making $10,000,000 and I’m Completely Stressed Out

Summary

The EntreLeadership Podcast: "Making $10,000,000 and I’m Completely Stressed Out"

Release Date: January 13, 2025
Host: Dave Ramsey
Podcast Description:
Experience real-life, real-time business and leadership coaching from Dave Ramsey, a successful CEO, popular radio personality, bestselling author, and the host of The EntreLeadership Podcast. Dave draws on over 30 years of experience as the CEO of Ramsey Solutions to help you overcome the challenges you're facing.

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1. Scaling Up: Ross's Electric Company Growth Challenges

Caller: Ross from Louisville, Kentucky
Timestamp: [01:12] – [10:48]

Key Points:

• Rapid Growth: Ross started an electric company at 27, growing it to 65 team members with an expected revenue of over $10 million this year.
• Challenges Faced:
  • Lack of Standard Operating Procedures (SOPs).
  • Discrepancies in accounting processes between two offices.
  • Over-reliance on himself as the sole point of contact for all team members, leading to overwhelm.

Notable Quotes:

• Ross: "I've never run a business before, and I haven't expected to grow this fast. I'm kind of lost in how do you, I guess, back up and get all this in place" [01:17].
• Dave Ramsey: "You need someone within that group that that group respects and that has some people skills and that has a lot of accounting skills... appoint that person in charge of that, and say they're deputized to make both places systems be identical" [04:05].

Dave's Advice:

• Delegate Leadership: Appoint a leader for the accounting department who possesses both technical accounting skills and strong people management abilities.
• Implement Consistent Systems: Ensure that both offices adopt identical accounting systems to enhance efficiency and reduce confusion.
• Communication: Clearly communicate the reasons behind implementing new systems to the team to foster understanding and buy-in.
• Accountability: Hold the appointed leader accountable for maintaining consistent processes and address non-compliance decisively.

Insights: Ross's situation highlights the common pitfalls of rapid business growth without adequate systems and delegation. Dave emphasizes the importance of leadership roles and standardized processes to sustain and manage growth effectively.

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2. Difficult Terminations: Lauren's Residential Painting Company Dilemma

Caller: Lauren from Kansas City
Timestamp: [13:00] – [19:04]

Key Points:

• Employee Performance Issues: Lauren struggles with letting go of a long-term employee whose performance and attitude have deteriorated over time.
• Emotional Attachment: The employee has become "family," making the decision to terminate more emotionally challenging.
• Delayed Action: Past reluctance to address the issues promptly has led to exacerbated problems.

Notable Quotes:

• Lauren: "He's just become more negative and crotchety. Just not a good attitude... it's just the difficulty" [13:33].
• Dave Ramsey: "You've set yourself up to where you're being a [sic]. You don't need to be running a bunch of accountants, dude. You need to be running a $10 million business" [05:03].
• Dave Ramsey: "You're gonna fire him. And I think you're gonna suffer the consequence of your poor leadership" [16:26].

Dave's Advice:

• Immediate Action: Proceed with the termination to prevent further negative impact on the team and business operations.
• Severance Considerations: Offer appropriate severance pay to ease the transition for the departing employee, though it won't eliminate all negative feelings.
• Rebuild Trust: Acknowledge the mistake of delayed action and commit to more proactive performance management in the future to rebuild team trust.
• Transparent Communication: Clearly communicate the reasons for termination to the remaining team members to alleviate fears and reinforce fairness in leadership decisions.

Insights: Lauren's situation underscores the importance of timely performance management and the challenges leaders face when emotional attachments interfere with business decisions. Dave advocates for decisive action to maintain organizational health and leadership credibility.

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3. Profit Sharing Strategies: Connie's Special Inspections Company

Caller: Connie from New York
Timestamp: [34:18] – [38:32]

Key Points:

• Profit Sharing Implementation: Connie's company is on track to make about $10 million in revenue and has implemented profit sharing based on accrual accounting.
• Tax Considerations: She is uncertain whether to account for taxes when distributing profit shares.
• Cash Flow Concerns: Managing profit sharing payouts in alignment with cash flow, especially given the nature of government contracts.

Notable Quotes:

• Connie: "We do the profit sharing on an accrual basis... I'm just curious if I should be taking into account the taxes that I have to put aside when I'm implementing the profit sharing" [34:26].
• Dave Ramsey: "If you're running the business on a cash basis, then you can calculate profit on a cash basis, can't you?" [37:09].
• Dave Ramsey: "I would not have a profit sharing program that paid on that. That'll create a cash flow bond big time" [38:32].

Dave's Advice:

• Prefer Cash Basis for Profit Sharing: Align profit sharing with actual cash received to ensure payouts are sustainable and avoid cash flow issues.
• Align with Cash Flow: Implement monthly profit sharing payouts based on cash profits to provide immediate motivation and align with the company's financial health.
• Avoid Accrual-Based Payouts: Using accrual accounting for profit sharing can lead to discrepancies and potential financial strain when cash is not yet received from contracts.
• Tax Planning: Ensure that profit sharing distributions account for tax obligations to prevent unforeseen tax liabilities.

Insights: Connie's query highlights the complexities of profit sharing in businesses with fluctuating cash flows. Dave recommends aligning profit sharing with cash basis accounting to maintain financial stability and enhance employee motivation through timely rewards.

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4. Closing Remarks and Leadership Insights

Timestamp: [38:32] – End

Key Points:

• Leadership Integrity: Dave emphasizes the importance of honesty and proactive leadership in building trust and fostering a strong organizational culture.
• Continuous Improvement: Leaders must learn from past mistakes to enhance their management practices and prevent future issues.
• Customer-Centric Focus: Ensuring that all team members understand and prioritize customer interactions to maintain business success.

Notable Quotes:

• Dave Ramsey: "Your job is to have uncomfortable conversations as often as is necessary for people to hear how you feel about them, positive and negative" [19:04].
• Dave Ramsey: "Better a weary warrior than a quivering critic. This world needs more high-quality leaders, so take courage and lead" [34:32].

Final Insights: The episode concludes with a strong emphasis on leadership virtues such as honesty, proactive decision-making, and a relentless focus on customer satisfaction. Dave encourages leaders to embrace uncomfortable conversations as a pathway to stronger, more efficient teams and sustainable business growth.

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Conclusion

In this episode of The EntreLeadership Podcast, Dave Ramsey addresses critical leadership challenges faced by growing businesses. Through real-life caller scenarios, he provides actionable advice on managing rapid growth, handling difficult personnel decisions, and implementing effective profit-sharing strategies. The overarching theme underscores the necessity of strong leadership, clear communication, and strategic delegation to navigate the complexities of business expansion and maintain organizational health.

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Notable Quotes with Timestamps:

• Ross: "I'm kind of lost in how do you, I guess, back up and get all this in place" [01:17].
• Dave Ramsey: "You need someone within that group that that group respects and that has some people skills and that has a lot of accounting skills" [04:05].
• Lauren: "Why didn't you correct. We just didn't" [14:43].
• Dave Ramsey: "You're gonna fire him. And I think you're gonna suffer the consequence of your poor leadership" [16:26].
• Connie: "We have our taxes on a cash basis. So I'm just curious if there. If I should be taking into account the taxes that I have to put aside when I'm implementing the profit sharing" [34:53].
• Dave Ramsey: "I prefer cash basis accounting when you can use it" [37:56].

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For more insights and real-time business coaching, visit Ramsey Solutions.

Transcript

[Dave Ramsey]

From the headquarters of Ramsey Solutions, this is the Entre 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. I'm the CEO of Ramsey Solutions. I do this every day, and I'm here to help you do it. And I've been doing it since I started on a card table in my living room. And we're here to help you take your business, wherever you are, to the next stage. That's what we do. If you got a question you want to ask, well, you fill out the [e-mail] ask and we'll call you and put you on the show as a caller. Or you can call and talk to us at 8449-441078-44944-1070. Ross is starting this hour off in Louisville, Kentucky. Hey, Ross. Welcome to the Entree leadership Podcast.

[Ross]

Hey, Dave. How are you?

[Dave Ramsey]

Better than I deserve, sir. What's up?

[Ross]

Well, so I'm 27 years old. I started an electric company, and we have grown drastically. And I called in last year about taxes because I got hit with a big tax bill and didn't know about quarterly taxes and this kind of stuff. So I'm just trying to kind of figure it out. But now our business has grown so much that we now are up to 65 team members, and this year, we'll clock just right over $10 million.

[Dave Ramsey]

Good for you. Well done, sir.

[Ross]

Well, I appreciate that, but the. The issue I'm having is, obviously never ran a business before, and I haven't. I've only been open for. This will be my fourth year, but haven't expected to grow this fast. And I'm kind of lost trying to figure out how to get standard operating procedures or with the size we are now. You know, there's four or five people in accounting, and, you know, there's. There's all these kind of. There's a lot of people here, there, and everywhere doing a whole lot of things, and I don't really have operating procedures or, you know, and so I'm. I'm kind of lost in how do you, I guess, back up and get all this in place and kind of maybe how you did it or, you know, I've just. I'm kind of lost with it.

[Dave Ramsey]

That's perfect. Yeah. That takes you from Pathfinder up into Trailblazer, which you probably would be in, except you need These repeatable processes, systems and processes are necessary to run a business, to go from, you know, to go from 10 million to 50 million in your situation. So good for you. Good question. So give me an example of something that is chaotic, that needs a new system.

[Ross]

I guess one example is. So I've got two offices. So I've got one in another city about an hour away. And so the people, I guess we'll just say like accounting. They're. The way they're putting invoices and putting together profit and loss statements, it just completely contradicts here. And it feels like we have meeting after meeting, like, no, this is the way we need to do it. And then, you know, four or five hands touch it and it's like, no, this is not, you know, this is not correct.

[Dave Ramsey]

So you have, you should have a leader of accounting overall. What do you call that person?

[Ross]

I guess we really don't have. I mean, we have. Well, I guess who would kind of be the head of it, but we.

[Dave Ramsey]

Don'T really have, like, what's that person's title?

[Ross]

Accountant.

[Dave Ramsey]

Okay, all right, cool. All right.

[Ross]

I've never, I guess I've not never really set up.

[Dave Ramsey]

No, that's okay.

[Ross]

Titles over that.

[Dave Ramsey]

Well, that's okay. I just don't want, you know, you got four people in each location. Are all eight reporting directly to you?

[Ross]

Yes, currently everybody reports to me, so I'm kind of pulling my hair out.

[Dave Ramsey]

There's your problem.

[Ross]

Yes.

[Dave Ramsey]

Okay. You don't need to be running a bunch of accountants, dude. You need to be running a $10 million business. And so we need to choose someone within that group that that group respects and that has some people skills and that has some. A lot of accounting skills. And then we're going to call everyone together, appoint that person in charge of that, and say they're deputized to make both places systems be identical.

[Ross]

Okay, so break it up into smaller bites then.

[Dave Ramsey]

Yeah, both place has to have systems, but you need someone else running it. Because the problem is you get all these herded, you herd all these cats into one room, then you open the door and they all run out.

[Ross]

Correct.

[Dave Ramsey]

They go back to doing their old crap. That's what you said. But if you got a guy, that's his only job is to look over all the accounting and make sure it conforms to the same system at both locations. That's his job, is to make sure that this works. And anytime you're implementing a new system like that, people aren't gonna like it because they prefer Doing things their own way. Because that's what's always worked. Right. Correct. For them, but it's not working. So what we have to do, anytime we put in a system, we have to tell everybody why the system is better than the chaos.

[Ross]

That makes sense.

[Dave Ramsey]

Okay, I'll give you an example. We've got 12 different departments, divisions, profit centers inside Ramsey. At one point a decade ago, they all were running their own creative. And so the entree, leadership, colors, brand, all the stuff you saw on it looked way different than everything else in Ramsey. There was no connection visually. So we put a system in place for all of our creative to get on the same page, so that when you saw one Ramsey brand, you recognized it as a Ramsey brand under the umbrella. You follow me? But that's a system we're putting. All the creatives are dancing to the same song rather than everybody's freelancing out here in the middle of a dadgum thing, and I'm paying them to screw it up. And that's what I was doing. You call that governance? We started governing across the whole company. They had to meet certain standards in the creative. In your case, you're saying they have to meet certain standards and conform to an accounting process to where both locations have an identical thing. Why did we do that? We did that because the customers were getting confused as to whether or not they were actually dealing with Ramsey. Why are you doing it? Because it's very inefficient for us to have two different accounting systems. And the boss, the owner, me, I can't tell what the flip's going on. So it's necessary for everybody to get using the same system. It's gonna be much more efficient, much more enjoyable for everyone involved, and I'm gonna be happy. That's why we're doing it. And you tell the whole team. That's why we're doing it. And I've just appointed George here. He's the new controller. And George is gonna control. By God, that's his title. We're going to conform to this. I'm not gonna send you back out. And then you go back to doing it the way you used to do it. No, we're not doing that anymore. And then, you know, you hold them accountable to doing that. And if you got somebody continually getting off the reservation, you dial them back in. You dial them back in. And then you fire them if they won't come back in. Okay, you're going to do it this way? If you want to stay.

[Ross]

Yeah.

[Lauren]

Okay.

[Ross]

So how do you Pick, I guess. Or how do you pick that. Do you just pick the best person that does that role or.

[Dave Ramsey]

They need to be. They need to be the best at accounting and at people skills. Because now we're asking them to lead. We're not asking them to just do accounting. If they're horrible with people, they're not going to be able to herd these cats.

[Ross]

Okay?

[Dave Ramsey]

But if they're horrible at accounting, they're not going to be able to herd these cats because these are accounting cats and they won't respect them. Think about, okay, think about if you got a crew in the field and you know you got a three man team going in to do electrician work, right? And you got a senior guy on that, right? Well, he's got to know his. He's got to know how to wire the house so he doesn't burn it down or wire the building so he doesn't burn it down. The other guys aren't going to respect him if he doesn't know his technical knowledge. But he also can't be a. But. Yeah, he's got to have people skills to lead the crew. Same thing here, only we're not wiring a house, we're wiring a spreadsheet.

[Lauren]

Okay.

[Dave Ramsey]

Same exact process, but tell the team why. Otherwise it sounds very corporate and bureaucratic. We're just handing down paperwork for you people to do. You don't want them thinking that. That's not what you're asking. All I want is efficiency and conformity for the sake of the guy that owns it. You guys are driving me crazy. I'm pulling my hair out. We gotta be on the same page. And that's what we said to our creatives. We're not. This is not random. Like we're just dropping bombs on you from corporate. That's not what we're doing. We're going. The deal is we need this stuff to communicate to the customer that's good for everybody. Cause we make more profit. The customer has a clue. They're dealing with a Ramsey brand based on the way the creative is done and it's plugged in. There's a consistency to the fonts, there's a consistency to the color schemes, there's a consistency to the spacing and the way we use stuff. And you know, we put basic creative governance guidelines in place, gave them a set of boundaries that they could play in the sandbox between those boundaries. And that's how we went through the thing. So really, really good question. Ross, I'm proud of you, man. You're Killing. Keep it up. Keep it up and you call anytime I can help. I love helping guys like you. That's why we're here. This is the Entree Leadership Podcast.

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[Dave Ramsey]

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[Lauren]

Thank you. Hop right into it. My husband and I, we own a residential painting company. We typically keep about four team members on board at a time and we gross about 625, wondering how do we let someone go that should have gone a long time ago, like a long, long time ago, but has become family and there's not really an opportunity to come back? This is not one of those if you don't get better, then you're coming back. This is a farewell.

[Dave Ramsey]

Why?

[Lauren]

What have they done kind of conversation. Well, he was our first hire about 10 years ago when we first started, and he was 52 at the time. J doesn't have a lot to do with it, but over the years he's just become more negative and crotchety. Just not a good attitude. And over the years, he's also become less and less useful as far as, you know, job responsibilities, go climbing ladders, etc. And just less enjoyable to be around. My husband's not on site regularly to witness all, you know, any issues immediately, so they kind of snowballed over time.

[Dave Ramsey]

Why did you address this a long time ago?

[Lauren]

Yeah, it's just difficult conversation. But more so, I think it's always. Not always, but a lot of times just been feeling like, well, what happens if we do? Are we going to get behind and we know we're not going to get behind and nobody's going to miss him. It's just been, why didn't you correct.

[Dave Ramsey]

His behavior before it became fatal?

[Lauren]

Just wasn't. We just didn't. We weren't good at that part. Something that we need to get better at.

[Dave Ramsey]

Okay.

[Lauren]

And so unfortunately, now we're here and that won't happen again. But, yeah, I mean, he's, you know, he's a good person, but he's not who we want on the team anymore. And, you know, it's just. It has gone on for so long. So that's the difficulty. You know, conflict delayed is conflict magnified, basically, how it's gone. So become a really big lens, really big lens over time. And to make it. And over the time, we've continuously or continued to give him raises, really, when they weren't even deserved, just because it was the end of the year kind of fell into that pattern. And I think sometimes we felt guilty or greedy, like we were being unfair by not increasing his wages. You know, obviously that should be based on performance, but it wasn't, and here we are. So, I guess just, you know, how do you have that conversation? How do you deliver that news to the team, get them energized for the future again? Nobody's going to miss them, you know, in two weeks.

[Dave Ramsey]

Well, the problem is you've done this so poorly that there's not a good way to do it.

[Lauren]

Yeah. Yep.

[Dave Ramsey]

You've painted yourself in a corner and that's a bad metaphor. But I mean, really. Because here's the thing, no one should ever be surprised. And this guy's gonna be surprised. It's not fair to him.

[Lauren]

Right.

[Dave Ramsey]

You're gonna catch him off guard. And guess what? Then the team's gonna see that you just came out of left field all of a sudden and took his head off. And then they're gonna worry that they're next.

[Lauren]

Yeah, they've each individually, over time, brought up things here and there.

[Dave Ramsey]

No, no, no, no, no. They're gonna know that he did not see it coming, and so they're gonna worry that they don't see it coming. But the fact that you're surprising him, they're gonna worry that they're gonna get surprised. They're not surprised about him, but they know he doesn't think this is coming. He's gonna be surprised. And so you've not only set yourself up to where you're being. You know, this is a horrible situation because you've not only set yourself up that it's gonna be very uncomfortable with him. He's gonna be pissed off. He's gonna be hurt because he got no warning. No one ever told the poor guy that he was doing, that his job was on the line before you just walk in and fire him. And then the other guys are gonna look at that and they're go, crap. They may do that to me. This is a problem. Yeah, it's a real problem.

[Lauren]

And that's where you come in. So what do we do?

[Dave Ramsey]

I don't have a good solution. I think you're gonna fire him. And I think you're gonna suffer the consequence of your poor leadership. I think you're gonna. I think your team is gonna look at you with suspicion for a while. It's gonna take a while to rebuild trust with them. And then you're gonna have to start being real clear with your team on every little thing that they do. That's not right. No more weakness. You've been dodging, dodging the conflict. And by dodging the conflict, like you said, it's now magnified, and it's at an explosive level. So you're going to sit down and fire the guy. You've made that decision, and he's not gonna see it coming, and he's gonna be hurt, and he's gonna. You know, this is not gonna be a relationship that's gonna last. He's not gonna like y'all anymore. That's what's gonna happen. There's not. I don't know any other thing else you can do. Cause you're not gonna give him another chance. You've already made that decision.

[Lauren]

Right.

[Dave Ramsey]

So he's Just gonna be pissed and hurt and you can give him some nice severance pay.

[Lauren]

Yeah, we fully intend on that. And I guess that was a follow up question.

[Dave Ramsey]

That's not going to keep, that's not going to keep the feelings down though.

[Lauren]

Oh, no, I know it's not. I know it's not. But it'll help them get through the holidays. And we're not going to be, you know, I'll be overly generous, but I don't know, you know, what is a. I know that you're going to say there is no appropriate severance, but what is in this situation? What would be the best?

[Dave Ramsey]

We typically run about a month per. Okay, so he's been with you 10 years. I mean, 10 months, that's a lot. In an operation your size, that's a lot. So I might not go that high in this case, but that's a whole lot more than anybody else does out there in the real world, by the way. But we're overly generous in severance situations. Now I have been in situations where I've confronted people and I really couldn't put my finger on the problem. And I finally came to the end of it and that was highly uncomfortable. But they weren't just completely caught off guard. We'd had discussions about problems, but we couldn't say, these are three things you have to do to stay. I couldn't put my finger on it that clearly and I didn't even like those discussions because I felt like I was still surprising the people and I don't wanna be in that position. So the thing you've gotta do is go, this is the last time this ever happens. As a leader, your job is to have uncomfortable conversations as often as is necessary for people to hear how you feel about them, positive and negative. You need to sit down and be very clear. And your job is to not give raises to people because they keep taking up space. Your job is to give, you know, and that's an uncomfortable conversation. Your performance has not changed. Our revenue has not changed. I don't have a raise in here for you this year. If you were doing more work or carrying more weight, there'd be a raise for you, but you're not doing that. That's an uncomfortable, awkward thing to say. But it's less awkward than giving somebody money out of guilt because you didn't deal with them. So you guys are gonna have to stand up and be stronger and kinder and more clear and have lots more discussions with these people or you're gonna lose them all. Cause they're gonna come to know they can't trust you because you just look up one day and you've had enough and you throw em in the street and that's how it's gonna feel to them. So it's gonna take you a little time to rebuild that trust with the new team after that. But at least if you're gonna go through the pain of this, at least learn your lesson. And you guys fix the cause of it, which was not him. The cause of this mess is you. And so I would jump in there and fix that as a part of my commitment. And then, you know, you're just gonna have, he's gonna have a really bad day. You're gonna have a really bad day and you're gonna be out some money and that's gonna be over. And then you've lost a relationship cause he probably won't speak to you the rest of his life. Wouldn't be unusual at all. People don't like to be surprised, man. It's that simple. And you know, bopping along thinking everything they're doing is okay and then all of a sudden they just walk in and get fired. So you know that's going to be bad, it's going to be a bad day. But then just commit to yourselves to never be those kinds of leaders again. Don't be that kind of person because you're not going to be able to attract and keep good talent if they can't trust you to tell them when they're doing good and when they're doing bad. They have to be able to trust you in that. Hey, thanks for the call. Sorry to be rough on you, but that's where you are. It's a reality and it's what you presented to me. So this is the Entree Leadership Podcast.

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[Dave Ramsey]

I'm Dave Ramsey, your host. This is the Entree Leadership podcast. You guys know I pick on corporate America all the time. I can't stand corporate America. And just as a reminder, corporate America is not the size of a company and it's not the fact that they're publicly traded or not, although that sometimes does influence it. Corporate America is a mindset and it could be in a small business or a large business and big businesses can be led well and run well, and then they don't fall under what I call corporate America. Because corporate America for me is an insult I am laying out there towards some company. You got me. But there's companies that do very, very, very cool things. Like I love that Amazon called their people back to work and the what that CEO did was very cool. The way he handled that and the memos that he put out and the whining that he endured and the negative articles he endured from the lefties. Oh, they're making people work from work. Oh my God. So we defended him. And even though Amazon's obviously a hu here's another huge company that this is pretty cool. Home Depot. This is from Forbes is implementing a new policy aimed at bridging the gap between corporate and retail operations. Starting in the fourth quarter of 2024, all corporate employees, including senior management and remote workers, da da da da da. Will be required to complete an eight hour shift at one of the company's retail stores every quarter. You have to work four days a year in the store to inform you how things work. Listen, this is cool. Bloomberg has reported this, citing an internal memo from Home Depot CEO Ted Decker. Way to go, Ted. This decision aims to bridge the gap between the corporate office and the retail floor. The intention is to ensure that all employees, regardless of their position, understand the challenges and daily operations faced by store workers, thereby fostering empathy, better decision making and a more cohesive company culture. Brilliant. We need to stay connected to the core of our business so we can truly understand the challenges of opportunities of our store associates face every day, Decker said in a note to the staff. Because people, when people sit in the ivory tower and never come out and visit the real people. They lose their soul. They become bureaucrats. The worst word you could ever call anyone. And then corporate starts coming up with really asinine ideas for the real people out there that are doing the real work. And they look at corporate with this sideways German shepherd look, like you people are morons. Because corporate has become disconnected from what's known as the customer, which is where corporate gets paid from, by the way. I love this. This is me injecting into Ted Decker's operation. But I'm just saying, way to go, way to go. Thumbs up right here. I like it. We need to stay connected to the core of our business, which is, by the way, the retail store has nothing to do with corporate. Corporate is there to actually support the retail store. Ha ha ha ha ha. This is real leadership. Home Depot, one of the largest retailers in the United states with over 150 billion billion in annual revenue, 450,000 employees is reviving this practice after it was suspended during the pandemic due to safety concerns for white collar workers. This move serves as an opportunity to gain firsthand insight into customer interactions, operational challenges, and the physical demands of retail work, potentially enhancing their managerial and strategic decisions. However, this mandate is considered an unconventional step for the retail industry, particularly in light of growing labor activism and a recent decline in sales after a surge in consumer spending during the pandemic. How this policy could backfire. The success of this initiative largely depends on its implementation. Well, no kidding, Sherlock. Wow. Okay. Doordash previously introduced a program called We Dash, requiring all employees in the US And Canada and Australia, from engineers to the CEO, to complete a food delivery once a month. This initiative aims to provide staff with a deeper understanding of their product, offer insights into how their decisions affect dashers and customers. See, it's a really good idea for everyone in the company to remember where money comes from. Money comes from the customer, not your bureaucratic bull crap. Coming from a disconnected corporate culture, this is brilliant. Way to go. Tad Decker, Entree leadership. Salute you. It's just well done. Like you care. You probably don't care, but it's just, I'm telling you, man, this is the kind of stuff. So when we were smaller, when you came on board, one of the things you had to do. We used to do about 40 live events a year, and there were like arena events and theater events. Anywhere from 5 to 12,000 people. And we would go around. We spent half our life on the dadgum road going out, setting up all this stuff. And Doing all this. And it required a tractor trailer, loads of books on the back table at the breaks, and, you know, all the setup of the live events and the, you know, getting all those people's tickets, getting them into their seats, helping them do all that stuff. So we would take. We have a live events team, but we would also require all new team members in the first six months that they worked here to. To volunteer. They were voluntold. You were going on the road with us, and you're gonna set up stuff and you're gonna sweat loading the truck, and you're gonna help us, and you're gonna hand out tickets, and you're gonna talk to the actual customer that's had their life changed by what we do, and the customer that's giving us money to come and learn from us, and the customer that's having an experience at one of our events that was properly run or there was a problem at it, and you got to watch the customer at that. So, new team members, it was part of your onboarding. In those days, our growth rate has been so high that we didn't need 200 volunteers doing that. And we don't do as many of those type of events anymore. So we quit doing it. But that was our way of doing what they're doing here to make sure our team was plugged in. And of course, we now have the Ramsey event center here on campus, and we do events here. And when the events are here, we voluntold people that, you know from all through the company to go up there and sit and watch and watch the consumers reaction to our speakers, our teachers watch how they interact with our products, talk to them, hear their stories, serve them with issues that they have. And it changes everything, guys. It gets everybody. Okay. The accounting team now suddenly knows where money comes from. The customer. The software engineers all of a sudden know why they're writing all these lines of code for the customer. You know, it's just brilliant. I mean, golly, this is so cool. Most small businesses that have 20 people, it's mandated just by the way the business functions. You're with the customer all the time anyway, so you've got this close interaction, but the bigger you get. And I can't Even imagine having 450,000 employees that just blow. I don't even want a tenth of that. Wow. I got 1100. It's all I need, I can tell you that. Wow, this is. I mean, this is just good stuff. So great lesson for those of us in smaller businesses, from the great people over At Home Depot, it's a good idea for your team members to be in the weeds. Get em out. Get em out from behind the cube. Put em out there in the weeds chopping. Seeing where money comes from comes from the customer. Teach em how to love the customer, how to super serve the customer, how to surprise and delight the customer. Yeah. And then when you go back to your desk to do your normal job, you have a different perspective. This is just. Man, that's really, really good leadership. Again, we salute you guys. Proud of you. We know you probably never hear this and don't care, but just the same, that's where we are. This is the Entree Leadership Podcast. Motivating your team to work and lead with the same passion you have is one of the toughest things in leadership. But it's crucial if you want to scale your business. Fortunately, Entree Leadership Summit is the leadership event that will equip you to build a team that fights shoulder to shoulder with you so you can grow like never before. Join US in Denver, Colorado, May 18th through the 21st by going to ramseysolutions.comsummit or click the link in the show notes. Hey guys, if you want to send us a question, you can do [e-mail] ask or you can call me at 844-944-1070. Now I love you enough to tell you the truth. So be ready. Cause I will tell you that. But hey, if you want to help the show out, we would appreciate it. You can do that by clicking the old follow button, the subscribe button. Leave a nice 5 star review. Mama said if you ain't got nothing nice to say, don't say nothing at all. Click the share button or clip the link out and send it to somebody and go, hey, listen to this show. If you spread the word about this show, we would appreciate it very much. You are our only marketing program. If we fail, it'll be your fault. No, I'm kidding. Thanks. Thanks for helping us. We know you're sharing it. We know you're telling people about it because our numbers are growing. There were two of you out there and now there's four. So it's getting better every day. Do call me though. We'd love to have you at 844-944-1070. Connie is in New York. Hey Connie, how are you?

[Connie]

I'm doing well, Dave. How are you?

[Dave Ramsey]

Better than I deserve. What's up?

[Connie]

Well, thank you for taking my call. It's an honor to speak with you.

[Dave Ramsey]

Sure.

[Connie]

I Own a special inspections and material testing company in New York. We have about 75 team members and we're on schedule to make about 10 million in revenue this year.

[Dave Ramsey]

Way to go.

[Connie]

Yeah, we're killing it. It's great. We've implemented profit sharing based off of reading the entree leadership book, and I found it's been helping our management team stay motivated in the. We do the profit sharing on an accrual basis.

[Dave Ramsey]

On a what basis?

[Connie]

On an accrual basis.

[Dave Ramsey]

Okay.

[Connie]

And we do our taxes on a cash basis. So I'm just curious if there. If I should be taking into account the taxes that I have to put aside when I'm implementing the profit sharing. Should I like, take some out? If that makes sense.

[Dave Ramsey]

If you need to. To cover the tax bill. Yeah. You can still do cash basis for tax at your size for now. Here's the question that popped into my head and it really wasn't what you're asking. But my personal experience is the more the closer the profit sharing is tied to the actual production of the profit time wise. Like if you make a profit, like if you make a commission and you don't get paid for six months, that's not as motivating as if you make a commission. You get paid Friday.

[Connie]

Yes.

[Dave Ramsey]

And it sounds like you're delaying your profit sharing with the accrual.

[Connie]

I'm not. The cash flow is good so that I still have the money.

[Lauren]

It's.

[Connie]

So we're only three months behind on the profit sharing.

[Dave Ramsey]

Why? Why are you doing that? Why don't you just do it one month? Why don't you close March by April 15th and pay it on April 15th? That's what we do. I'm just curious. There may be a good reason. I'm not saying you're wrong. But I want to get it closer to the actual month because we go.

[Connie]

We do concrete sampling. When we go through winter, we go through a slower period and I just want to make sure. So I do it on an accrual basis for the. For a quarter.

[Dave Ramsey]

Oh, you only pay it once a quarter?

[Connie]

I pay it once a quarter just in case there are some slow months. If they're not meeting their numbers, there's a deduction in that month and it just keeps the cash flow moving. I don't want to promise people money if I don't have that cash flow. You know what I mean?

[Dave Ramsey]

Okay. If you made a profit in March and you're on a cash basis, why would you not have the money to pay the profit sharing? From March, 15 days later on April 15.

[Connie]

Because the profit is on an accrual basis as opposed to a cash basis. We work in government contracts, so we're not paid till 30.

[Dave Ramsey]

Yeah, but if you're running the business on a cash basis, then you can calculate profit on a cash basis, can't you?

[Connie]

I can, yes.

[Dave Ramsey]

And pay your profit sharing on the cash basis. In other words, if that contract, you know, you sign a contract on accrual, the stupid thing goes on the books, but you don't get your money for six months is what you're talking about.

[Connie]

Yeah, I just wanted. I was doing it.

[Dave Ramsey]

Pay them only when you get the money.

[Connie]

But I was only doing it on an accrual basis to see if the company at that month was being profitable in all the actions that they were taking.

[Dave Ramsey]

But if you're running the business on a cash basis and the actual cash that came in versus the actual expenses that came in created a profit, then, you know, you're profitable. Am I missing something?

[Connie]

Well, if a client decides to Pay, you know, $300,000 worth of invoices in one month, and then I don't get any cash flow from other clients the next month, that's a different problem. If the management team is actually working well in being profitable.

[Dave Ramsey]

Okay, but you can. If you don't, we don't disclose our percentage.

[Connie]

I don't either.

[Dave Ramsey]

That we're distributing. And so this is just a discussion. This is not me correcting you. Let me make sure you understand that, okay? Cause here's what we're doing, and we're just comparing notes. Okay? Because I run into some stuff too, where we have some really low months. For instance, summer around here is really slow. December's huge for retail book sales and that kind of stuff. But, like, live events is low. Some of the other stuff is low. Right. So we will use. We will hold. If we have like a banner month, a bonus month, a bonanza month, like you're talking about 300k or something, and then there's nothing. The next month, we will hold some of that profit. We won't distribute it all so that we have something to distribute the next month. We do. Smooth it. But we do all of this on a cash basis, not accrual, because I want to be able to put up there. March was great. Great. And our profits were up. And so your profit sharing is up. And I wanna do that quickly. And I wanna do it. And we do it monthly, too, for that reason, when we were doing it on a quarterly basis, we weren't getting the emotional lift that we were expecting to get from the actual thing. Now you're getting some lift emotionally. You told me that the management team's appreciating it. But my contention is my challenge for you to consider. And again, I'm not correcting you, I'm just interested in how you're doing it. We've chosen to do it on a cash basis because we want the monthly frequency. And if we have a bonanza month followed by a down month and we know that's coming, we're gonna hold the bonanza month some of it back. So there is something in the down month and we create smoothing that way rather than by using accrual to do it. So something to think about there. But you're doing really good work. I love what you're doing. I love how you're handling it. And yeah, if you continue to handle it that way and the tax issue is gonna throw you, then yes, you do need to pull the taxes back out of it and lower it by that because taxes are part of profitability in your situation and so you can't get bid on that. So the profit sharing is net of taxes. And because people like you and me, we run our lives on a real cash basis, we don't run it on EBITDA or on accrual or anything else. We actually want to see money in the account and that's how we know if we're, if we're going to be open or not. Because that's old school. And that's why I love cash basis accounting when you can use it. So anyway, I get what you're doing, I would not pay on profits that the cash has not been received. So if you have a government contract that's going to pay out in six months and it's going on the books and it's showing you profitable because of that contract. And you don't have the money from that contract yet. I would not have a profit sharing program that paid on that. That'll create a cash flow bond big time. You can really get in a pinch on that. So salespeople that get, you know, I tell our salespeople all the time, when you get a contract signed, you haven't made a sale yet. When we get the check, now you've made a sale. We even had a ridiculous, funny thing we would do with new salespeople. We would take the check out of the envelope and put a piece of tape on it and let them wear it around on their forehead when they got their first check in. So they proved they made a sale and that was like a rite of passage, like we were hazing them or something. But because when you get actual money in here is when we count it. I grew up in the real estate business and having a property under contract does not. You don't get paid for that. You get paid at the closing when the buyer gives the seller money and the seller gives the buyer a deed and the agent gets paid that day. You don't get paid for a wish. And so I don't want you to get into that business either. It doesn't sound like you are, but in your particular case, you're doing really, really good stuff. I love it. Connie, it's good to talk to you. Thanks for letting me have that discussion with you. I enjoyed that. Folks, remember, 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.