My Business Has Cash-Flow Issues

Summary

Podcast Summary: "My Business Has Cash-Flow Issues"

The EntreLeadership Podcast
Host: Dave Ramsey
Release Date: March 31, 2025

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Introduction

In this episode of The EntreLeadership Podcast, Dave Ramsey addresses pressing business concerns from entrepreneurs seeking guidance on managing cash flow, succession planning, scaling operations, and handling credit card fees. Drawing from over three decades of experience, Ramsey provides actionable insights and strategies to help business owners navigate these challenges effectively.

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Caller 1: Bob from Minnesota – Managing Cash Flow in a Contracting Company

Timestamp: [01:23]

Background: Bob owns a painting contracting company with 28 employees generating approximately $3 million in annual revenue. He grapples with cash flow issues, particularly the delays between incurring costs for materials and receiving payment from clients.

Key Discussion Points:

• Building Retained Earnings: Ramsey emphasizes the importance of cultivating a robust reserve to manage cash flow fluctuations. “The answer ultimately is to build the retained earnings to handle the cash flow fluctuation.” ([02:35])

• Setting Clear Payment Terms: He advises Bob to establish firm payment terms upfront with clients to avoid extended payment periods. “I need my money...you're dragging crap out 60, 90 days...I can't do work for y'all if you don't pay very, very, very promptly.” ([03:04])

• Managing Relationships: Ramsey suggests maintaining strong relationships while asserting the necessity for timely payments. “Remember when we talked about this? I'm not your bank...You guys gotta get these checks released.” ([04:00])

• Alternative Financing Options: He discusses the possibility of adding finance charges or offering discounts to incentivize quicker payments, comparing it to his experience with advertising clients. “We just began talking about it...I'm not your banker.” ([07:00])

Conclusion: Ramsey reinforces that effective cash flow management begins with retained earnings and clear, upfront communication about payment expectations. By setting firm terms and maintaining strong client relationships, businesses can mitigate cash flow challenges.

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Caller 2: Kevin from Kansas City – Succession Planning in a Metal Roofing Company

Timestamp: [10:16]

Background: Kevin is the general manager of a metal roofing company generating $5 million in revenue with an $800,000 profit. His father-in-law, the current owner, plans to retire within the next decade. Kevin seeks advice on preparing for a seamless transition.

Key Discussion Points:

• Gradual Transition: Ramsey advocates for a phased approach to succession to minimize disruption. “The more gradual the transition, the easier it is on the team...you can talk about it and go, okay, you know, we're aiming down the road here.” ([12:10])

• Leadership Development: Emphasizing the importance of becoming an exemplary leader, Ramsey advises Kevin to lead with integrity and dedication. “Be so dad gum good at your job, that the people that work with you are looking forward to you being the owner.” ([13:00])

• Communication Strategy: Ramsey highlights the significance of transparent communication with the team about the succession plan to ensure alignment and buy-in. “Once you have your plan laid out, then you just start talking about it.” ([15:00])

• Handling Team Dynamics: He shares anecdotes of successful transitions where gradual handover made the process seamless for all stakeholders. “It's like an interstate on ramp... nobody thought anything about it.” ([19:00])

Conclusion: A successful succession plan hinges on gradual implementation, continual leadership development, and clear communication. By preparing early and fostering trust within the team, Kevin can ensure a smooth transition when the time comes.

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Caller 3: Chris from Lynchburg, Virginia – Scaling a General Contracting Business

Timestamp: [17:18]

Background: Chris is a general contractor whose company has doubled its revenue from $3.5 million to an anticipated $7 million within the year. He attributes this growth to strategic planning and team alignment through EntreLeadership Elite.

Key Discussion Points:

• Strategic Planning and Team Alignment: Chris credits the success to developing a core team, defining mission and values, and strategic planning sessions. “We developed our mission, vision, core values...the rest is history.” ([19:41])

• Leadership Without Pressure: Drawing from farming analogies, Ramsey highlights the importance of leading without coercion. “We lead. We don't push... we're not trying to whip the cattle into place.” ([19:47])

• Accountability and Growth: Chris emphasizes the role of EntreLeadership Elite in maintaining accountability, which has been pivotal in driving growth. “Being a year in Elite has really helped keep me accountable.” ([21:06])

• Handling Team Changes: Ramsey commends Chris for making tough decisions when necessary, ensuring the team remains strong and aligned. “You’re a strong leader, man. You made the call.” ([20:58])

Conclusion: Effective leadership, strategic planning, and team alignment are crucial for scaling a business. Chris's experience underscores the value of structured programs like EntreLeadership Elite in fostering growth and maintaining accountability.

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Caller 4: Chad from Charlotte, North Carolina – Implementing Credit Card Surcharges in a Veterinary Practice

Timestamp: [23:02]

Background: Chad and his wife own a veterinary practice with 11 employees, generating $2.7 million in revenue with plans to increase to $3 million. They face significant credit card fees ($40,000 annually) and are considering passing these costs onto clients through surcharges.

Key Discussion Points:

• Cost Analysis: Ramsey evaluates the impact of credit card fees on Chad's business, suggesting incorporating these costs into pricing or implementing surcharges. “You just have to build that into your pricing... it's 1% or something.” ([26:07])

• Customer Perception: He discusses the potential backlash from clients when introducing surcharges and advises on clearly communicating the rationale to mitigate negative reactions. “If you feel good about it... the narrative that feels right.” ([28:20])

• Implementation Strategies: Ramsey recommends testing the surcharge approach and being prepared for a small percentage of pushback, which may not significantly impact overall business. “You could try it and see what kind of pushback you get.” ([28:20])

• Staff Management: He advises Chad to ensure that staff are well-prepared and have the necessary support to handle client queries regarding the new fees. “I need you to feel comfortable with it so you can explain it without... it's going to be 1% of your people.” ([30:05])

Conclusion: Passing credit card fees to clients requires careful consideration of pricing strategies and client communication. By transparently explaining the reasons and maintaining a customer-focused approach, Chad can implement surcharges effectively while minimizing potential backlash.

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Closing Remarks

Dave Ramsey concludes the episode by reinforcing the importance of strong leadership and proactive decision-making in overcoming business challenges. He encourages listeners to apply the discussed strategies to enhance their business operations and achieve sustainable growth.

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Notable Quotes

• “I'm not your bank. Do I look like a banker? I'm not a banker. Do I look like a painter?” – Dave Ramsey ([03:04])
• “The more gradual the transition, the higher the probability that the succession plan will be a success.” – Dave Ramsey ([19:00])
• “Better a weary warrior than a quivering critic.” – Dave Ramsey ([32:05])

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Key Takeaways

1. Cash Flow Management: Building retained earnings and setting clear payment terms are essential for maintaining healthy cash flow.
2. Succession Planning: A gradual and transparent transition ensures organizational stability and team alignment.
3. Scaling Businesses: Strategic planning, team alignment, and accountability mechanisms are critical for business growth.
4. Handling Fees: Implementing surcharges requires thoughtful communication and strategic pricing to balance profitability and customer satisfaction.

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This episode provides valuable insights for business leaders facing similar challenges, offering practical solutions grounded in real-world experience.

Transcript

[Dave Ramsey]

Hey, business folks, today's your last chance to pre order my new book, build a business you love and get the free ebook two weeks before the official book launch. Plus, when you reserve your copy from the Ramsey store, you'll get more than $350 in bonuses for free. Go to entreleadership.com preorder or click the link in the show notes 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 alongside people just like you in the trenches. If you want to submit a question for the show and be on the show, go to entreleadership.com ask and type in what you're thinking about. Our team will get with you, put you on the air, or you can call us at 8449-4410-7084-4944, 1070. Bob is with us. Bob is in Minnesota. Hi, Bob. Welcome to the Entree podcast.

[Bob]

Hi, Dave. Yeah, I own a pig contracting company and we have 28 people, and we're in that $3 million a year annual revenue category.

[Dave Ramsey]

And good for you. Well done.

[Bob]

Yeah, thanks. My question would be is some. Getting some ideas on how to finance large projects. We run into cash flow issues when we. We work for a month, we get our contract, we work for a month, and then all of a sudden we start, you know, incurring the costs up front, buying the materials, getting things going, and then, you know, submit the pay request 30 days later. Everybody gets approved from the engineer, the architect, and the owner. And then the next thing you know, you. You end up usually waiting 30 days for. For a check. So my question would be, is, is that something that you would. While you're. While we're saving up our money to. With our retained earnings to be able to cash flow ourselves, would we be better off to try to give a, like a 2% 10 net 30 discount, or would we try to just put some finance charge in there and just have like, maybe project financing?

[Dave Ramsey]

You know, what I would do is. Yeah, you're right. The answer ultimately is to build the retained earnings to handle the cash flow fluctuation. That's a pretty standard thing in your world. The other thing I would do is I would manage the relationship tighter. I'm gonna set the terms on the front end. Okay, guys. You guys are huge. Commercial contractors, engineers, architects, y'all are all fancy people. I'm A painter. I need my money.

[Bob]

Yeah.

[Dave Ramsey]

And so I can't. I'm not your bank. Do I look like a banker? I'm not a banker. And so you guys dragging crap out 60, 90 days and playing around cash flowing off of me isn't going to work. I can't do work for y'all if you don't pay very, very, very promptly. Now, I understand that the, that you have to get sign off on the quality of the work before you can release the check, but then you need to release the check. I don't need to be drug out after that. And you could tighten this up by two months if you, if with some conversations on the front end at the point you take the job. And the more you've done work with a contractor, the more they're going to accept that conversation because they like you. They want you to have the job. They like your quality of work you're delivering. You're not causing them any issues. And so they want to be a blessing to you to keep you around. But if it's a brand new contractor, it's harder. But I'm still going to have this conversation at the beginning of every one of these jobs. And if then they don't pay me, I'm gonna have the conversation again and say, guys, remember when we talked about this? I'm not your bank. I don't look like a banker. I look like a painter. And there's a reason. It's cause I'm a painter, I'm not a banker, and I'm not carrying your butt. You guys gotta get these checks released and you can reset the relationship. And what you're asking for there is not. All they're doing is either trying to ride the float on you intentionally or they're just sloppy and they're just, you know, they're pushing paper around on the desk and it's not getting paid on time. That's all it is. And in either one of those two cases, when you go, hey, I'm a painter, I'm not a banker. And I have used this myself. I'm a small business guy. I am not your banker. You're not cash flowing off my butt. That's not that. You know you're gonna do that. There's gonna be other dish, there's gonna be additional charges here. And you know, we're gonna, we're gonna build some more profit into this if I'm your banker. Cause I, I didn't realize I was a banker or I would have been charging you visa rates. You know, so we. We can figure this out. I can add 18% on top of this if you want me to, or y'all can just decide to pay on time. Whichever. I've had this conversation. I'll give you an example. In the radio world, making a ton of money on talk radio back in the day, because we're a huge talk radio show on the Ramsey side. And, you know, we would sell an ad to a company through an ad agency. And so here's how this works. It's kind of like his situation, all right? We would bill at the end of the month, the ad agency for that month's ads. They would sit on it for at least 30 days. Then they would bill the customer that we were running the ads for, who would sit on it another 30 days. We were getting our money, like, four months later by the time all these people did a dance. And so we finally just said, guys, we bill you. And I don't really care where the money comes from, but it lands on our desk in 15 days. Otherwise, we're not going to run your ads. That's the terms. Well, that's not how it's done in the industry. I don't give a crap. I'm not your bank. You're buying ads from me. If you need a bank, go see a banker. If you need a loan to float something for 120 days, you're going to have to do that on your own. I don't look like a banker. I don't even like bankers. We're not doing this. And so, you know, we got to where some of the agencies, the big agencies, wouldn't do business with us because they live off of the dad gum float. And we don't let you live off the float on us. Cause we're a cash business. It's cash on the barrel head. I'm gonna bill you at the end of the month. And it's 15 days. You screw around with that, I'm gonna start billing you in advance. I won't run your ads until you pay me in advance. If you wanna really screw around with this. And here's the good news. There's only one place to buy ads on the Ramsey show. From me. It's the only way you can get on. So I get to set the terms. Hello. And you can't buy these anywhere else. They're not available anywhere else except through me. And so, you know, we reset this and pissed off some agencies. But then once they kinda got used to it, they were okay with it. They just figured out a way to get paid. They paid up front or whatever, and then they I got my money 15 days later. But I'm not your dadgum bank. And I just go, guys, I'm a little small business. Y'all are big fancy agency in New York. Y'all are so smart. You're just brilliant. But I need my dad gum money. That's how it works. Dave's a hillbilly. Just count on that. That's what we're going with right here. That's the overall plan. This is the Entree Leadership Podcast.

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[Dave Ramsey]

You spend more money on payroll than any other expense. Your team is your largest investment, which means you got to get a great ROI on it or you don't stay open. That's where Entree Leadership Elite can help. Elite is the online platform that aligns your team so you can scale your business. You're gonna use integrated tools to get the whole team on the same page, singing the same song off the same sheet of music. Our proven trainings will help you become the kind of leader people wanna follow. Plus, Elite's community of business owners will have your back in even when things get tough. My leaders use Elite every week to unify over 1000 team members here at Ramsey Solutions. And now you can use Elite to align your team, too. To grow your business with elite, go to entreeleadership.com elite or click the link in the description. If you're on YouTube or a podcast, Kevin is with us in Kansas City. Hi, Kevin. Welcome to the Entree podcast.

[Kevin]

Hey, Dave, thank you for having me. I am general manager of a metal roofing company. We manufacture and install metal roofing, mostly residential, some in commercial. And over the years we've gotten into the exterior of homes, doing siding and gutters. Our gross revenue last year was right at 5 million.

[Dave Ramsey]

Good for you.

[Kevin]

And roughly the profits on that was about 800,000 to everything was paid.

[Dave Ramsey]

Very cool. How can I help today?

[Kevin]

So my question is, my father in law is actually the owner. He started the business and he's getting older and wanting to slow down, of course, and he has over the years, as I stepped in a little bit more and I really enjoy doing that. And just lately had some small talk on about, you know, him stepping on out eventually and how that would all look and me taking on that responsibility. And one thing that I was wanting your advice on and I assume you could help is what could I do at the moment with the position I have that would help me once that time comes and we make that change? Just something I could maybe start doing now in. In with. With the guys. We have work.

[Dave Ramsey]

How much longer you think he's going to be in the saddle?

[Kevin]

Well, like I said, we just, we just had that conversation. I don't think he's sure yet, but if I'd have to guess, I'd say, you know, another, you know, maybe, maybe 10 years.

[Dave Ramsey]

Good. Okay. The more gradual the transition, the easier it is on the team, the customers, the suppliers, the vendors, everyone, the more gradual it is because you can talk about it and go, okay, you know, we're aiming down the road here. This is not today, it's not this year, it's not even next year. But we're beginning. And the both of you, you and him, once you have your plan laid out, then you just start talking about it. And then your job is to be so dad gum good at your job, that the people that work with you are looking forward to you being the owner, that you're easy to work with, you're leading them well. You're kind, you're taking care of the team, you're making the tough decisions when tough decisions need to be made. And one of my buddies that did a great transition, he said the best transitions are when your father in law announces formally, okay, next month, Kevin is going to be the owner and I'm stepping aside and he'll be the president. The team looks around and goes, oh, I thought he already was because you were already doing everything Mechanically, tactically, you were already sitting spiritually in the seat. The only thing that left was the ownership transfer. And you guys had done it so gradually. There's like an interstate on ramp. You got a long Runway there, right? And you got 10 years. And so this could be very gradual and very gentle. The team, they'll be going, oh, yeah, well, I kind of already thought it had happened. I mean, Kevin's already running everything. My gosh. And he takes care of us. And so, I mean, so now he got the title and he got the keys to the building. Oh, well, okay, good. And, you know, they just move right along and it's. They don't think anything about it. Another friend of mine, when my son moved into the president role here at Ramsey, and we're co running the business now as part of our gradual transition. I'm the CEO, he's the president. But one of my other buddies I was telling him about this has a big organization whose son had stepped in. He said, was your son Daniel, was he. Was he elected into the position in the boardroom or the elevator? He was confirmed in the elevator. The boardroom just went along with it. So in other words, it didn't come. It wasn't a decision that came down from on high. All the people Daniel worked with every day were, would. Would have been surprised had he not gone into the role because he was walking that direction and everybody knew it. Right. And so that's kind of what you're doing with your gradual handoff. You put yourself in that, and then what that does is there's no whiplash because you're not driving along and just whip the wheel to the left and everybody gets thrown out of the car. Right. And so instead we're just driving up onto the. Oh, we're on the interstate. Who knew? And you just. You got up to speed and nobody thought anything about it. So it's one of the principles of a good succession plan is the more gradual, the better. The more gradual, the less problem the team has. The more gradual, the more you can iron out any bumps or bugs in the process. The more gradual, the higher the probability that the succession plan will be a success, that you'll be holding the keys and can take this company on to the next level because you're not having to fight through a bunch of problems by a herky jerky, sudden succession plan that wasn't well thought out or thought through. And that's what you're looking at there. That's the process. So that's what I'd tell you to do is go that direction. Good stuff, man. It's a good question, Kevin. And the fact that y'all are Talking about it 10 years out, that's the way to do it, man. And you guys go ahead and get started. As soon as you get nailed down, kind of what the plan is, start communicating and say, this is kind of the plan. We're not sure exactly, but it's going to look something like this. That'll relieve the team today, because they're already wondering. This is the Entree Podcast. I'm Dave Ramsey, your host. This is the Entree Leadership Podcast. I would appreciate your help. If you're enjoying this information in this show and with the price you paid for it, how could you not? We would appreciate the help. You are our only marketing plan. You're our only chance of getting the word out. So if you'll click on the subscribe button or the follow button, it helps the algorithms on these podcast platforms, YouTube platforms, to push this show forward in these different spaces where more people find out about us. Same thing with the five star review. Same thing happens when you share the show and send people directly to us. So tell people about the show, leave us a nice review, and click follow or subscribe or whatever it is that you do out there in the world, that Internet thingy that you do. All right. Chris is with us. He's in Lynchburg, Virginia. Hey, Chris. Welcome to the Entree Podcast.

[Chris]

Hey, Dave. How you doing?

[Dave Ramsey]

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

[Chris]

Good. Glad to hear that. I'm doing great. Yeah. In Entre Elite, and this is my second year at the master Series, and it's been an incredible deal for us as a company and individual. We've doubled our revenue.

[Dave Ramsey]

You doubled your revenue? I hate it when that happens. What was your revenue before? What is it now?

[Chris]

It was 3.5 million at the end of last year.

[Dave Ramsey]

You went to 7 or you went from there from 1.7?

[Chris]

No, we're going to go to 7 by the end of this year.

[Dave Ramsey]

Oh, man. Wow. That's so much profit. I can't breathe. I love it.

[Chris]

Yeah. Yeah.

[Dave Ramsey]

What kind of business is this?

[Chris]

We're a contractor. General contractor.

[Dave Ramsey]

Okay.

[Chris]

We do mostly commercial construction and in the central Virginia area, Lynchburg area, Charlottesville area.

[Dave Ramsey]

Cool. How long y'all been open?

[Chris]

We've been in business since 2010.

[Dave Ramsey]

Well, one of the things, those of you that might be a new listener, one of the things we invite our listeners to do is to call in with what we call a brag Call. Because there's not many places a small business guy can brag. And this is a place where we're your biggest cheerleader. We love you, we want you to win. And we're cheering for Chris right now. He just scored a freaking touchdown. The super bowl, baby. Yeah. I like this. Very cool. All right, so what do you attribute your growth to? What is it you're doing that's causing this to blow up?

[Chris]

Well, the biggest thing we're doing as a group, as a team is from what we've learned in the first Master Series is we came away from that event with an idea of developing a core team, putting people on the right seat, going to this off site strategic planning meeting, and developing our mission, vision, core values. All this stuff fell into place within two months after my last Master Series in 2023, which was incredible. And so after that, it just, we just went to work and we were blessed to get the work that we got and did well doing it. And so it's just. The rest is history.

[Dave Ramsey]

But everybody being aligned and flying in a straight line causes the speed to kick up. Right?

[Chris]

Right. Yeah. I think your biggest comment over the last series was, you know, as leaders, we, we, we lead. We don't push, you know, and I was, I've been in the farming business as well. I know what, what it's like to try to, you know, whip the cattle into place and, and you know, we're not doing that if you're not on the bus, we're just going to get left behind. And we took a real strong approach at that. And that's kind of how we've proceeded with things.

[Dave Ramsey]

Did anybody get left at the bus station? Didn't get on.

[Chris]

We did. We had a key employee that I thought was going to be a key employee. And after about six months, we had to make a pretty tough decision. And it was difficult, but we had some good training in our back pocket with having these uncomfortable conversations. This gentleman, good friend of mine left with dignity and, and I felt good about it at the end, if, if that's possible. I hated to do it, but, you know, it needed to happen so he.

[Dave Ramsey]

Just would not get on the bus. Bus is leaving. We said what we're doing and he, he didn't want to be a we.

[Chris]

Right. Exactly.

[Dave Ramsey]

Wow. And you're a strong leader, man. You made the call. Proud of you. That's backbone stuff right there.

[Chris]

I got a lot more to learn, but it's, it's going in the right direction. Being a year in Elite has really Helped keep me accountable.

[Dave Ramsey]

I appreciate you bragging on us, but right now we're bragging on you. You're the man. I mean, you took it from three and a half to seven. You took what we taught you and you went and used the tools. You took the tools out your tool belt and you swung the hammer. You made it happen. So proud of you, man. Very, very well done, man. I love it. Would you like take your business from three and a half to seven million? You understand that a whole bunch of that next jump is profit Because a lot of that he's got to sell. He's got some of the nut covered already, right? So that's like Cha ching right there, baby. I do like it when get to win. Winning is a good thing, man. Hey, we don't do anything. Hey, we're capitalist pigs around here, man. We believe in the capitalist system. We believe you leave the cave, kill it, drag it home, it's yours. Shut up. This is how it works around here, baby. This is the Entree Podcast. Hey, guys, I got great news. My newest book, Build a Business yous Love is now available to purchase. If you're a business owner, you know that running a business is freaking hard. And it's easy to get caught up in the daily challenges and fears that keep you stuck. But in Build a Business you love, I teach you the proven five stage system that helped me break through those same challenges and build a $250 million company. Grab your copy [e-mail] grow or click the link in the description if you're listening on YouTube or podcast. I'm Dave Ramsey, your host. This is the Entree Leadership Podcast. We're so glad you are with us. Open phones here. If you want to be a caller on the show, call us at 844-94844. 1070. That's 844-944. 1070. We'd love to have you. Chad is with us and he's in Charlotte, North Carolina. Hi, Chad. How are you?

[Chad]

Hey, Dave. I'm doing great. Thanks for the call. It's a pleasure to talk to you.

[Dave Ramsey]

You too, sir. What's up?

[Chad]

So I'm a owner. My wife and I are owner of a veterinary practice in North Carolina. We have 11 employees. Our top line from last year was 2.7. We should do three this year. And my question was about passing along credit card fees to the client. So I wanted your opinion on what you thought about it just in general and then how to implement it. We are currently paying about $40,000 a year in credit card fees right now. So my plan was to start surcharging, which is where we charge 3% for credit card use. That fee would be passed along to the clients, and then the clients would have debit cards, cash or check, as an option to pay with with no fee.

[Dave Ramsey]

If you run a debit card like a credit card, it still gets you with a merchant fee. The only. Only way a debit card works is if they run the pin number and treat it like an ATM.

[Chad]

Okay. Yeah. So I think our percent would drop to one. To 1.5% if we. If we cover the debit fees ourself.

[Dave Ramsey]

Okay. All right, so 40,000. So out of your 3 million, are you only running only a million dollars worth of credit card fees?

[Chad]

I'm not sure the exact.

[Dave Ramsey]

I know that sounds low. Yeah, I would have guessed. Most people walk in and pay for their vet bill with their card.

[Chad]

They do. We're a little bit more out of. Out of the city a little bit. So, you know, the country folks tend to carry a little bit more cash. And we do a lot. A lot more debit. We still take checks. It's not a lot, but, yes, it's definitely lower than you would expect for our gross revenue.

[Dave Ramsey]

Yeah, Yeah. I mean. Yeah. So, okay, so you got a large animal practice too, then?

[Chad]

No, we're strictly small. We're just outside of the city.

[Dave Ramsey]

Okay, I got you. Okay. Well, I mean, there's two approaches you can use. I'm thinking about, like, our website. We don't take credit cards, but we do take debit cards, and we get charged a merchant fee, just like you do for running a credit card. When you use a credit card or a debit card on a website, it's processed through the Visa system, and we still get hit with the two, two and a half, whatever it is, the merchant fees. Okay. So in a situation like that, a vendor or a retailer like me, in that situation, we just build. That's just one of our cost of operation. There's virtually no way to buy on the website except that. Right. So I'm almost 100% of my transactions are that if you're buying a book on the Ramsey Solutions site. Right. And that kind of thing. Okay. So I'm gonna get hit with that. So I just have to build that into my pricing. And so you could just say, all right, you know, we have a $40,000 cost associated with these stupid cards. And so we're gonna raise our prices by the equivalent of $40,000 out of 3 million, which is not much. I mean, it's 1% or something, right?

[Chad]

Yeah, I haven't done the math, but that. Yeah, that was the two schools of thought.

[Dave Ramsey]

You can go that way or you can do a surcharge. If you're trying to dissuade them from using them, the surcharge will do that. And in your case, in your space, it wouldn't be as unusual. But if you went to a restaurant and they did that, it would piss you off.

[Chad]

Yeah. So that's my hesitation in doing it is that we, you know, we don't sell widgets. We're very much. There's emotions involved in the human animal bond. And we're dealing with clients who are trying to make decisions for. So I don't want them to feel nickel and dimed. But also raising the prices kind of hurts everybody as opposed to the people that are paying with credit cards versus that are paying with cash.

[Dave Ramsey]

And you would prefer them not to run it on a card. And you're saying that. So a place where I see that often is like buying on an online auction site, like a classic car site or a gun broker site type thing. You'll often see price plus a credit card fee. If you're gonna run it on a credit card. Okay, that's not that unusual on those sites. So it's not offensive then because, you know, that's a small broker of some kind or it's an individual. And if you're gonna, you know, run a card on something like that, it's gonna cost them a chunk. And they're saying you're gonna. If you wanna run it on a card, that's fine. And so I bought some ATVs for this farm the other day for the grandbabies to ride on. And those guys are friends of mine. They're great customers of us. And we BO from them and I call them up and I'm like, hey, you don't want me run this on a card. In my case, it's a debit card, but they're still going to get hit with that exact same fee. And they're like, oh, no, no, no. We'll. We'll send you the wire information. Just wire it. But now that's a little larger transaction. That's not a. It's not a $200 transaction. Right. So you know, on a $200 transaction, you do feel kind of nickel and dime. I don't know. I think you got to gauge whether how your customers are going to react to a surcharge and just go. You know, as of June 1st, when you use a card, we're going to attack on 3% or 5% or whatever it is. And you could just try it and see what kind of pushback you get.

[Chad]

Yeah, I'll figure out if it's worth some of the pushback, which we may not know.

[Dave Ramsey]

Well, you know, if it's two people and they're loud, well, so what? Maybe you didn't want them anyway.

[Chad]

Yeah. Right.

[Dave Ramsey]

And you know, if. If this. Okay. If they're running $1,000 surgery on their cat. Okay. And it costs them 50 bucks or they could just pay for it. Right?

[Chad]

Yeah.

[Dave Ramsey]

That's not punitive. You know.

[Chad]

Yeah. I thought if we explained it to the fact that we didn't want to raise prices on everybody so that we're implementing this ahead of time. They know ahead of time so they have other options.

[Dave Ramsey]

This is a cost that we're not making money on this transaction. This is a cost that when you use your card, it costs us. And so we're gonna let you pay for it. And that's all it is. And if you don't wanna use a card, it's okay. You don't have to use a card. We're not encouraging one way or the other. But if you run on a card, it costs us. And I'm not gonna raise prices on everybody because of that. Yeah, I think you could try that. You just need to message it to the customers to where you feel good about it. What's the narrative that feels right, that I feel ethical in how I'm doing it. And the way I've talked it, the way you've talked it through with me, Chad, makes a lot of sense. I'm trying to think, if I walk in there with my dog, what am I gonna think? And I'm not gonna think boo about it. I'm gonna, you know, I'll just pull some Uncle Benjamin's out of the dad gum wallet and pay you. But I'm a cash dude. I'm more like one of your country customers. I'm more that guy. I'm that redneck. Right. So, you know, I've always got money in my pocket, so. Real money. So it wouldn't bother me a bit if I look up and go, it's $1,000. I can say 50 bucks by not. I'll reach in there and pay you.

[Chad]

Yeah. And like you said, the ones that will make a fuss are probably our C and D clients anyway.

[Dave Ramsey]

Yeah. And they may be clients that it's okay if they didn't come back.

[Chad]

Right.

[Dave Ramsey]

They may take up a lot of your calories anyway and, you know, sometimes that's okay, but again, you don't want to lose them because you hadn't thought through it. Which is smart to make this call and kind of talk it through together here. So I would make sure you think through it. You have like one person more than anybody else that's going to be having this conversation because they work the front desk and do the checkout.

[Chad]

Yeah, that was my other hesitation. Our tsrs up front, it's going to be a lot on them.

[Dave Ramsey]

No, not, not if you get their buy in on it.

[Chad]

Well, they're going to take the brunt of the ones that are. That are complaining.

[Dave Ramsey]

Well, you know. No, no, no, no, no, no, no, no. I'm going to tell them, listen, if someone is getting hot about it, just call me out of the back. I don't want you to have to handle that. Yeah, come get me because that's going to be 1% of your people. You're not going to have much of that. Okay. But don't, don't ask them. And guys, this is what's going on. It's going to affect profitability, so it affects my raises with you. And you guys helped me run this business well. And this is just a good business move. And I just need you to feel comfortable with it so you can explain it without a. I don't want them explaining it apologetically. I just want them to be matter of fact.

[Chad]

Yeah, yeah, that makes sense.

[Dave Ramsey]

And to do that, I need their emotional buy in. And part of that is you got to take the slack on the hot ones. They don't, don't ask them to take the hot ones.

[Chad]

Yeah. What are your thoughts on having some sort of, I guess a bonus or something for the staff to say, hey, I know you're. You know, we got this big transition. Here's a little something extra.

[Dave Ramsey]

I think it's a bigger transition to you than it is anybody else. You've already burned more calories thinking about this than everybody else in the whole discussion put together. Will. They'll look at it and they'll make a nanosecond decision and go, whatever, here's cash, you know, and they're just gonna move right on because it's not the only time they've ever seen this in their life.

[Chad]

Right? Yeah. It's becoming more common.

[Dave Ramsey]

We've just discussed that. I've seen it other places and how would I, if I am your customer, And I'm walking in there or the Persona of your customer, how are they going to feel? Let me tell you who's going to gripe. Somebody's broke, they got no money, and the only way to fix their animals is go in debt and they're putting it on a credit card and they're already broke and they're already pissed about money and now they gotta fix an animal and so now they're super pissed. And that's who's gonna gripe. It's broke people, but people that have money, they're not gonna think about it twice. Does that make sense?

[Chad]

Yeah, yeah, it does. We certainly have a wide range of clientele.

[Dave Ramsey]

Yeah, yeah. But I mean, that's, that's, it's gonna be the money stress thing to go with the animal stress thing. You know, I'm already broke. I'm already living paycheck to paycheck. I've already got credit card debt, and then the dadgum cat got out on the road, you know, I mean, what, you know, it's just, that's, that's who it is. And then somehow that's gonna be your fault. Right? So, I mean, if you go to the dentist, the people that gripe at the dentist are the ones that are broke, you know, they don't have the money to get their teeth fixed and so they're having to figure out a way to finance their teeth, you know, and it's the same thing. And that's another place, by the way. You'll see something like you are doing right here as a professional situation like that. It wouldn't be, I wouldn't be surprised at all if I walked into a dentist and they said, okay, you can run it on a, we can bill you and not, you know, or whatever. And if you pay cash right now, here's the price. And that, that wouldn't be an unusual transaction at all, I think, in today's world. So cool stuff, man. Interesting, interesting discussion. Good luck with that. Make, just make sure you got good communication and you're not doing it apologetically. That'd be my thing. 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.