My Husband Isn’t Pulling His Weight in Our Company

Summary

The EntreLeadership Podcast: "My Husband Isn’t Pulling His Weight in Our Company"
Hosted by Dave Ramsey
Release Date: January 27, 2025

---

Overview

In this episode of The EntreLeadership Podcast, Dave Ramsey tackles real-life business challenges faced by entrepreneurs and leaders. The primary focus is on Brooke’s struggle with transitioning her husband from a hands-on role to a leadership position within their residential construction company. Additionally, Dave addresses questions from Nate, a small plumbing business owner seeking marketing advice, and Brad, who is developing a formula for calculating year-end bonuses and pay raises for his construction company. Throughout the episode, Dave provides actionable insights, drawing from his extensive experience to guide listeners through common business dilemmas.

---

1. Brooke's Challenge: Transitioning Leadership Roles

Background
Brooke, the CEO of a residential construction company generating $3.6 million in revenue with a team of five, including herself and her husband, reaches out for help. She is in the trailblazer phase of her business and is encountering difficulties in shifting her husband from a hands-on project management role to a more strategic leadership position.

Key Discussion Points

• Current Role Conflict
  Brooke explains that her husband enjoys the day-to-day interactions on job sites and prefers being actively involved with subcontractors and clients. However, she needs him to focus more on strategic planning and leadership to advance the company to the Pathfinder phase.

  Brooke [02:22]: "...he really enjoys... working relationships with our subcontractors, with the clients and those sorts of things. So he's having a really hard time leaving that aspect behind."

• Dave’s Initial Advice: Reframing Roles
  Dave suggests redefining her husband’s role not as a co-CEO entrenched in office work but as an owner contributing strategically while retaining his passion for building.

  Dave Ramsey [07:02]: "If I were in your shoes... he probably in his day job as a team member. What is his role? His KRA. It probably needs to be 80% project manager."

• Emphasizing Owner Responsibilities
  Dave recommends that Brooke and her husband collaborate on client-facing activities, such as building relationships with real estate agents, while delegating project management duties to other team members.

  Dave Ramsey [07:08]: "As owners, here’s what we need to do as owners. But that doesn’t mean you’re gonna be co CEO in the office."

• Encouraging Partial Engagement
  To alleviate the perception that the husband is being dragged into office work, Dave advises incorporating strategic owner tasks that align with his interests and strengths.

  Dave Ramsey [07:31]: "Redefine this and bifurcate that out, I think will help you in this overall process."

Conclusion
Brooke benefits from Dave’s pragmatic approach to role definition, emphasizing the importance of aligning leadership duties with personal strengths and business needs. By reframing roles and ensuring both owners contribute strategically without forcing unwanted responsibilities, Brooke can facilitate a smoother transition into the next business phase.

---

2. Nate's Inquiry: Enhancing Marketing for a Plumbing Business

Background
Nate owns a small plumbing company in Raleigh, North Carolina, with three team members. Recently, he hired a new full-time plumber, resulting in surplus capacity. Nate seeks guidance on effective marketing strategies beyond word-of-mouth to maximize his investment.

Key Discussion Points

• Current Marketing Efforts
  Nate relies primarily on word-of-mouth and branded trucks but recognizes the need for a more robust marketing strategy to support his additional hire.

  Nate [13:32]: "...I've hired another full time plumber on and I found that I have enough work to keep him busy but not enough work to keep myself busy all the time."

• Dave’s Marketing Recommendations
  Dave advocates for amplifying existing referral systems and improving digital presence.

  • Enhancing Word-of-Mouth
    Encourage current customers to refer others by actively asking for referrals and providing business cards or flyers.

    Dave Ramsey [14:30]: "You'll double it by just asking them to help you."

  • Optimizing the Website
    Invest in a user-friendly website with clear contact information and minimal friction for potential clients to reach out.

    Dave Ramsey [15:11]: "We live in a website world... make it no friction."

  • Implementing SEO
    Utilize basic Search Engine Optimization to ensure the business appears in local search results, making it easier for potential customers to find Nate’s services.

    Dave Ramsey [15:48]: "Hire someone that does SEO consulting and pay them four or five hundred bucks to get your basic SEO."

• Balancing Residential and Commercial Markets
  Dave advises maintaining a mix of residential and commercial clients to diversify revenue streams and enhance stability.

  Dave Ramsey [19:21]: "I like having a mix now. Marketing to the commercial is gonna be more referrals..."

Conclusion
Nate receives a comprehensive strategy to bolster his marketing efforts, focusing on maximizing referrals, enhancing his online presence, and maintaining a balanced client base. Implementing these strategies can help him fully utilize his new hire and drive sustainable business growth.

---

3. Brad's Question: Developing a Formula for Bonuses and Pay Raises

Background
Brad operates a construction company in Lake Charles, Louisiana, with $6 million in annual revenue and 20 employees. As the year-end approaches, he seeks a consistent and fair method for calculating bonuses and pay raises based on company and individual performance.

Key Discussion Points

• Differentiating Raises and Bonuses
  Dave clarifies that raises and bonuses serve different purposes. Raises should be based on individual performance and market value, whereas bonuses can reflect company profitability.

  Dave Ramsey [37:01]: "Raises are different than bonuses or profit sharing. Raises are based on performance..."

• Implementing Annual Review Processes
  Conduct annual reviews based on employees' work anniversaries to assess performance and determine appropriate raises.

  Dave Ramsey [38:00]: "We don't do that anymore... Raises are done on an annual basis now."

• Designing a Profit-Sharing Formula
  Dave shares his experience with creating a profit-sharing formula that fairly compensates long-term and high-performing employees while adjusting for company profitability.

  • Weighting Factors
    Emphasize time on the job and individual contributions over fluctuating departmental profits to ensure fairness across all roles.

    Dave Ramsey [43:56]: "Most of the weight, it turns out now in our current formula is time on the job."

  • Testing the Formula
    Run hypothetical scenarios to ensure the formula yields fair and motivating results for all employees.

    Dave Ramsey [46:54]: "Run some samples out in the formula and put people's names beside the sample and go, how does that feel?"

• Excluding Certain Roles
  Exclude sales and leadership roles from profit-sharing formulas if their compensation is directly tied to performance metrics like commissions.

  Dave Ramsey [47:07]: "We took all leadership out of the formula... taken all the salespeople that are on commission..."

Conclusion
Brad gains valuable insights into structuring a fair and effective compensation system that rewards employees based on tenure and performance while aligning with the company’s financial health. By developing and testing a tailored profit-sharing formula, Brad can ensure consistency and fairness in rewarding his team.

---

Final Thoughts

Dave Ramsey provides pragmatic and experience-based advice to entrepreneurs facing common business challenges. Whether it's redefining leadership roles, enhancing marketing strategies, or structuring compensation systems, his guidance emphasizes fairness, strategic alignment, and sustainable growth. Listeners can apply these insights to navigate their own business hurdles effectively.

---

Notable Quotes

• Brooke on Role Transition:

  "He really enjoys... working relationships with our subcontractors, with the clients and those sorts of things. So he's having a really hard time leaving that aspect behind."
  [02:22]

• Dave on Reframing Roles:

  "As owners, here’s what we need to do as owners. But that doesn’t mean you’re gonna be co CEO in the office."
  [07:08]

• Dave on Enhancing Referrals:

  "You'll double it by just asking them to help you."
  [14:30]

• Dave on Website Optimization:

  "We live in a website world... make it no friction."
  [15:11]

• Dave on Profit-Sharing Formula:

  "Most of the weight, it turns out now in our current formula is time on the job."
  [43:56]

---

Listener Takeaways

• For Leadership Transitions:
  Align leadership roles with personal strengths and business needs, avoiding forcing unwanted responsibilities.

• For Marketing Growth:
  Amplify referrals, enhance online presence, and balance client bases to fully utilize team capacity.

• For Compensation Structuring:
  Differentiate raises from bonuses, base raises on performance and market value, and design fair profit-sharing formulas that reward tenure and contributions.

---

Connect with Dave Ramsey and The EntreLeadership Podcast

For more insights and real-time coaching on business and leadership, visit Ramsey Solutions and consider subscribing to the podcast for future episodes filled with valuable advice from Dave Ramsey and expert guests.

Transcript

[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. The phone number here, if you want to talk, is 844-944-1070. That's 844-944-1090. Or if you want to leave us a question on the line, you can do [e-mail] ask and we'll make you one of the callers here on the show. Brooke is with us in Greenville, South Carolina. Brooke, welcome to the Entree Leadership Podcast.

[Brooke]

Hi Dave. I met you a few weeks ago actually at Master Series which was an amazing experience by the way.

[Dave Ramsey]

Thank you.

[Brooke]

And if you don't mind me giving an unsolicited marketing plug, I would highly recommend that anyone consider going to go and I will be there again next year.

[Dave Ramsey]

Well, thank you. Thank you very much. We enjoy Master Series. It's a long, tough week. You guys are tired when you leave, we're tired when you leave. But we teach a lot, we talk a lot, we have a lot of group discussions and you leave with way more information than your brain can hold in one week. But we want to make sure we over deliver. So we're glad you came. Thanks for coming. How can I help today?

[Brooke]

Very, very accurate. So I am a CEO of a residential construction company. We did 3.6 million in revenue last year.

[Dave Ramsey]

Good.

[Brooke]

And I have a team of five and that includes myself and my husband who's the co owner with me and he's also the senior project manager. So we're currently in the trailblazer phase. And my husband's really having a hard time transferring into more of a leadership role from being a hands on and on the job site. So my question is how can I get him on board with this transition into that more leadership role instead of, you know, swinging a hammer on a job site, so to speak.

[Dave Ramsey]

So he's physically doing work. He's not project managing.

[Brooke]

Well, he's project managing so that's. But he is, he likes to get in there with, with his subs a lot of times as well. But he is primarily project managing. I just need him to be more in the office and helping me with the strap planning and the things that we're developing to move us into that next phase of Pathfinder. So I need him in more of a leadership role in delegating more of that project managing duties to our other project manager.

[Dave Ramsey]

Okay, so you don't need two project managers.

[Brooke]

Correct. And that's what I keep telling him that I just, I need him to be co owner, CEO with me and out of project managing. But I'm having a hard time. He really enjoys. I mean, he and I built this business so he enjoys that day to day working relationships with our subcontractors, with the clients and those sorts of things. So he's having a really hard time leaving that aspect behind.

[Dave Ramsey]

He likes building houses.

[Brooke]

Yes, he does.

[Dave Ramsey]

My first inclination is to let him build houses. What is it that you need help with that you can't get done?

[Brooke]

So as we're developing into more of our strap planning, we actually are working on that two days coming up. I took that from your master series, by the way. So we're working on it. So him and I really are the face of the business. And so as we develop that strategic plan out, I think there'll be some things in there that him and I will need to go out and be the face of the company, let's say with real estate agents and things like that, to sell them when they have clients move into the area. We have a lot of people moving into this area who are often looking for builders. And so we need, I need him as a team member to go in with me to make those relationships, so to speak, part time. Not all the time, just at least part of the time. And that's where he's having struggles with allowing our project manager to actually project manage and him helping me make more of those types of connections and decisions just on moving the business forward.

[Dave Ramsey]

Okay. I think maybe we need to reframe this. If I were in your shoes. Okay. He probably in his day job as a team member. What is his role? His KRA. It probably needs to be 80% project manager. He enjoys building houses. He's good at it. It's how y'all got here. It's what brought you to the party. And he doesn't want to do the other stuff. He's been pretty clear about that then. The other part of the discussion though is that there's a different thing. So I'll use our family as an example. Okay. My daughter, my oldest daughter runs our family foundation. That's her day job. Okay. And so she handles all that, everything having to do with philanthropy and generosity and so forth. She is also one of the owners of Ramsey Solutions. As an owner of Ramsey Solutions, she has things that she does as the owner. Because when you're an owner, you go see clients in your case and you're the face of the business. And in her case, what she's doing is she sits on the operating board and she sits on a couple of our key work groups internally. As an owner, she does not work for Ramsey Solutions, but she's the owner. Okay, so he needs to pick up, or he should pick up, I think some of the owner duties, which is what you're looking for, Right? But this idea that he has to be co CEO in order to do that. No, he doesn't. He can just go. My wife and I own this. She's the CEO, she runs all the ops. And we both together go dealing with and meet the real estate agents. As the owner. As the owner of the company. We're co owners. So I run the projects in the field, she runs the office back home. She helps lead the stratop, lead the overall team and strategy. I love being hands on as a builder. And that's what you're going to get. And this is him talking to the real estate agent with you.

[Brooke]

Right?

[Dave Ramsey]

And so he needs to carve out part of his work week to be an owner.

[Brooke]

Yes. And that's where the struggle's been, I think.

[Dave Ramsey]

But I think, I think the difference is he keeps thinking you're trying to drag his butt into the office and he doesn't want to live over there.

[Brooke]

I think you're right.

[Dave Ramsey]

Yeah. So you need to quit saying that because he's not going to do it. So I think instead you say, hey, as an owner, as a co owner with me, here's what we need to do as owner. But that doesn't mean you're gonna be co CEO in the office.

[Brooke]

Okay.

[Dave Ramsey]

That's different. Instead you need to be the best project manager we got. Cause you love building. You're the reason we build. This is how the whole thing started was because of your love of swinging a hammer. And you're gonna swing a hammer less and less. You know that. As we get bigger and bigger. But you don't have to be in the office to keep from swinging a hammer. But you do have to come with me on these client visits and we go to the realtor luncheon. You gotta go be the face of it. Because if I wasn't here, that's what you'd have to do as the owner.

[Brooke]

Right.

[Dave Ramsey]

You know, there's some of the parts of executing your strategic marketing plan that involves the owner in a small business like this going and doing some owner jobs and then he has a team member job, which is project managing. I think if you can designate that differently, then he gets away from the work that you're trying to make him sit in an office all day, which would make him want to shoot himself. Right. He didn't want to do that. I can sympathize with that. And so, yeah, let's redefine this and say, okay, there's some things that we're going to do together, not as our position in the company, but as our ownership position as owners. Here's what we do as owners. I need to do this, this and this. And so, like we have things. After 90 days, our new team members all come into a room and we talk to them. And some members of the Ramsey family that are owners come in and talk to that team. Sometimes it's my son Daniel who's the president. Sometimes it's Rachel who's a. I'm always, I'm there if I'm in town. Sometimes it's Rachel who's a personality, and sometimes it's Denise who runs our family foundation. But that's their day jobs. But as owners, they show up and talk to the team members at Ramsey Solutions, that kind of thing. So, yeah, designating that and bifurcating that out, I think will help you in this overall process. I think that's where we're gonna go to. So that's a really good question. Sounds like a cool business. I think you guys are doing really good. Brooke, way to go. And again, thank you for coming to Entree Leadership Master Series. We love that week and it's an incredible, incredible time. It's almost sold out for next year, folks. If you want a ticket, you probably need to jump online right quick. This is the Entree Leadership podcast. What does the future hold for business? Ask nine experts, you'll get 10 different answers. Economic growth or a recession. Business taxes will go up or down. AI will help us work or replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite and you should, too. Whether your company's earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities with one unified business management suite. There's one source of truth for the visibility and control you need to make quick decisions. NetSuite's real time insights and forecasting help you see into the future with actionable data and when you're closing the books in days, not weeks, you spend less time looking backward and more time focusing on what's next. And speaking of what's Next, download the CFO's guide to AI and machine learning at netsuite.com Ramsey it's free at netsuite.com Ramsey I'm Dave Ramsey, your host. This is the Entree Leadership Podcast. Thank you for joining us. If you want to help us out, you can do that by leaving a nice five star review. Subscribing to the show. Click the subscribe button. It's a big deal. Click the follow button. That's a really big deal. Click the share button or cut the link out and send it to someone and say, hey, listen to the show. You're our only marketing plan. You're our only hope. So thank you. We appreciate you. A bunch of you have been doing this because our numbers are way up. We really, really appreciate you hanging out with us. Nate is in Raleigh, North Carolina. Hi, Nate, how are you?

[Nate]

Hey, Dave. I'm doing pretty good. How are you doing today?

[Dave Ramsey]

Better than I deserve. What's up?

[Nate]

Oh, actually, I'm calling on that marketing plan you were just talking about there. So in brief, I own a small plumbing company here in Raleigh, North Carolina. I'm, I've got three team members, including myself, and basically I've hired another full time plumber on and I found that I have enough work to keep him busy but not enough work to keep myself busy all the time. And so I'm trying to figure out where's the best ROI to, you know, start marketing the company a little bit more than just word of mouth.

[Dave Ramsey]

Who's your customer?

[Nate]

Residential and commercial service plumbing.

[Dave Ramsey]

Okay, so commercial is. Commercial is businesses.

[Nate]

Yes.

[Dave Ramsey]

And residential as individuals. What percentage of your business is commercial? What percentage is residential?

[Nate]

I would say about 70 is residential and 30 is commercial.

[Dave Ramsey]

Okay, so are you doing repairs or, or new on residential repairs?

[Nate]

Repairs. It breaks. I fix it.

[Dave Ramsey]

Okay, so people call up with a broken plumbing issue and your team goes out.

[Nate]

Yep.

[Dave Ramsey]

How do they find, how do those people find you?

[Nate]

A lot of it's just been word of mouth. You know, the only advertising I have done is I've gotten my trucks painted up with like the company name and the number on the side of it and stuff. But, you know, it's. I want to keep growing this thing.

[Dave Ramsey]

So you, you're keeping two or three plumbers busy doing repairs in houses off of painted trucks. Off of painted trucks and word of mouth.

[Nate]

So two plumbers, including Myself and then an office lady who works from home.

[Dave Ramsey]

Oh, okay. So the new plumber was the first hire you've done that does plumbing?

[Nate]

Yes, sir.

[Dave Ramsey]

So prior to that, you were keeping yourself busy?

[Nate]

Yes, sir. I've been wearing out that treadmill.

[Dave Ramsey]

Okay, gotcha. Okay, good. Hmm. Well, the reason I ask all these. Reason I ask all these questions is my first inclination is always just to do more of what you are already doing. How can we throw fire on the word of mouth? The referral business? And so I think the first thing I'm gonna do is just as you're wrapping up the job and they're paying you. They usually pay you right then, don't they?

[Nate]

Yes, sir.

[Dave Ramsey]

I'm handing them a flyer or a business card and saying, hey, I'm a young guy. I'm starting a new business here. It's just growing. Anybody you can tell about this? I'd be really appreciative. Spread the word for me. And let's take the existing word of mouth and just add. You'll double it by just asking them to help you.

[Nate]

Okay.

[Dave Ramsey]

Cause what's happening now is they just think of you when something comes up. But nothing prompted them to do that. I want you to prompt them to do that, and that'll increase the numbers.

[Nate]

Okay.

[Dave Ramsey]

That's the first thing I would do. You got a good website.

[Nate]

It's okay.

[Dave Ramsey]

Okay. We live in a website world, my friend. Okay. Doesn't cut it anymore. So let's. If you want to do a little bit of investment in advertising, let's build that website a little bit cleaner, a little bit crisper, easy to find you, easy explanation of your services, easy to contact you. And if someone contacts you on that website with your email, you answer immediately. We live in an instant world. People have zero patience. You email me back the next day and I have a plumbing problem. I've already got someone else to do the job.

[Nate]

Absolutely.

[Dave Ramsey]

So you have to answer right now. If you're on a job and your phone buzzes, you stop a second and you answer that client. And then you go back to fixing that job. And that's what you use. Cause you're answering the phone is what it amounts to. And they're probably not going to call you. They're probably going to email you or even text you and make that very easy. On the website, don't make it where they have to fill out a form with their problem. Yeah, the people don't do that. They move on to the next site. So make it no friction. So let's spend a little money on the site and create a clear contact. And then your next stage would be some basic SEO search engine optimization. How can we get people in our area to find my website when they're searching? I need a plumber. And that's an SEO function. And you can hire someone outside the company. Do not hire a full time person at this stage, but just hire someone that does SEO consulting and pay them four or five hundred bucks to get your basic SEO where your website will show up when someone types that in Google. And it's really not hard to do because you're, you know, you're not in New York City. So there's not 5,000 people, there's you and a handful of other people in Raleigh. So it'll show, you'll show up. Four or five other people will show up. So if I type in heating and air in Google, it'll tell me sometimes it'll say near me, right? And it knows you ever done that? And it, when you're looking for something, a restaurant near me, I need a biscuit near me, right? And it'll pop up biscuit places near me. Well that's called SEO. That's called search engine optimization. That's a search engine. When they type that in, it needs to pop up your site. And you know what I would do when they find your site? I would put on there small business owner support local small business. Make this kind of a patriotic thing. Meaning we're not big corporate plumbing America. We're a little guy. We're a little guy. We respond quick, we respond really fast. We're small and our prices are very reasonable.

[Nate]

Okay.

[Dave Ramsey]

And see, you know, and see if you don't get some response to that when people find you on the site. I think if you, if you do that basic thing, that's the very first steps in digital marketing, very primitive steps that I gave you. Nothing sophisticated about what I told you at all. And you ask your current customer every time you're there to send you business and help you. I'm a young guy trying to get started, please help me out. People like to help other people out, especially if you do a good job for them, you know, and you don't have to do a big sales pitch. You're not trying to get them to subscribe to something. You're just going, hey, I'm a little guy. If I helped you, please tell people about me. I'm trying to grow my business. They like doing that, you know, they like helping people that are getting started and, and they feel like they're a part of your operation, then where if you're a huge company, they don't feel like that you need their help. Yeah, you have. That's an advantage for you.

[Nate]

If I can ask just like a little bit more, just for direction.

[Dave Ramsey]

Sure.

[Nate]

Would you suggest that I stay more residential? Cause that's where bulk of my business has been. Or try to get more into the commercial? Because that's a lot more of like return business.

[Dave Ramsey]

I like having a mix. I like that you've got a mix now. Marketing to the commercial is gonna be more referrals, less search engine optimization stuff. What I was describing a while ago is more of a retail, what we call B2C business to consumer. Your commercial's B2B business to business. And you're right, that's a return business. And that's probably the way you're gonna get that is probably like through property managers.

[Nate]

Okay.

[Dave Ramsey]

People managing commercial properties. Cause a lot of businesses are tenants. They're not necessarily the owner of their business. And so the property manager's who sends out the plumber.

[Nate]

Okay.

[Dave Ramsey]

So I start calling on if you got a little time on your hands, find out who's managing commercial properties in your and drop by with a box of donuts and say, hey, Dunkin and Krispy Kreme. Everybody speaks that language. I'm just saying.

[Nate]

No, especially around here. Krispy Kreme, especially.

[Dave Ramsey]

Hey, you're a good man, Nate. I love what you're doing. You're thinking, you're hustling and grinding. You're exactly who we are here to help. Thanks for hanging out with us, brother. I love it. This is the Entree Leadership podcast.

[Brad]

As a business leader, there are things you like to do and need to do, things you don't like to do but still need to do and things you don't like to do and don't need to do. So what if you stop doing some of those things? Think about how much more time you could spend growing your business and making more money. Because no leader dreams about stuff like managing their own inbox and calendar, booking travel, updating software, and handling minor customer service concerns. Well, that's where Belay can help you focus on your strengths. Belay pairs you with a virtual assistant, accounting specialist, or marketing assistant based in the United States. And they'll find the right match. Based on your personality, company culture, tasks and systems, Belay is perfect for those of you who aren't ready for full time help. Belay has professionals to protect your time and help you focus on things you should while your business grows. To get started stopping text Entrez to 55123 and you'll receive Belay's free resource called 25 Things to Stop Doing in 2025. That's Entre to 55123 on this podcast.

[Dave Ramsey]

I talk a ton about the Entree Leadership System, the small business roadmap that takes the guesswork out of growth. It includes the five stages of business Treadmill Operator, Pathfinder, Trailblazer, Peak Performer and Legacy Builder and the six drivers of business that literally drive your business forward. Personal Purpose People plan, Product and profit. Now we've seen this system work for tens of thousands of business owners like you, and we want to reach even more. So we have an exciting announcement. In February, we'll be starting the presale of my new book, Build a Business you Love. The book breaks down each stage of business and the unique challenges you'll face in that stage. So you'll learn how to solve the right problems at the right way and the right time. Build a BUSINESS you love is the essential guide for a business owner like you who wants to grow your business the right way and leave a legacy you're proud of. If you'd like to be the first to know when the book is available for pre sale, well join our interest [e-mail] book or just click the link in the description if you're listening on YouTube or the podcast and we'll get you signed up. One of the things that comes up around here a lot is when am I able to make my first hire? So there's a lot of factors in that. Let's discuss a couple of them. The first hire I ever made in this business was 30 plus years ago and it was a guy named Russ Carroll. And Russ came on as a financial counselor. I was doing financial counseling, helping people that were in crisis and I was doing a little radio show and I was doing a little bit of speaking here and there and I had a little book I was selling out of the trunk of my car. Those were my income streams. And I was booked all day long solid and had no time left for financial counseling. And I had people trying to get in that I couldn't get in. So I had more counseling than I had time to do. Meaning that's rule number one. Do you have enough work for the person you're thinking about hiring? I'm sick of doing this or I've got too much of it to do and I can turn it over to Them and never look back. And so a friend of mine introduced me to Russ. He came up and visited our church. We went out to lunch afterwards, then came over to our house. Our kids played together in the backyard. We kept talking for hours. It's not how you do an interview, but it's how I did that one. And I told him, I don't want employees. Employees come late, leave early, and steal while they're there. I need people partnering with me in this. I need team members. I need people to walk with me. And so they'll do it the way I do it. That'll do it like they care. That'll pour into it. And Russ certainly was that. He was that and many things more. He stayed with us almost 20 years and retired from Ramsey. He was the first person hired and the first person to retire here. Pretty cool. Great guy, by the way. Still friends. He and Joy are still friends of ours. And so number one is, do you have more work than you can do? And so I had more work than I can do. I did not have double. And so I told him some of the coaching counseling slots, you're gonna have to fill up. You're gonna have to hustle out there and go talk to some marriage counselors that need. Has a marriage couple, they're counseling that need financial coaching and let them know you're here. You have to go talk to some pastors and tell them that you're here because they need help. They have people come in that need help with financial counseling. And so you got to go out and generate some leads to fill up the rest of your book, because I can't fill it all up. But I can give you a few of my overflow because I'm not going to quit doing it. I just can't get to what I have. And so do you have enough work? And do you have a method for them to have enough work to keep them busy? Otherwise you wouldn't want to hire somebody. And so oftentimes you feel completely overwhelmed with the work that you're losing because you don't have enough help before you hire the first person. And that's okay. You don't want to hire the first person, and both of you starve because you don't have enough work. So I'm fine if you're like, stuff's just splashing all around you and you go, okay, I really do need another bucket here, you know? And you're probably gonna feel some stress right before you make the hire, and that's good. That means you've got. Cause there's just stuff flying everywhere, and you've got to have some help. That kind of thing. Not, oh, I hope this all works. And I'm kind of bored. And so let's get two people in here that are kind of bored. No, I don't think that's a plan. All right, so make sure, number one, do you have enough work? Then number two, people always ask, do I have to have money in the bank? No, but you have to know how you're going to get money to pay them. And so again, that goes back to the first thing. Do I have enough work for them to do? That work should be generating money, and that money gives me money to pay them with. Pretty simple. So our last guy hired a new plumber. Can he keep that plumber busy? He was already a plumber. Now he added a plumber, and he's keeping that guy busy, but he's not quite busy yet. Okay, yeah, but he can pay the other guy. But he may be taking a little bit of a pay cut to pay the other guy right now until he gets his volume of production back up. But he at least made the move. So you don't need six months of their salary in the bank. Although it wouldn't be bad. But I'd prefer you have just that. You see a way that you're going to monetize on the higher. Meaning I'm gonna pay them X number of dollars, and I'm gonna make Y number of dollars above what I pay them. That's why we pay them. We don't hire people to lose money on them. Everybody that you hire, you should make more on them than they cost. Otherwise you go broke. So it's either direct revenue, if it's someone like that plumber that's producing, or it's indirect revenue. Like you hire office staff so you can go do more plumbing instead of doing paperwork back at the office, which makes you no money. But that person doing the paperwork is freeing you up to make more money. So revenue is increased by either administrative staff freeing up people or people actually doing the task. So we need to have revenue increase more than enough to pay the person that you're hiring and see your way to cause that to happen. Do we have enough work for this plumber if I think I can keep him busy? No. Now, you gotta have money in the bank to cover that part of. I think. But if you like. God, I definitely keep him busy 1000%. I keep him busy. Yeah. Well, then you're gonna make money on him. And it's easy to pay him. It's pretty easy. So that covers that. No, you don't need a certain amount of money in the bank. Now. Every small business needs to start building retained earnings. You need money in the bank, period. But do you have to have a certain amount in the bank before you do a hire? No. You need to see a way that you with integrity, honesty, know that you can pay the person what you've promised to pay them. You're not gonna have to lay them off four weeks later because you didn't do math before you brought them on and they don't produce anything and you had no way for them to produce. And there was a wing and a prayer. No, that's not fair to them. So if you're going to do that crap, you do need a six months on money in the bank and then you're going to burn through that and still be screwing up. So no, Find a way to create the revenue. Know that the revenue is coming in on what it's going to cost them. Number three, your first hire is by far your scariest hire because you don't have any idea what you're doing. When I did my first hire, I was dumber than a rock, but I was a little bit smarter than Russ. Sorry, Russ. But I mean, seriously, I mean, my interview was bad. We go to church, go to lunch, and all afternoon, this is the interview. And then he started. Two weeks later, we moved the card table on the other desk out of my living room in a U Haul into a tiny little 800 square foot office and Ramsey Solutions was born. Although we didn't call it that back then. So it's something you've never done before. And anytime you're doing something you've never done before, it's scary or you're dumb. One of the two. I mean, if it's not scary, you're unwise, right? If you're doing something you've never done and you're cocky, you're getting ready to lose your dadgum head, so don't do that. But I'm saying walk in, you can be confident and go, I believe in what I'm doing and I need some help. But I've never done a hire before. And you're the first one. And you don't necessarily have to be the interview professional and know all the trick interview questions like some corporate HR goob or something, but expect it to be stress inducing. And by the way, the first person you ever let go fire super stressful. The hundredth time you do it not stressful at all. For you is for them, but not for you. Not because you become heartless and calloused, but because you finally figure out after doing that a hundred times, nobody's going to die. I'm not going to die. And he's not going to die, she's not going to die for not working here. We're all going to be okay. As a matter of fact, a year from now, we'll both be better from them not being here because they need to leave. And so you reach that point, right? So the more you do something, the better you get at it and the more you realize it's not the end all to be all. It doesn't shut down and mess up your whole life. And so same with your hire. If you screw it up, you can do another one. God blessed me and I found a really unusually wonderful person with my very first hire. And he stayed with me almost 20 years, like I said. And that may not happen. And that's okay. The second person I hired did not stay with me 20 years. They didn't even stay with me 20 months. The third person I hired stayed with me two years. The fourth person I hired, I don't know who that is. I can see the other three very clearly, but I don't remember the fourth one. I'd have to go back and look it up. So you see my point. It gets easier. Okay, so it's not the end of the world. It feels different. But you're not God and you're not their provider. You're simply hiring them for a job. And you're not asking them to commit their entire soul and their life and mortgage their house for you. They're just coming to work there, that's all. And so chill out. It doesn't have to be so freaking stress inducing and just have some fun with it. Do I like this person? Do I want to work with them every day? Because by definition it's a small business and we're going to spend a lot of time together. I don't want to hang out with you. I don't like this person. They're icky. Well, don't hire them. It's a small business. The last thing I'll tell you, that I did a lot and I always do it a lot more when I'm in a stressful situation, a new situation where I don't know what the flip I'm doing. And that is I pray and I ask God for help. God, I don't have any idea what I'm doing. But you're not surprised with this. Can you help me? Can you send me some good people? And please God, keep your crazy children away. Cause God, you have some crazy children. Some of them are nuts. And he knows that and he knows which ones they are and he knows if you're one of them. And so there you go. Which list are you on? Right? So I mean, have some fun with this guys. But your first hire is it's like the first time you drive a car, it's the first time you ride a bicycle, it's the first time you do a speech, first time you stand in front of a microphone, the first time you do anything. It's, you know, you freak out your vocal cords, tighten up your stress. All your physical stress symbols, signs are there. Everything like that, that's normal. But do it anyway. Cause otherwise you're gonna be a solopreneur. Which I gotta tell you is fun for a while, but pretty quick you get tired of it. Doing everything yourself. You're the CEO, the chief everything officer. No thanks. That's a lot of work, y'all. Get somebody to help you do the work. Give em some of your money, give up some of your money and get some of your life back and that's what your hires are. I'm gonna give up some more of my money, I'm gonna get some of my life back and I'm gonna get a little bigger and then I'm gonna give up a little bit more of my money and I'm gonna get more of my life and I'm gonna get even a little bigger. And every time you do it, that's what you should be doing and thinking this is an investment into people and into your business and into having a quality life. So you definitely wanna go that way for sure. So first hire is nerve wracking. Do it anyway, boys and girls. This is the Entree Leadership Podcast. If you're a business owner, you know running a business is freaking hard. And it's easy to let the daily challenges and fears get the best of you. That's why in my newest book, Build a Business yous Love, I share the proven system that helps you break through those challenges and keep your business moving forward. Join the pre order waiting list to be the first to get access and I'll send you the first four pages of my book for free. Go to entree leadership.com build or just click the link in the description if you're listening on YouTube or podcast. Thank you for joining us. America this is the Entree Leadership podcast. Brad is in Lake Charles, Louisiana. Hey, Brad, what's up?

[Caller]

Hey, Dave, thanks for taking my call.

[Dave Ramsey]

Sure. How can we help?

[Caller]

Hey, look, I own a small construction company. We do about 6 months million dollars worth of work a year. I have about 20 employees. The end of the year is approaching and this is the time we normally issue yearly bonuses and pay raises. My question is this. How should we be calculating end of the year bonuses and pay raises for our team? Should we factor in the company profit, their performance, company performance, and how long or how long have they been a team member? I'd like to develop a formula for calculating this year in and year out for consistency purposes. Any, any advice you may have would be greatly appreciated.

[Dave Ramsey]

Good for you. It's a great question. Raises are different than bonuses or profit sharing. Okay. Raises are based on performance and based on what it takes to keep that job full. What would I have to pay to hire someone if I didn't have this person here? They're worth at least that and a little more. Okay, so if they left, what's the prevailing job market on that position? You follow me? And so raises are based on that, plus a little replacement cost, plus some cause they're more valuable than somebody coming in off the street that doesn't know your company. And two raises are based on, you know, their performance, how good they are at their job, and that kind of a thing. And let's set that aside. And I don't do that at the end of the year. I do that on their anniversary. So if they were hired in June, I review them in June. We're having meetings all throughout the year talking about things that need to get better and things that they're doing right. But then in June, we confirm all of those meetings and have an annual review, ask them how they're doing, what we can do better, and tell them what they're doing right. I don't do a bunch of correction in the annual review. I would do correction long before I got to the annual review. But I do get my raises then because it reminds me that I don't go four years accidentally without giving somebody a raise just because I didn't pay attention. You did that one time, but we don't do that anymore. So raises are done on an annual basis now. So bonuses and profit sharing, I would lump into the same thing. And that is not based on performance only. We sat down and started doing that monthly, the month following. So like we close up, for instance, February's books, and we see what our profit is for February. And then we apply the formula that you're gonna develop to that profit and we pay that profit sharing out March 15, two weeks after the books are closed for February. Does that make sense?

[Caller]

Yeah.

[Dave Ramsey]

Okay, so we pay it out monthly because if they only get it once a year or once a quarter, they disconnect it from where profits come from. They just see it as like money that just flew in from nowhere that they've got no control over. But monthly, we remind our entire team profit. We stand on stage in staff meeting and say, profits happen when revenues go and everybody says up and when expenses and everybody say goes down. So we all are self employed, we all are trying to get revenues up and expenses down, there's more profit. And then we can share that with you. We're all self employed. So we remind them and then we tell them what the profit sharing looks like for that month. It's gonna be up or down or whatever. And so we do that once a month so that everybody's tied into getting revenues up, expenses down. Cause that's what lands in my pocket next month. So that frequency and that reminder helps them help us run the business. Because everybody's involved in keeping expenses down that way. Everybody's involved in making sure revenues go up, the customer's happy, and so on. So now when we first instituted that, we did it quarterly and people didn't count it before that. We did it once a year at Christmas and people didn't count it. Now if you just want to give a Christmas bonus, that's fine. You just give them some money. And there's not a formula for that. You just figure out what you can afford and you give everybody $100 or everybody $1,000 or whatever you give them, right? And that's just a Christmas bonus. And you're just Santa Claus's helper, right? That's all you're doing. But I'm talking about sharing profits, literally. So what we do is we take a percentage and we might change the percentage. And we don't disclose the percentage of our net profits and we share it with the team. We dump that number into the formula. Now when we first started doing this, we had to develop the formula. And we took a person that was a high performer that had been with us 15 years, and we took a person that was a high performer that had been with us a year, and we took one that had been with us seven years, and we ran the formula based on that and said this is what they would get. And then it just. How does that feel? Does that feel right? And honestly we looked at it and we went, no. This person that's been here a year is getting way too much compared to the person that's been here 15 years with us. And we realize that people that have been with us a long time have been helping us carry the water. And we don't have anybody here that's just here because they take up space. If you're just taking up space, you get to leave. So if you're here 15 years, it's cause you're a student. Right. Or stood it. And so, you know, we don't have 15 year people that aren't excellent, incredible people. And they've been here, you know, all this time, put up with all kinds of crap like I have and you have and you know, they've been scratching and clawing with us a long, long time. And so we feel differently about someone 15 years than we do one year. We're not mad at the one year people, but we just feel like we owe that 15 year person more. You may not feel that way, but when we ran the formula out, we figured out that time on the job was more valuable to us. And so we weighted our formula mathematically more to time on the job. The second thing that we did was we wanted part of the formula to be on their attitude that has turned out to be a waste of time. We said, okay, how's their attitude and their work ethic and so on their overall feeling about them, are they a 1, 2, 3, 4 or a 5? A 5 being beyond excellent, a 1 being we're getting ready to fire them. Right. And and a three is you're just doing your job and you're fine. And everybody basically ought to be a three. Occasionally something's going on and it's been a unusual season and they might jump up to a four or a five for a couple pay periods and then they drop back down to a three. But a three at Ramsey is an excellent person. Okay, if you're at a 2 or a 1, we're probably talking to you about whether you're going to stay or not. And so what we figured out is we don't want to cut the pay on a 2 or a 1. We want them to straighten up or leave. And so we don't really like that part of the formula. And we have taken that part of the formula that used to be in there out. We don't use it anymore. That makes sense.

[Caller]

Yeah, makes sense.

[Dave Ramsey]

But that's the process that we went through. We thought we want to gauge that and reward them based on just their general attitude, effort, demeanor, so forth, likability, whatever it is. The third thing was the profitability of their area, and I thought that was a really important thing. And again, I was wrong. Meaning if entrez leadership is super profitable, that the production team in here on the thing is going to get more in their profit sharing check than the production team in an area that's not profitable or as profitable because they help create that profit was my theory. But it turns out that the person doing accounting in entree leadership has very little to do with whether there's profit or not. And a good accounting person in entree leadership should get as much as a good accounting person over in financial Peace University, even if it's not as profitable. And by the way, both are very profitable. But that's not the point. But. So I thought I was kind of rewarding the team that was winning. That made sense in my mind. But then when we actually ran the formula out and went, that doesn't feel right because that accountant over there is doing their job. They're doing a great job. Or that personal assistant over there is doing a great job, and it sucks for them that they signed up with the wrong team. That's not as profitable. No, that's not what we want to do. That's not how we want this to work. And so again, we weighted that much smaller. So I take that back. The. The attitude thing, the 1 through 5 is still in the formula, but it's weighted very small. Most of the weight, it turns out now in our current formula is time on the job. So across the whole company, if you look at 1100 team members, the people that are getting our profit sharing, a person that's been here 15 years is gonna get a profit sharing check that's much more sizable than a person that's been here 15 months. That's what we end up waiting it on more than anything else. Even though the other two things, when we first started this, we thought. Thought that was the cool way to do it. Brad, now you can add whatever you want to add in this. I just made those up. You know, they were not. They're not unique. I didn't even study another company that did it. We just made it up and say, okay, that. But we do have a math formula that says number of years on the job multiplied times this. And let's say our pool is. I'll just make up a number. It's a million dollars. We're Going to distribute. Okay. And in your case, it might be 40,000 bucks or 10,000 bucks. You're going to distribute. I don't care what it is. And then here's what they get as a percentage of that based on this formula. And so the math automatically then creates the payroll. We don't even have to look at it.

[Caller]

Yeah, yeah. And that's kind of. That's. That's really what I'm kind of driving towards. If I can develop this formula, it should make it easy and it should. I want it. I want it to be fair to our personnel.

[Dave Ramsey]

Yep.

[Caller]

But also towards the company as well. Right.

[Dave Ramsey]

But what I'm telling you is. And you're exactly right. That's a. That's a perfect way of saying it. When you run the formula, run some samples out and put people's names beside the sample and go, wait a minute. That doesn't feel right or. That feels exactly right. And so we had to adjust the porridge until it was just right. It was too hot and then it was too cold. Right. And so like, you know, I'm even thinking of the person's name. I'm not gonna say it. That was with us at the time. I kept looking and go, she's incredible. She'd been here 15 years and she's only getting this much, you know, this tiny bit more than the person that's been here seven years. No, that doesn't feel right. And that's up to you to have that feeling. Cause what's fair to you is all that matters. Cause you're the freaking owner. You're the one deciding what's fair and. Cause there's not a set moral standard on this or ethical standard on this. You know, you want to give everybody that qualifies something. Oh, I'll tell you what else we did. We took all leadership out of the formula. None of them get profit sharing. Cause they all share in the profits other ways in their comp plan. Right. Yeah. So the profit sharing is not spent on them. We took all the salespeople that are on commission. You want some more money? Go sell more. They're out of the plan now. If they've just been here a little while and they're on the base and they hadn't started making commissions yet, we'll put them on it for a little while. But once they start making bank and some of these salespeople make good money, then they could control their own destiny. But this is for somebody that isn't directly affecting their own income with their actions. And I want to share with that person in marketing. I want to share with that production person. I want to share with the folks in the booth right now. I want to share with people that aren't out there necessarily on a commission of some kind, but yet are helping to create the profits that are here. And that's what I'm looking for. So we carved out certain people and that left more for the ones that are in it. Oh, and you don't get profit sharing til you've been here a year. That helped too. So number of new people coming into the plan each month, number of old people dropping out of the plan each month that you know, so what's the net? So we have 32 people more in the plan this month than we did this time last year or whatever the deal is. And so you just talk that through and again we tell the team everything except the numbers, the actual dollar amounts and the, and the percentage of profits. We don't share that because we might change it, it might be more later. And so. But yeah, you're onto something, Brad. When you say, I want a formula that's automatic, but you need to run the case studies out in the formula and you and a couple of your leaders that are privy to the numbers look at it and go, how does that feel? We looking at Bob over here, we're looking at George over here, we're looking at Laura over here. And does that feel right that they're getting that much versus the other one based on how we want our company to place our values and, you know, that's the whole process. So very, very well done, sir. Proud of you, man. $6 million construction company in Lake Charles, Louisiana. Whoop, whoop. There we go, baby. Hey, folks, 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.