Should I Be Concerned About Trump’s Tariff Policy?

Summary

The EntreLeadership Podcast: Should I Be Concerned About Trump’s Tariff Policy? Hosted by Dave Ramsey | Release Date: July 14, 2025

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Introduction

In this episode of The EntreLeadership Podcast, Dave Ramsey delves into pressing business concerns with real-time coaching and actionable advice. The episode primarily focuses on navigating the complexities of tariff policies under the Trump administration and offers strategic insights for business owners facing similar challenges. Additionally, Ramsey addresses questions from entrepreneurs seeking guidance on business opportunities and leadership growth.

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Navigating Tariff Policies with David from Canada

Caller: David, founder of a Canadian manufacturing company specializing in log cabin kits.

Context: David is exploring expansion into the U.S. market and seeks advice on how Trump's tariff policies might impact his business.

Key Discussion Points:

• Business Overview: David's company generated $12 million in revenue with a $1.5 million profit last year. They manufacture in Ontario and have expanded distribution to 40 U.S. states.

• Impact of Tariffs:

  • Current Status: David’s products currently face a 0% tariff rate, but he anticipates potential changes by April 2026 due to renegotiations of trade agreements.
  • Ramsey’s Insight: Dave acknowledges the uncertainty surrounding tariffs, stating, "Most of what I've seen on the tariff stuff so far... the actual net result is zero" [03:20].

• Growth Strategy:

  • U.S. Market Performance: David reports a 200% growth in American sales, while Canadian sales remain flat.
  • Production Planning: Ramsey advises against hastily accelerating U.S. production, cautioning, "If you do this poorly, it's gonna end up costing you more than paying a small tariff" [05:07].

• Strategic Recommendations:

  • Maintain Current Trajectory: Ramsey suggests sticking to the planned expansion timeline, emphasizing the importance of avoiding overexpenditure due to market volatility.
  • Monitor Tariff Developments: Stay informed and prepared to adjust strategies as needed without compromising the business model.

Notable Quote:

"What you're telling me is, you're probably safe until April of 2026. Who knows?" — David [02:32]

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Guidance for Aspiring Business Owners: Andrew’s Construction Company

Caller: Andrew Beach from Waterford, Michigan, owner of Independence Commercial Construction with 35 employees and $10-11 million in revenue.

Question: How to take initiative and grow as a leader without stepping on the toes of established team members.

Key Discussion Points:

• Excellence in Performance: Ramsey emphasizes the importance of outperforming expectations to gain respect, stating, "You gotta work twice as hard and be twice as good just to be respected at your job" [21:06].

• Initiating Leadership:

  • Prove Competence: By excelling in current roles, Andrew can demonstrate his capability and earn the trust of his team.
  • Communicate Ambitions: Once performance excellence is established, Ramsey advises approaching leadership with a clear intent to grow, asking, "How can I take initiative?" [21:18].

• Mentorship and Collaboration: Encourages seeking mentorship from senior leaders and building strong professional relationships to facilitate leadership growth.

Notable Quote:

"You don't want that reputation [of nepotism]. That's what the team's afraid of. They're not afraid of you stepping on their toes." — Dave Ramsey [25:24]

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Strategic Partnership Transition: Christy’s Mental Health Practice

Caller: Christy from Atlantic City, owner of a group mental health practice with 35 employees and $1.5 million in revenue.

Question: Advice on transitioning from 100% ownership to a 50/50 partnership with a long-term collaborator.

Key Discussion Points:

• Risks of Equal Partnerships: Ramsey cautions against 50/50 partnerships, highlighting potential for conflict, especially when personal and professional boundaries blur. "The only ship that won't sail is a partnership." [26:07]

• Best Practices for Structuring Partnerships:

  • Detailed Operating Agreements: Emphasizes the necessity of comprehensive agreements that cover operational control, decision-making processes, and conflict resolution.
  • Addressing Contingencies: Stresses the importance of planning for unexpected events ("the Ds" – Divorce, Death, Disability, etc.), ensuring business continuity [25:35].

• Customization for Medical Practices: Suggests modeling the partnership structure after established medical partnerships to cater to the unique needs of a mental health practice.

Notable Quote:

"Nothing with two heads is a monster." — Dave Ramsey [26:03]

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Conclusion

In this episode, Dave Ramsey provides valuable insights into managing business expansions amidst political uncertainties and offers practical advice for aspiring leaders and those contemplating significant structural changes in their businesses. The discussions underscore the importance of strategic planning, operational excellence, and meticulous partnership agreements to navigate the complexities of modern business landscapes.

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Key Takeaways

1. Stay Informed and Strategic: Understanding and anticipating policy changes, such as tariffs, is crucial for sustaining growth and avoiding unnecessary costs.
2. Excellence Leads to Leadership: Demonstrating outstanding performance can naturally position you for leadership roles without causing friction within your team.
3. Cautious Partnership Planning: Equal partnerships require thorough planning and agreements to prevent conflicts and ensure business stability.

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Notable Quotes with Timestamps

• "Most of what I've seen on the tariff stuff so far... the actual net result is zero." — Dave Ramsey [03:20]
• "You gotta work twice as hard and be twice as good just to be respected at your job." — Dave Ramsey [21:06]
• "You don't want that reputation [of nepotism]. That's what the team's afraid of. They're not afraid of you stepping on their toes." — Dave Ramsey [25:24]
• "The only ship that won't sail is a partnership." — Dave Ramsey [26:07]
• "Nothing with two heads is a monster." — Dave Ramsey [26:03]

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Learn More: To gain further insights and strategies discussed in this episode, consider subscribing to The EntreLeadership Podcast and exploring additional resources at Ramsey Solutions.

Transcript

[David]

Foreign.

[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. In other words, if you want to think tank with theory, you're in the wrong place. This is a practical place. I actually do this crap every day. If you got a question you want to ask on the show, fill out the [e-mail] Ask or call and leave us a voicemail at 844-944-1070. We'll make you a caller here. That's 844-944-1090. David is in Canada. Hi, David. Welcome to the show. How can I help?

[David]

Hi, David. Thanks so much for having me on the show. And to give you a little bit of context, we're looking to expand to the U.S. we're a Canadian company. I'm the founder of. My wife and I, we did about 12 million last year, and our profit was about 1.5 Canadian dollars, just to be clear.

[Dave Ramsey]

Wow. Way to go.

[David]

Yeah. Thank you. I'm the father of five, and I'm excited to chat. We essentially manufacture our product, which is a small log cabin kit that people can build themselves in a couple days. We manufacture here in Ontario, and we shipped last year to all the provinces and most of the territories of Canada and 40 different US states.

[Dave Ramsey]

Wow.

[David]

Yeah.

[Dave Ramsey]

How much of your volume percentage was in Canada and how much was in.

[David]

The U.S. it's evolving, but if I look at the last trailing quarter, it was about 60, 40 Canadian versus American. That portion is growing the most. Yeah. Our American sales are doing 200% roughly, and our Canadian sales are kind of a little bit flat.

[Dave Ramsey]

What's all this tariff junk going to do to you?

[David]

Well, so far, it's amounted to a lot of chaos over nothing. We've been shipping ourselves across the border before all the announcements are made and kind of trying to get ahead of things, but we are still a 0% tariff item, although that seems to be constantly in flux. My base case right now is that because our item is under the former trade agreement, that. Which will be renegotiated next year, that we're probably safe until. I think It's April of 2026.

[Dave Ramsey]

And you're probably safe then.

[David]

Who knows?

[Dave Ramsey]

Well, I mean, who knows? I don't know. I mean, I'm not an expert on what's going on. That's why I was asking you, but most of what I've seen on the tariff stuff so far and by the time this airs even, it might be wrong, but is a lot of saber rattling, a lot of grenade throwing, but as you said, a lot of chaos. But actual net result is zero. Now, there's some exceptions to that, obviously, but Canada and Mexico are different than some of the other countries that President Trump's negotiating with in that, you know, he wanted some equality there, but he was also concerned about border issues, as I understand it. Does that sound right?

[David]

Yeah, I mean, I'm not a political person, but yeah, that's, that's kind of what I've gathered from some headlines.

[Dave Ramsey]

Okay, all right. That's what I, that's the only thing I've got it from. I hadn't had a discussion with him, I promise you, but the. Okay, so, I mean, does it not feel like that there's a low, it would be a low percentage that you ever get tagged.

[David]

Yeah. Or if it's like say 5 or 10%, I think we can eat that and keep growing.

[Dave Ramsey]

Yeah. And of course it would have to be for sure. You got a year.

[David]

Yeah, I think so. I think that's my base case right now. But even prior to Trump even getting elected on a roadmap, we were looking at our growth trajectory in Canada versus growth trajectory in America. And America production was still on the roadmap. It's just that it was more of like a 2027 or maybe 2028 issue. And now it's like, okay, do we fast track it? That's kind of the question.

[Dave Ramsey]

Yeah. No, I wouldn't, I would run your business and keep your finger on the pulse because let's just say if they do, if they did something, it's going to be 26 before they do it. And you're, you're without fast tracking, you're already on path to do 27 anyway. You're just doing that as a business model issue, tariffs aside.

[David]

Well, I mean, yeah, the issue with starting a factory is at least we've done it once. It's a 9 months to 12 month lead time on machinery and it's probably, you know, it's a year long process to really get something from zero to one.

[Dave Ramsey]

Yeah. So I mean, I would start mapping out and going in 27, this is where I'm going to do it. And I'd start ordering the machinery to do it in 27, because that's what you already had. Your only question is do you short circuit it by 12 or 18 months. And I wouldn't.

[David]

Okay.

[Dave Ramsey]

Because I think what's gonna end up happening is that you're gonna join this crazy chaos rush thing and you're probably gonna end up overpaying for some stuff just to get the thing set up, which would make you wish you paid a small tariff.

[David]

Yep.

[Dave Ramsey]

You know, if you get in a hurry and you do this poorly, it's gonna end up costing you more is my point. And you're not ready to do it right now, cash wise and everything else. So. Yeah, I'm probably just, you know, the actual. I think you've done a really good job of critical thinking on this and you're doing a really good job running this business, by the way. It sounds excellent. I like it.

[David]

Thank you.

[Dave Ramsey]

So, yeah, so you, you're. You just think because I'm going to have 40 to 50% of my revenues going forward in the future, I need to have something stateside anyway. And then the only question is, how much damage is the tariff going to do to me before I can get there?

[David]

That's exactly the question. Yep.

[Dave Ramsey]

Yeah. And it's, you know, it's. It's 12 months of tariff if there is one. That's what you're telling me anyway. I'm learning from you.

[David]

Yep, that's it. I think that's my, that's my base case. Although there's always that tail risk of something comes in and just hits you with a 50% out of left field kind of scenario.

[Dave Ramsey]

Yeah. If he just continues to throw grenades.

[David]

Yeah, yeah.

[Dave Ramsey]

A metaphorical grenades.

[David]

Let's hope so. We're one tenth of size, you guys.

[Dave Ramsey]

So I think we're on the same team, David. At least most Americans think we are, so we'll see. Yeah, but I mean. Yeah, that's. Oh yeah. What a mess. Yeah, I, that. I think, you know what I have experienced working with entree leaders across America, you know, as to whether they're gonna, you know, their cost of goods sold, if they're importing an item or a. Pieces of items to build something and do assembly here, they're gonna get smacked around. If they were ordering out of China pretty good. Yeah, but the. But, but, but, you know, if you already were building made in the USA or, you know, made in Canada, even made in Mexico, we're not seeing much actual effect yet other than, as you said, a lot of chaos and saber rattling. There's just all these threats to get people to the table and to get something, get some political capital out of the thing and all that. So Gosh, man, I'm sorry you're facing that because you're too good a guy. But that's the way it is and yeah, I think you've analyzed it. Well, I, I, you know, just walking through it with you here, it makes a lot of sense. What your way you're looking at it. I'm going to hold off and just do my normal plan and move when it's time to move. And if I got, you know, 12 or eight months or whatever of time, I mean, you may be able to speed it up a couple months if a thing comes down on you without really incurring any extra huge costs. This is the Entree Leadership Podcast. These days, business as usual is anything but. Tariffs make trade policy a moving target. Supply chains are squeezed and your cash flow is tighter than ever. If your business can't adapt in real time, you're in a world of hurt. That's why you need NetSuite by Oracle. Trusted by more than 41,000 businesses and including Ramsey Solutions. You need to see what's happening, what's stuck and what's costing you and how to fix it. NetSuite is the number one cloud based business management suite because it helps your business make the right decisions fast. It brings accounting, financial management, inventory and HR into one place so you're not left shuffling a dozen different spreadsheets. That gives you the visibility you need to make quick decisions based on actionable data. And NetSuite AI automates everyday tasks so your team can focus on strategy. It's one system for full control and no guesswork to tame the chaos. And right now, if your business is doing a million or more in annual revenue, download NetSuite's free ebook Navigating Global Trade. Three insights for [e-mail] that's NetSuite.com Ramsey Entre Leadership Master Series is already over 90% sold out. In the event world, we call that sold out. But we got some seats left and we'd love to have you come. It's gonna be. We want you to join us October 19 through 24. Now's the time to act. Master Series is a five day intense business conference where my team, my leadership team and me walk you through the exact tactics that we use to grow Ramsey to where we are today. About a $300 million company. You will leave with a custom plan to grow your business. You can join us in Frisco, Texas at the wonderful Omni there in October. To do that, go to entreleadership.com masterseries. You do not want to miss this. This is a PhD. It's what getting a master's degree in business should be. I've had people with masters come to this thing and they go, this is better than my master's degree. Well, it is. That's right. It definitely is. Master's degree is good, but this is better. So click the links in the show notes or the YouTube podcast, all that stuff. Or you can just go to entreleadership.com masterseries we'd love to see you. Jared is in Cincinnati. Hey, Jared, what's up?

[David]

Hey, Dave. Thanks for taking my call.

[Dave Ramsey]

Sure.

[David]

I'm 33. I currently work for a Fortune 200 company as a product manager. I've been with the company for over 12 years, and I've held various roles in that time. About a month ago, I was offered a small business and I'm looking for your advice on the process I should follow to determine if it's a good opportunity for me and my family that I should quit my job and go for. The business is a flower shop. It has around 10 employees and an annual revenue of 1 million.

[Dave Ramsey]

What are they telling you the profit is?

[David]

So he did not have a P and L built, so I was able to get my hands on the tax returns over the last handful of years. Gross profit is like last year was just under half a million. But the net income that he's actually showing small losses over the past few years. So I don't know if that is, you know, a. A quote unquote strategy or if this.

[Dave Ramsey]

Is just something might be a good tax strategy, but it's a bad business idea because this business isn't worth anything. It's not making a profit.

[David]

Yeah. Yeah. And it's not selling it. It's. I was. I was offered it being given to me as a gift.

[Dave Ramsey]

Okay. There must be something else going on in this relationship. Is this a family member?

[David]

It's not a family member. So I worked there all throughout high school. So have a good relationship with the owner and there isn't another. So he's ready to be done and doesn't have an exit strategy.

[Dave Ramsey]

So he's just going to hand you the keys?

[David]

Yeah. Yeah.

[Dave Ramsey]

Have you attempted to build a P and L?

[David]

Yes, I. Well, using. Using the tax forms. Yes.

[Dave Ramsey]

Okay. What are you finding there?

[David]

I'm basically what you said, where it's, you know, it's. It's hard to see when the.

[Dave Ramsey]

So what's the problem? Why is he not making a profit on a million dollars? Is it labor? Cost of goods sold, rent.

[David]

So cost of goods sold is like 60%, like 600,000. Yeah.

[Dave Ramsey]

So he's got a pricing problem.

[David]

So he said that last. So up until basically August of last year, they weren't really counting costs. They were, they weren't keeping an eye on things. He said that he implemented some changes then to have everybody really looking at what they're putting into arrangements to keep costs down. And that, that's had positive effects. But I don't have, you know, 20, 25.

[Dave Ramsey]

You have enough base knowledge from your high school days to know that you can make a flower arrangement for half of what he's making it for. I don't.

[David]

Yeah, yeah.

[Dave Ramsey]

Because I mean. Yeah, that's a, I mean it sounds, it sounds like that this is a hobby. Well, yeah, it's a million dollar hobby.

[David]

Yeah. Yeah.

[Dave Ramsey]

I mean he loves the artistry of it and the customers and being down there smelling the flowers and he hadn't. There's. He's been asleep at the wheel for a decade.

[David]

Yeah. And I mean as compensate, I would be taking a massive.

[Dave Ramsey]

Yeah. What do you make now?

[David]

About 130. The compensation has been between 30 and 60 thousand.

[Dave Ramsey]

To him.

[David]

To him. Yeah, yeah, yeah, yeah.

[Dave Ramsey]

So I mean I've got to have a level of confidence that I can make a 13% net profit on a million dollars or this is not. I'm not doing this. And that means you're gonna get paid $130,000. Cause you own it and you have a profit margin of 13%. That'd be. You would at least break even on what you're doing and have the potential to grow from there. I'm guessing that that's probably doable. That doesn't sound unreasonable. A 13% net profit on a million bucks on. Because I think he's, he's not paying attention to anything. His labor costs, he's not paying attention to any of his accounting metrics at all because he doesn't even have any.

[David]

Correct.

[Dave Ramsey]

And certainly cost of goods sold and there is no telling how much waste they have.

[Christy]

Correct.

[David]

I think there's a lot of opportunities.

[Dave Ramsey]

Yeah. They're over ordering, they're half butt taking care of stuff and they just throw it around, make some flowers and send them to mama. I mean, wow.

[David]

I mean he walked me through kind of his day to day activities and to me it's all office manager type stuff. It's not owning, it's not growing.

[Dave Ramsey]

Well, first thing I gotta do is I gotta get all the processes and systems that are Broken here, fixed. And if fixing those doesn't get me to a 13% profit, then I got a problem. And so I think you go down there and spend some weekends, spend some Friday afternoons and all day Saturday, and you get your elbows in the flowers and let's see what's going on. Because otherwise, I think you're being irresponsible for your family. Because you gotta have a good, logical case that you can make $100,000 a year out of this thing. And it's possible that the marketplace has shifted and Costco selling bouquets of flowers is putting guys like this out of business. I don't know. They may have driven the price point down to where there's no margin left. Yeah, I have no idea how stuff like that affects this, but I'm just thinking about, okay, when I order flowers, what happens? Well, I pay the florist cause I'm an old school dude, and they deliver a nice bouquet to Ms. Sharon, and my life is good. That's what you're supposed to do. Right. But when my wife gets ready to buy flowers, she goes. Goes down to freaking Costco or Publix and picks them up.

[David]

Yep.

[Dave Ramsey]

And so I don't. I mean, I'm trying to put myself in the shoes here a little bit. I don't know. I'm not the focus group probably, by the way. But. Yeah.

[David]

Yeah. So, I mean, I would say almost 40% is from funerals, and then they haven't really been doing weddings, which is another big.

[Dave Ramsey]

Well, that's where all the money is.

[David]

Correct. Yeah.

[Dave Ramsey]

And Mother's Day. And Mother's Day. Right. I mean, that's.

[David]

Yeah, yeah. That's why this is enticing. But it's hard to say.

[Dave Ramsey]

Yeah, but you know, if you're losing a quarter of watermelon, you don't get a bigger truck.

[David]

Yeah, yeah, agreed.

[Dave Ramsey]

So that. That's what we got to figure out. So you got to spend enough time down there to get more information than you and I have. I think my gut tells me. I mean, if you told me that we were trying to get 130,000 out of 400,000, top line, I would be going, I don't think this is happening. Forget it. But 13% on a million dollars doesn't sound unreasonable to me. I think that you ought to be able to squeeze that out just by cleaning up, just by actually running the freaking business. I think. But that's just supposition. Right. It's easy for me to do on the other side of a microphone. You Gotta go down there and live this life. So if I'm you, I'm gonna get neck deep in flowers for a little while before I make the decision.

[David]

Okay. Yeah, that makes sense.

[Dave Ramsey]

How much have you got? Any time off schedule that's available to you at work? Yeah, yeah, Take some of it and use your vacation down there. And go down there and work.

[David]

Yeah.

[Dave Ramsey]

And go in there and try to, you know, see, because you'll see the stuff. It won't take a week. You'll. You'll look at it and go, this is just. We're losing $100,000 on these two things right here.

[David]

Yeah.

[Dave Ramsey]

You know, or you'll go, I think this is. There's just no margin because we've gotten priced out of the market. Or you'll start to see it, I think, don't you?

[David]

I would think so. It's hard thinking back, you know, 10 years and.

[Dave Ramsey]

Yeah. It's just not, it's not a complicated business. It's a, you know, we got cost of goods sold, we got labor, we got rent and we got price points and business model. And the business model doesn't have weddings in it right now. And so, you know, one of the things I'm gonna do too is I'm gonna contact some of the local wedding chapels and wedding planners and say, if I, I'm looking at buying this, if I had, if I did, what would it take to earn your business?

[David]

Okay.

[Dave Ramsey]

And see if you can open up some markets that way. And if you, you know, if you had like three of those, go, I've never, not in a million years, I wouldn't touch you with a ten foot pole. And you go, oh, I got another issue.

[David]

Yeah, so.

[Dave Ramsey]

Or if they go, yeah, if you came over there and gave me some package deals and help me get these brides done. Yeah, that would be great. Help me deal with Bridezilla, then. Yeah, that'd be great. And you know that. Then, you know, you could. That would give me some help. That there's some upside too, because if you took the million to a million five, you know, that's another way to get to it just by cleaning up the marketing and, you know. Yeah, that's very interesting. Very cool. It's neat. That's neat. I like your proposal. I like the idea. It's an interesting look. And you know what I bet about this guy? I picked on him here for the last few minutes. I would also say that this guy is probably a very nice, sweet person. I think he's probably just a little Too nice. Instead of getting his hands down in this stuff and cleaning up some of the mess. All right, we got a video question of the day that's been sent in. Let's see what's happening here.

[David]

Yeah, my name is Andrew Beach. I am from Waterford, Michigan, and we are a construction company called Independence Commercial Construction.

[Dave Ramsey]

And how many team members do you have?

[David]

We have about 35. Our top revenue is about 10 to 11 million. My question for Dave would be, as the owner of or the son of the owner, how do I take initiative and grow and become a leader? Right now, I'm not in a direct leadership position. How do I take initiative and grow and also not step on the toes of my teammates that I'm working around every day?

[Dave Ramsey]

Well, you're not gonna be stepping on their toes if you do your work with excellence. We told the Ramsey kids growing up that if you're doing anything here, whether you're 13 years old, 23 years old, or 40 years old, you gotta work twice as hard and be twice as good just to be respected at your job. So your first goal is be so excellent at your job and so diligent at your job that everyone around you goes, he's competent. Surprise. The boss's son's not an idiot. That's a. You know that. That's relieving to the team. It's good for them to know that. And so you go be the best version of you at your job. Blow it up. And then that's. Once you're doing that and you get 110, 120% performance ranking on. On what you're doing and what they're asking you to take care of, then you can say, I want to take initiative. And I would go to your leader, whether that's your family or whether that's your boss, that's between you and your family. And say, how can I take initiative? I'm performing at 120% here. Everybody's in agreement on that. I want to grow. I want to see how I can help. And how can I do that in a way that isn't offensive to the rest of the team or threatening to the rest of the team? The rest of the team is more threatened by nepotism than. Which the definition of that is a doofus that gets a job he's not entitled to just because he hit the DNA lottery. And that's what you want to avoid. You don't want that reputation. That's what the team's afraid of. They're not afraid of you stepping on their toes. If you're better than them, if you're doing a great job, as a matter of fact, that gives them great comfort because they know the next guy coming in is not going to blow this thing up. And it's because you're pulling off. You're pulling off your part of the. You're carrying your weight, you're carrying your part of the water. So, yeah, that's how I'm going at this. And first thing is you be excellent there. Then and only then would I raise my hand with whoever your immediate leader is and say, hey, I want to make sure I'm the best I can be so that I can prove myself to the rest of the team and to the customers to be able to move into the ownership role here someday. Help me do that. What do I need to do? And I would actually ask for a couple of the senior leaders to start mentoring you at breakfast. That's what we did with my son Daniel about 12 or 14 years ago. And he eventually became their boss. He's now the president of the company. And they still go to breakfast because they're still friends, they still love him, he still loves them, and they still pour into each other and believe in each other, hold each other accountable and so on. Even though the roles have somewhat reversed over those, over that decade plus. But that's the kind of thing you can do, is step into that. So very cool. It's a good question. Thanks for asking that. I love it. Very good. This is the Entre Leadership podcast. Thanks for hanging out with us. We could use your help. If you would help us, we'd appreciate it. How can you do that? Well, click subscribe or follow or share. Click the cut the link out, send it to somebody and say, listen to this. It's helpful. And spread the word that this podcast exists. We know that many of you are doing that, but because our numbers continue to grow. Thank you very much. We very much appreciate that. And yeah, continue to leave those five star reviews. All that stuff helps the algorithm in the world of the Internet. So thanks, thanks for all of that. Christy's with us in Atlantic City. Hi, Christy. How are you?

[Christy]

I'm good. How are you?

[Dave Ramsey]

Better than I deserve. What's up?

[Christy]

I am an owner of a group mental health practice and I have about 35 employees and about 1.5 million revenue per year. I was just wondering if you have any general advice on how to transition from 100% ownership to 50, 50 with a business partner.

[Dave Ramsey]

Why would you do that?

[Christy]

That's generally Been the reaction I've gotten from most people. My future business partner has actually been with me from the very beginning of founding the business. Been in business for about five years. So she's essentially helped me build it.

[Dave Ramsey]

But she's not a partner.

[Christy]

She's not a partner yet.

[David]

Okay.

[Dave Ramsey]

Have you. You promised her a partnership?

[Christy]

Yes, we have an operating agreement in process. Got the business valuation and. Yeah, we have just a couple steps left.

[Dave Ramsey]

Okay. I think the ship has sailed, so I don't think I can stop it. But if I had caught you earlier, I would have tried to stop it. I think you'd have been better off to let her get paid off of the bottom line and share in the profits as if she was a partner but not screwed this thing up with an equity position, particularly a 50. 50 equity position. Anything with two heads is a monster.

[Christy]

Yeah, I've heard you say that before.

[Dave Ramsey]

And you've heard me say that the only ship that won't sail is a partnership.

[Christy]

Yes. Talk about it being different for like the group practice, like doctors.

[Dave Ramsey]

Not a mental health group practice. More of a medical setting or a, you know, I.

[David]

No.

[Dave Ramsey]

And she's not a practitioner anyway. She's an operator, right?

[Christy]

She is a practitioner.

[Dave Ramsey]

Oh, she is. Okay. All right. Well, I mean, what I would do is get some best practices from the medical community then and try to model it after. There is some unique, you know, some unique ways and actually some unique types of corporations that you can use there. And I don't know enough about it to tell you other than I know they exist. So if I'm you, I want to get with someone that helps people in medical practices, structure these operating agreements and make sure they're proper. Okay. And do model it like a, you know, you know, two OBGYNs that went together or two dentists that went together or whatever, that kind of thing. Model it after something like that and put that together and hopefully that'll give you the proper operating. The problems you're going to run into on a practical tactical level, even after you do that, and you need to make sure you address those while you're doing this. Okay. Is who has operational control and how, you know, in case of a tie, who wins, in other words. And you know, I want to buy a $500,000 piece of equipment and which you probably wouldn't in your world, but I'm making up a scenario and I want to go in debt and the other one doesn't want to do it. Who decides then? We both got 50%. Who decides? So that needs to be addressed in the operational agreement. And my suggestion would be, in case of a tie, the founder wins you. Okay, so it's pretty much a 5149 idea rather than a 5050 idea. But somebody you know, you gotta solve that on a practical level. So if you run in a more practical thing and yours would not be equipment, it would be. I wanna move to a different location and the rents double. But I think we get more clients. Well, I don't. I like this location. Now what do we do? You know, that's the kind of stuff that's going to come up. I want to add some payroll and some assistance and so we can make the office run more efficiently and whatever. I don't. Well, now what are we going to do? All that kind of stuff. That's the kind of thing I want you to solve for. Then the second thing you've got to solve for is all the possible negative events of life. We call them the Ds. The Ds, they all start with a D. What happens in the event of divorce? And the judge says that your partner's spouse now owns half of your thing. That ain't cool. Okay, what happens in the event of drug use? You find out she's doing cocaine. What happens in the event of disability is a car wreck and she's unable to practice. What happens in the event of death? What happens to her share then your share then what happens in the event of default? I just don't want to work much anymore. Or disinterest the same thing. I don't want to work much anymore. Well, I think we both agreed that we were all going to work all the time. No, I know, but I'm just kind of tired and burnt out and I think I'm going to take a four year sabbatical and I'm still going up my Prof. You know that, that kind of stuff. What are you gonna do with that? You gotta have to deal with these exit strategies and disinterest. Could be. I just don't wanna be here anymore. I wanna move to Oklahoma, you know, and so. Okay, well, what are you gonna do? And so you gotta think about all those things and put them in the, in the partnership operating agreement. Not only the operating agreement, but just you gotta have all these ex. For all the things that can happen. And if you leave one out, that's the one that'll happen. Of course, there's no exceptions. You're in a world where you see people every day who have experienced things they thought they would never experience. Right.

[Christy]

Absolutely.

[Dave Ramsey]

Apply that to this. You're not the exception. Just because everything's hunky dory right now and we're all in love right now, doesn't mean it's always going to be that way.

[Christy]

Mm. Yeah, we've Hopefully.

[Dave Ramsey]

Hopefully it will be. We got two mental health professionals, for God's sakes. Hopefully they can get along. Right. But that would at least be the starter goal. But, yeah, but let's just assume everything goes bad and if we can stomach the strategy in each of those things I talked about and even more in the event of a negative situation and both of us can stomach and go, okay, that. I can live with that. If that's what happens. If I'm in a car wreck and I can't. Can't come into work anymore, I'm in a coma. I'm induced. In an induced coma for seven months, you know what happens? So this is what's going to happen. Okay. I can live with that. Okay. I mean, you got to think that stuff through, because this is the stuff I have seen coaching businesses for the last, you know, 15 years around here. We see all the negative things turn up and it's why I hate these things. But if you. I think you can find good answers to all of those questions by following some best practices in the medical field. Those are the partnerships that I have seen survive. I don't know that I can necessarily lump in mental health professionals, but I guess it makes. It's logical that you would fit in the same bucket. So. But I mean, like two heating and air guys doing this. The number of them that make it 10 years is almost zero. Two guys starting a construction company, the number of them make it 10 years, almost zero. The people you know, two guys having a cup of coffee or a beer, and they decide they want to be in business together. It's a bad idea. It's a really bad idea most of the time. So. But you've promised it a B. The ship has sailed. You're already working out the details, so I'll help you as much as I can, and that's as much as I can to get there in a positive way and set you up for a possibility of winning on a lot of things in business, folks, if you will analyze all the possible negative fallout of the deal, whatever the deal is that you're getting ready to get into, and if you can live with the negative. And the only. You know, but so many times entrepreneurs are optimists. We're glass half full people and so we figure out this is going to work and this is going to work and this is how it's going to work. But we never think about if it doesn't work, what's going to happen. And if you'll just go worst case scenario on your decision making paradigms and your decision making frame your framework. Always look at a worst case scenario as well as a best case scenario. And if you can live with both, then we've got a possibility we go forward in the thing. And that's kind of what we're applying to this exact question here, this nuanced question. So, Christy, you sound like you guys are real sharp. I sure hope this works out for you. I hope all my dire predictions are wrong. That would be my. It would be a real gift if they were. So that's how it works. Hey folks, that about puts us our in the books. 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.