We Make $13 Million, But We Didn’t Pay Our Bills

Summary

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The EntreLeadership Podcast

Episode: We Make $13 Million, But We Didn’t Pay Our Bills
Host: Dave Ramsey, Ramsey Network
Date: February 18, 2026

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Episode Overview

This episode delivers practical business and leadership coaching as Dave Ramsey fields real-world questions from three business leaders. Topics covered include managing major business debt, keeping company culture aligned with decentralized teams, and succession/exit planning in a family business. Dave provides direct, experienced advice with actionable tactics, illustrating his points with memorable analogies and frank conversation.

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[00:53] Segment 1: Managing Debt & Financial Recovery in a Fast-Growing Business

Context & Caller

• Caller: Andrew, CEO of a Dallas-based third party logistics firm ($13M revenue, 30 FTEs, 20-40 temps)
• Challenge: $1.25M debt, services with key suppliers paused due to unpaid bills, considering a high-interest debt consolidation offer to ease operational pressure

Discussion Highlights

• Company Background

  • Rapid growth, profitable now, past cash flow issues worsened by warehouse move and poor labor planning.
  • Paying down main supplier debts at $20,000/week per vendor.

• Debt Details

  • Three main vendors: $400k, $300k, and $180-225k owed.
  • Considering a private-lender consolidation loan: 16-19% interest and 0.5% of revenue over 2 years.

• Dave’s Core Advice

  "Interest rate is absolutely ridiculous. I would just call these three vendors and say, look: we want you back online and we're committing $20,000 a week. If that's not enough, pop us offline again." – Dave Ramsey [05:29]

  • Direct repayment over consolidation: Focus cash flow directly on vendors, negotiate discounts for faster or priority payment.
  • Suggests leveraging partial lump sum offers for vendors in exchange for substantial discounts.
  • Warns against trading a minor speed-up for prohibitive interest just to avoid embarrassment and inconvenience.

• Memorable Quote

  "You stubbed your toe, you didn't manage your cash flow well...but we're really slowing down how fast we get out of debt by this [loan]. It's not speeding it up." – Dave Ramsey [06:30]

• Key Tactics

  • Maintain regular, transparent communication with creditors/vendors.
  • Use healthy payment history as negotiation leverage.
  • Avoid high-interest loans unless it substantially accelerates recovery or is the only option.

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[10:30] Segment 2: Creating Alignment in a Decentralized Field Team

Context & Caller

• Caller: Zach, Atlanta-based power utility contractor ($11M revenue, 40 employees, debt-free)
• Challenge: Field crews work independently under client direction, leading to fragmented subcultures and employee alignment issues with company values.

Discussion Highlights

• Problem Defined

  • Crews take daily orders directly from the client’s directors, causing them to identify more with the client than their employer.
  • Client interference undermines safety meetings and internal processes.

• Dave’s Advice: Restoring Company Culture

  • Centralize Workflow: Consider transferring work order dispatching back under company control to reinforce reporting lines.
  • Direct Communication: "The instant one of these guys stepped between you and them on something like a safety meeting, I would do a sidebar with that customer and say, 'We're not doing that.'" – Dave Ramsey [15:55]
  • Increase Visibility: Weekly site visits and competency check-ins from a promoted manager.
  • Frequent Stand-Ups/Touches: Regular briefings (in-person or virtual) to reinforce alignment and keep communication flowing.

• Memorable Quote

  "My job is to make your life better, I’m gonna knock down blockers for you. But you’re also staying aligned, which means we’re course-correcting as we go along, gently in public." – Dave Ramsey [19:05]

• Implementation Ideas

  • Weekly in-person or bi-weekly Zoom check-ins.
  • Proactive, private correction of client overreach.
  • Persistence in reinforcing values and culture: "Chief Reminding Officer" as a core leadership function.

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[31:02] Segment 3: Succession Planning in a Family Construction Business

Context & Caller

• Caller: John, Los Angeles-based custom home builder (11 employees, $5M–$6M sales, two sons in the business, owner aged 64, planning retirement/exit)
• Challenge: How to equitably transition business ownership and roles, balancing contributions of sons and future succession among five children (three not involved in business).

Discussion Highlights

• Disentangling Roles and Ownership

  • Operational Leadership: Clearly define who handles production, operations, sales, office tasks, and how to increase “bench depth” so owner can step back.
  • Ownership vs. Employment: Sons are compensated for jobs, not just familial relation. Ownership transfers and profit shares can be distinct from job roles.
  • Profit vs. Equity: Offering equity or profit sharing as a staged step, with flexibility for future bequests via will or later transfers.
  • Communicate Plan: Telegraphed transitions boost morale, offer continuity for staff/clients, and clarify future expectations.

• Memorable Quotes

  "You just need bench depth for what you’re physically, tactically doing. If someone was doing what you’re doing and they worked for the president…you could have a leadership team that can run the business for you guys." – Dave Ramsey [34:48] "If you keep this real separate in your mind, it helps...First thing is we have to create the leadership team that can run it, with me being an absentee owner." – Dave Ramsey [38:59]

• Key Steps Outlined

  • Transition daily duties to staff/sons and hire for gaps.
  • Define profit-sharing based on actual business contribution and ownership, not just inheritance.
  • Plan an 12–18 month transition for a smooth handover.
  • Decide on long-term ownership allocations (all to working family members, split with other children, etc.).

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[22:27] Rapid Fire: Handling Bad Promotions

[22:27] Key Moment

• Caller Question: How to "undo" a failed leadership promotion without humiliating the team member or losing credibility?
• Dave’s Take: Take responsibility publicly, be authentic, apologize, and put the blame on your own misjudgment.

"When the leader says, 'I was wrong, I messed up, I apologize,' you’ll get a lot of grace from people." – Dave Ramsey [26:57]

• Outcome: Own mistakes openly; risking some embarrassment is better than protecting egos to the detriment of the team.

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Notable Quotes Recap

• On Debt:

  "Interest rate is absolutely ridiculous. I’d just call these three lenders and say, we're going to make good on this." – Dave Ramsey [05:29]

• On Culture:

  "I'm retraining my customer, and I'd be pretty direct with them that way. Especially in that world where you don't want to be subtle." – Dave Ramsey [16:25]

• On Succession:

  "If you'll separate the leadership team and the operations of the business as one category and the ownership as another, you can start to see a path to create a one-year exit ramp..." – Dave Ramsey [40:41]

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Timestamps for Key Segments

• [00:53] Debt & Vendor Management — Andrew, Dallas
• [10:30] Field Team Alignment — Zach, Atlanta
• [22:27] Handling Bad Promotions — Ken, Kansas City
• [31:02] Family Business Succession — John, Los Angeles

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Summary & Takeaways

Dave Ramsey’s tough-love style yields clear, actionable guidance in difficult situations:

• Negotiate, don’t capitulate, on business debts—transparent, disciplined progress beats costly shortcuts.
• For scattered field teams, regular, visible leadership and role clarity are essential for strong culture and safety.
• When planning succession, treat leadership duties and ownership as separate—be deliberate and communicative.
• Admit leadership mistakes openly to gain long-term respect and trust.

The episode is rich with real scenarios and practical wisdom, delivered with both compassion and the candor Dave is known for.

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Transcript

[Dave Ramsey]

From the headquarters of Ramsey Solutions, this is Entree leadership where I take calls from leaders like you about what it takes to win at any stage of business and leadership. I'm Dave Ramsey, your host with over 30 years of experience leading in the trenches right alongside you. If you got a question you want to ask on the show, fill out the form on entreeleadership.com ask or call and leave us a note at 844-944-1070. That's 844-944-1090. Thanks for joining us. Andrew is with us in Dallas. Hi Andrew, how are you?

[Andrew (Dallas CEO)]

I'm doing great Dave, thanks for having me. I appreciate the time.

[Dave Ramsey]

Sure. What's up?

[Andrew (Dallas CEO)]

I am the CEO and founder of a third party logistics company based in Dallas focused on e commerce and retail fulfillment. We have about 30 full time employees, 20 to 40 temps a day depending on upon the workload in the warehouse. We're doing 13 million revenue this year. We've got about 1.25 in debt and I'm looking at doing a debt consolidation loan for our debts and I would love your thoughts on that. Why it would relieve a little bit of our finance. We have also we're handling with AP obviously doing paying off multiple different collections on getting these debts down. And then the second piece of this too is Most of the 1.25 is between about three different suppliers and our services are paused with them. We don't need them but it would be nice to have them in to be able to use their services.

[Dave Ramsey]

They're paused because you haven't paid them.

[Andrew (Dallas CEO)]

Yes, sir. Yeah, we're back. We're profitable now. We're, we have payroll. I'm sorry, we're paying them down now which is about 20,000 a week to each of those and it'd be nice if we just got them all knocked.

[John (Los Angeles General Contractor)]

Out and get done right now.

[Dave Ramsey]

How long have you been out with them? How long have you been in collections?

[Andrew (Dallas CEO)]

About four months. We moved this year and we had bad labor management on my part and also a move into a larger warehouse. So we forecasted about 70% accurately which put us behind. And we've been calling them ahead of time. We haven't been avoiding it. It's just as a pain struggle that we've been through.

[Dave Ramsey]

So 20,000 a week is a million dollars a year, right?

[John (Los Angeles General Contractor)]

Yes, sir. Yeah.

[Dave Ramsey]

So you'll be gone a year. So are they how evenly distributed? So give me the breakdown between the three of them.

[Andrew (Dallas CEO)]

One of them is about the three major ones. One of them is about 400 grand. One's about 300 grand. The other one's remaining about 180 to 225, I believe it's at right now.

[Dave Ramsey]

Okay, so that's gone in just a matter of weeks.

[Zach (Atlanta Power Utility Contractor)]

Yeah, it'll all.

[Dave Ramsey]

It'll all be gone in a year?

[John (Los Angeles General Contractor)]

Yes, sir.

[Dave Ramsey]

Okay, and. And you, you said three major ones. Is there more?

[Andrew (Dallas CEO)]

Those are three major ones. The 1.25 is actually probably getting closer down to 1 million because we had a lot of these little ones that we were floating through and just asking them for another two weeks through the time period as we get our cash flow, cash flow positive back in January, all those limit ones are going to go away because we're back profitable now. So we'll be back managing and paying them on time. These three major ones are. These ones that are going to be about. It's going to be about 800,000, 900,000 left between those three major ones for.

[John (Los Angeles General Contractor)]

The rest of the year.

[Dave Ramsey]

Okay, and how long have you had this business?

[Andrew (Dallas CEO)]

We started out of an existing parent company, but then we really started and broke away in January of 2021.

[Dave Ramsey]

Okay, so just a few years.

[John (Los Angeles General Contractor)]

Yes, sir.

[Dave Ramsey]

Okay, so is it also safe to assume that your cash and your profits are not linear? They should be hockey sticking?

[Andrew (Dallas CEO)]

Yes, they are. Yes, Sir. We have 10x growth pretty well revenue wise. And then we've been profitable all of last year.

[Dave Ramsey]

In other words, we don't really want to extrapolate only $20,000 a week.

[John (Los Angeles General Contractor)]

No, no.

[Andrew (Dallas CEO)]

We want to knock this out and get on it asap. Yeah, it's just a more of like, you know, I've never had debt in my life. And so it's kind of like now we're in this position of building a business and not, you know, less than stupid tax stuff we've done. And so it's like, all right, I can relieve our operations by having one main target with a little bit higher interest rate. Pretty friendly. Like it's no personal guarantees or I can continue to deal with collections. And.

[Dave Ramsey]

And who's offering this?

[Andrew (Dallas CEO)]

We have a private lender here.

[John (Los Angeles General Contractor)]

They actually. It's great.

[Andrew (Dallas CEO)]

Partner. Actually the friendliest terms probably you could get across when it comes to this type of debt reconciliation offer.

[Dave Ramsey]

I'm sorry, when you say partner, what do you mean?

[Andrew (Dallas CEO)]

Oh, I say partner. Just in my network of relationships I have. That's not a partner.

[Dave Ramsey]

Oh, okay. It's a relationship. Okay.

[Andrew (Dallas CEO)]

Yeah, good, good relationship. It's a private equity company that invests in faith driven Faith Leadership Businesses.

[Dave Ramsey]

Okay, Are they taking an equity position for this?

[Andrew (Dallas CEO)]

No, no, no, sir. There's no equity position. There's no hostile language. It is strictly going to be interest. A high interest loan sits at 16 to 19%. We have a term sheet in front of us, we're talking to them, and then 0.5 of any realized revenue over the course of the two year term that they're offering us.

[Dave Ramsey]

Nah, I'll pass.

[Andrew (Dallas CEO)]

What would be okay, I agree with you. I'm gonna submit to you. What's the reasoning on your response there? Like how would you.

[Dave Ramsey]

Interest rate is absolutely ridiculous. And I would just call these three lenders and just start and say, guys, look, we want to get you back online and these vendors and I want to get you back online and we're going to commit $20,000 a month to this and at a minimum, or $20,000 a week, get to this at a minimum and you're going to see these healthy payments coming in. And if the healthy payments don't stick, then yeah, you could pop us back offline again. But you, you want our business, we want to work with you and we're going to make good on this.

[John (Los Angeles General Contractor)]

Yeah, yeah.

[Andrew (Dallas CEO)]

And they see our financials and everything too, so they'll know, they'll know what we're doing.

[Dave Ramsey]

Yeah. And you know, we give them the 19. The 19% gets you out of this a month and a half sooner.

[John (Los Angeles General Contractor)]

Yeah, yeah, it does.

[Dave Ramsey]

Yeah. This is like a September horizon. I mean it's not a, this is not a five or ten year program here. And so this is, you know, you stubbed your toe, you didn't manage your cash flow well. And like you said, you missed budget and grew too fast and it caused you to stumble and you missed your projections and we won't do that one again. I've been there. But the. It's too painful and it's too embarrassing. And that's what this is more than anything, honestly. I've been there. And you want to get rid of the embarrassment as much as you want to get rid of the actual debt. Cause we're really slowing down how fast we get out of debt by this. It's not speeding it up. So I think I would call them and depending on the nature of the vendor and what they put, what was it they provided? Did they provide a service? Did they provide a good that had a low cost of goods sold? You might say, you know, under. If you were to give me a discount on my balance, I might put you at the front of the line. And instead of paying them evenly, if somebody gives me a 25% discount on one of these because they to get me to get paid off and to get back to doing business again, to get cash flowing both directions again. So even if it's the 400, I might put them to the front and say you get $20,000 a week until you're paid and I'm just going to let the others are going to sit a little bit. Somebody wants to do that and get out of debt even faster. I would ask, I mean not demand and not, not, not say we're about to go broke because it's not true. But just say I'm committing $20,000 a week to this process. We're going to be done with all three vendors by September. If you would like to be at the front of the line on that, if you want to offer a substantial discount, then we can do that. Otherwise we're just going to run all three of you at the same time and either one's fine with me. I don't care. And see if somebody steps up and knocks another hundred grand off this or something, which is entirely possible. If I were on the other side of this, I would seriously consider that if I were looking at you and I wanted to get you back in the saddle as a customer and paying me again and buying from me again and doing business with me again and all that kind of stuff. So that's assuming it gets there. So I've done that in several different situations that were positive. So I don't know. But no, I wouldn't, I wouldn't give somebody 19% to avoid the embarrassment and to extend the pain one extra month. No thanks.

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[Dave Ramsey]

Zach's in Atlanta. Hey Zach, what's up?

[Zach (Atlanta Power Utility Contractor)]

Hey Dave. I just wanted to give you a call and ask a question that I've been, I've been having trouble with for a while. I'm a power utility contractor in Atlanta, Georgia. We run a debt free business. We have 40 employees and we did just over 11 million last year. My question is, how do I create alignment across my team that does construction work across the state? They report daily to our customer directly and I find often that they form silos with cultures of their own that do not line up with our core values.

[Dave Ramsey]

Why do they report to your customer daily?

[Zach (Atlanta Power Utility Contractor)]

So I guess for some context, we're contractors for the power company and we have dedicated contracts where we have crews, anywhere from two to five men on a crew that are assigned to a region of the state with a director that assigns work orders to them daily and they cover that region completing work orders as a contractor for the power company.

[Dave Ramsey]

Okay, so because of the daily communication and the isolation, they've forgotten who they work for.

[Zach (Atlanta Power Utility Contractor)]

Correct. That is exactly the problem.

[Dave Ramsey]

Yeah, that makes sense. It's logical.

[Zach (Atlanta Power Utility Contractor)]

And I even find that the, because they form strong relationships with the director that they work with that sometimes the director will almost help them get out of things that we try to do like safety meetings. Right. So they'll, they'll almost come up with a reason to not be there.

[Dave Ramsey]

Yeah, yeah. How long do you end up having a relationship with that director? I mean, you're going back to them repeatedly, are you not?

[Andrew (Dallas CEO)]

Yes.

[Zach (Atlanta Power Utility Contractor)]

Yeah, I mean I, I speak with most of them, if not weekly, every several weeks.

[Dave Ramsey]

But I mean, once that particular job or contract is finished, you probably are going to sign up with them again for some more later, right?

[Zach (Atlanta Power Utility Contractor)]

Oh yeah, these are, these are multi year contracts. I mean we've been doing this work with these people for eight to ten years.

[Dave Ramsey]

Yeah. Okay, well, I may need to retrain my customer too then.

[John (Los Angeles General Contractor)]

Yeah, I think so.

[Dave Ramsey]

They need to keep their dadgum hands out of my business. They're the customer. They're not in charge of my safety meetings, they're not in charge of my guys. They're giving them work and that's the workflow. How cumbersome. How many different crews you got? 40, so four. So you got 10, 15 crews, right?

[Zach (Atlanta Power Utility Contractor)]

Yes. About half of those are a different division that does a different service. But I have 12 employees that this issue pertains to.

[Dave Ramsey]

How hard would it be for the work orders to come to you and you give them to your men every day?

[Zach (Atlanta Power Utility Contractor)]

Probably not easy. They. We have a login on their internal computer system that. Where they do the work orders and things. So it. I know they have not designed it to come through me.

[Dave Ramsey]

I know, but you could log in.

[Zach (Atlanta Power Utility Contractor)]

That's true. Yes.

[Dave Ramsey]

And then you could hand out the orders. Your guys don't have the login.

[Zach (Atlanta Power Utility Contractor)]

That's true. That's an idea for sure.

[Dave Ramsey]

You could centralize it and get the power off of them. And then they're no longer confused about who they work for. They're confused because they get their marching orders every day from somebody else. And then that guy sometimes steps in and circumvents other things you're trying to do. So he's augmenting the confusion so that I don't. I don't know if it's worth all that effort or not. I don't know how much pain you've got. If you're in enough pain from this lack of alignment, then it's going to be worth the extra hassle to take the orders off the computer and distribute it them yourself. Or have a manager do that for you every morning. And that's just added to somebody's job every morning. And so they check in with your computer and you move the work order over onto your computer and then they log into you. They don't log on to the customer. And, you know, that's one way to do it. That's a bit. That's cumbersome and a bit drastic. So I don't know how drastic we need to get. I probably would start with something else and just say, you know, so who actually leads these 12 people.

[Zach (Atlanta Power Utility Contractor)]

I have this year promoted a manager that just. He is just over those. And we've been working on putting processes in place for him to start making weekly site visits and grading them and scoring them on meeting the competencies and doing the things that we want to see repeated. Right.

[Dave Ramsey]

Yeah. I think that's going to create a lot of alignment because it's creating accountability. And we're reminding who's, you know, we're reminding who they work for. I mean, because it's very logical that they're getting confused in this situation, even though intellectually I know that this guy doesn't. But, you know, I kind of do report to him because I have to get my work from him every day. And then, and then he's interfering in other stuff. So that's one thing I would do. The second thing I would do is the instant one of these guys stepped between you and them on something like a safety meeting, I would do a sidebar with that customer and say, we're not doing that.

[Zach (Atlanta Power Utility Contractor)]

Agreed? Yes, sir.

[Dave Ramsey]

We're not doing that. Cause this is important to our organization. My relationship with you guys is to serve you and get the work done, not to manage my people. And we're not doing that. So we're not gonna do that. Okay? And you know, it take 30 seconds, but you just sidebar with that guy. And you won't have to stop that, but a couple times and it'll be done. You'll never hear from it again. Cause nobody ever told him. Nobody ever told him it was wrong. That's all it is. And if you do it, you don't have to wait like 30 days and get all upset about it or something. Just instantaneously, hey, I need to jump on the phone with you right quick. And 30 seconds later it's over and you've moved on. Right? And you just go, we're not doing that. These guys are my guys and we demand that they do safety meetings. And you don't need to interfere in our safety meetings. Our relationship with you is to get the work done and for you to deliver the work every morning. Not to get involved in my company culture. Understand? Got it. I'm retraining my customer and I'd be pretty direct with them that way. Especially in that world where, where you don't want to be subtle.

[Zach (Atlanta Power Utility Contractor)]

Right. And that's, you know, and that's the biggest thing is like the safety culture we have is paramount. I mean, these guys work with voltage up to 500,000 volts. I mean, safety matters, right?

[Dave Ramsey]

Yeah. It's death. Yeah.

[John (Los Angeles General Contractor)]

Correct.

[Dave Ramsey]

This is not joking around. Well, whether it's safety or anything else, he's involving him and self in something that isn't anything to do with correct and inappropriately. So, yeah, I'm going to. No, you don't get that option, but just a little course correction. And you don't have to be mean about it or anything. But I would be very clear, very brief and very direct and very instantaneous and very private and course correct that. I think that'll make that go away. Then you do the stand up, do the weekly meetings. And you know, the more frequency you have with your guys, the more alignment you're going to get. So, like in the restaurant business, every shift has a stand up all the employees, all the waiters, the cooks, the front of house, the wine steward, everybody, everybody stands up and we have a circle and we all get aligned. And then we break the huddle and then we go serve the customer. And they don't do it once a day. They do it every shift. And so we do stand ups at Ramsey. We come in. We're not sit. It's not a sit down meeting. It's a 15 minute meeting. And we just gather up, we huddle up and we break right. We call the play, put the ball in the end zone. Today is what we're doing. Let's go. And you know, not every one of our departments does that, but a lot of them do it every day, and they certainly do it once a week around here. So your guys gonna be on site once a week, but in the interim, you could do every other day. We're gonna do a five minute zoom gathering here.

[Zach (Atlanta Power Utility Contractor)]

And we just talked about that this week. I mean, I think the zoom calls, if nothing else, it's just a point for them to see our face and a reminder of who they work for. I agree with you completely.

[Dave Ramsey]

Exactly. It doesn't take long. And hey, I'm here to help you. Got anything I can help you all with today? Is there something going on in the field I need to interject? And you got a supply issue, you got a safety issue, you got a problem with the customer. Is there something as your leader? Because my job is to make your life better, I'm gonna knock down blockers for you. What do you got? And you're supporting them, but you're also staying aligned, which means we're course correcting as we go along gently in public. When there's three construction guys standing there, we don't take one of them to task. Right. It's a good way to lose the whole team, but. But yeah, you know, and you stay aligned and then you go. That's what we talked about yesterday. Y' all remember, we talked about that two days ago. Everybody ready? Okay. Everything okay with what we talked about? Yep, we're on track. Okay, here we go. Anything I can help you guys with today? Hey, just want to check in, make sure everybody's good. Here we go. And the more. That kind of the more touches you have, the more alignment you get. And so I was talking with a guy in more of a corporate setting the other day, and he said, I think my job is the CEO R. O. The Chief Reminding officer, the Chief Repeating Officer. I just remind everybody and repeat everything over and over. And over and over again, finally they hear it, you know, and that's how culture is built and that's how values are aligned. It's communication and then implementation and then accountability to the culture. And so, yeah, you're doing, you know, I think you got your finger on the pulse of this really well. And I think you caught it before. It's out of control. So. So yeah, let's back the customer off and put him back in the customer seat instead of the manager's seat just because he's issuing work orders. Put your guy out there once a week and then do an every two day stand up for a little while. Let's see how that goes. Throw a couple things like that in and then again, make sure the customer backs off. And then I think everybody's gonna remember. There he is, the guy on the zoom call. That's the guy writes my check. Yeah, I remember him. Yeah. Be helpful. Yeah. Very good stuff. Very good stuff. I love it. Very cool. Zach, you're a good man. Keep it up, brother.

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[Dave Ramsey]

As a small business owner, it's your job to set expectations for each role in your company and make sure those expectations are met. Hey, we were just talking about that. But you can't hold your team accountable to something you didn't communicate. Hey, we were just Talking about that, our free Key results areas template will help you set expectations and create role clarity for every member of your team so you feel confident that everybody's working on the right things to drive the business forward. Go to entreeleadership.com role clarity to download the KRA template for free and start setting clear expectations for your team. Our question of the day comes from Ken in Kansas City. Dave, I promoted someone into leadership who is clearly in over their head and the team sees it. How do you correct a bad promotion without humiliating them or losing credibility? Well, you've already lost credibility. Can't get that one back. They know you made a mistake. Everybody knows you made a mistake. Probably even the guy knows you made a mistake. The person made you made a mistake. I'm not sure, depending on how self aware they are, whether they feel like I am drowning over here. The problem is the humiliation and you may lose them. You know, this mistake may cost you a good team member because I mean, they've got to walk in the next day after they don't have a position anymore and do the walk of shame. And I don't know how you avoid that. I don't, I don't know. You can't, you don't, you don't want to lie about it and butter over and act like, well, you know, so if the team is. The smaller the team is, the better your chance of pulling this off. Because you could sit down with everybody and just apologize to the whole place. There's seven of you, right? There's 10 of you and you just go, guys, I have screwed up. And John over here and I have talked about it. I really thought because John was so good at his job that he could do this leadership part. And it's killing him, it's killing everybody. It's killing me. And I screwed up moving him into the role. John is a great guy and he doesn't need to be in that role right now. And so he and I have talked about it and he's going to be back in his old role and we're not going to go that way right now. Someday maybe there'll be a time when he is there or maybe someday there's a time when one of you are there. And every bit of this is not John's fault. 100% of it's my fault because I should not have as the leader made this decision. I goofed up the decision. And the problem is, is that I've hurt John in the process because this is hard for him and he's sitting there while you're saying all this. Cause if you put all the junk on the table and people can all see all the junk, they're very forgiving of John, John's very forgiving of you, you're very forgiving of them and you got a chance of pulling this off. But if there's 60 people involved, it's going to be hard to transfer the feeling where John is not shamed by this process, no matter what you say, because you're going to be, you know, it's just too big a group to turn this around so you can go, look, this is his strength. So we moved him into this role. But the bigger the group, the harder it's going to be. But I think you take the whole thing on you. First you sit down, talk to John, you say, john, you can't do this. I goofed up. I'm so sorry. You know, this is struggling, right? And I think we need to go back to where we were and we'll look at it again later. Maybe there's a day in the future we can do this. But right now I've screwed up. And in the process I've hurt you. And I'm embarrassed you and it's my fault and I'm the one that's embarrassed and I'm so sorry and I love you and I'm glad you're here and I sure hope you'll stay and help us in that other role. And that's what I want you to do. Can you do that and just talk? Just demote him, put him back where he was and then you know what? 50, 50 chance that works, right? But you don't blame him. You blame you. You don't go, you know, I thought you were smarter than you are. You're a doofus. No, that won't work. Okay? No, we're not talking about that. This is like, I screwed up, I made a mistake. Yeah. When you say I promoted someone into leadership who's clearly in over their head, you screwed up. So when the leader says that, when the leader says, I was wrong, I messed up, I apologize. Most leaders don't have the backbone and the courage to do that. They're too small minded. So they're really just bosses. And if you can look at somebody and go, I messed this up, you'll get a lot of grace from people. Now you still got to come in the next day and not be the boss, not be in leadership anymore. And he still got that walk of shame back to the desk. Right? And all of that. And you still gotta walk through this. So it's still, I don't know what, a 50, 50 chance you could keep the guy, but. And the team. The team doesn't care because the team already knows he can't do it. And the team will gain respect for you. When you say, I did this, it's not John's fault. I should have looked at this more carefully. I screwed up. I'm sorry. I've already apologized to John, and John and I have talked about it, and he's going to move back into this role, and it's embarrassing for him. And you guys, I'm so sorry. I want to tell John in front of y', all, I'm sorry, John, I'm sorry I screwed this up and I'm sorry I put this. Put the. Put you in this situation. But we're still going to do it. We're not going to act like it didn't happen. And even though everybody's embarrassed, we got egg on our face and red and the walk of shame and all that stuff is there, but we're still going to do it. Still going to put the guy back where he needs to be. And then if it doesn't work, then just your mistake costs you a good guy. And that's. I've been there, Mishandled something, and I'll lose a good person. I've been there, and it's 100% on me when I do that. So a couple things there. Just the authenticity, gentle conversations. First, handle it with a guy, you take 100% of it on you. Lots of apologies. Talk openly about embarrassment, Talk openly about a walk of shame, talk openly about all that. Then everybody hears it, everybody sees it, and everybody goes, yeah. And it sucks. But we're okay now because at least. At least old Ken, our boss, has a brain. And he's a big enough man to say when he screwed up. And so I'm working with a guy who's a real guy, and he's gonna tell me the truth. And he told me the truth this time. And people will rally around that, be loyal to that. They'll push themselves through. For somebody like that, that's good stuff. So very cool. Good question, Ken. Been there myself, brother. You'll get through it. I love entrepreneurs. Don't forget, guys. I started my company on a card table myself, so I know what it's like to have people counting on you, your team, your family, not to mention your customers. And when you're the one signing the paychecks, you can't afford to fly blind. But I'll be honest. Early on, one thing that nearly sunk us was wasting time with spreadsheets that didn't add up because business units didn't talk to each other. I finally told my team, just fix it. And they did. We got netsuite. That was years ago and we've never looked back. See, netsuite isn't just for tech giants. It's built for growing businesses like yours. Over 43,000 businesses already run on NetSuite, including a lot that started just like you. And now with built in AI, NetSuite is helping them even more. It's one system connected to every part of your business for real time insights, not guesswork. NetSuite AI flags inventory issues, cash flow risks, even supplier delays before they become problems. So you can trust the data, stop wasting time and make the right decisions faster. Take a free product tour today at netsuite.com Ramsey that's netsuite.com/ramsey. John is in Los Angeles. Hey John. How are you, Dave?

[John (Los Angeles General Contractor)]

I'm very well, thank you. I appreciate you taking the time to talk today.

[Dave Ramsey]

Sure.

[Andrew (Dallas CEO)]

How can I help?

[John (Los Angeles General Contractor)]

So I've got a dilemma here. I'm. I'm about the same vintage as you are getting ready to retire. Want to retire, but some of us have an exit plan. I don't have any one of them. So I have a general contracting firm. We specialize in building custom homes and large remodels. I personally have 11 employees and we do about between 5 and 6 million dollars of sales a year. We operate on about a 12 to 15% profit margin on this. And I have of the 11 employees, I've got two of my boys that are working and one runs pretty much everyday operations. And I'm trying to figure out what is a fair way to segue out.

[Dave Ramsey]

How old are you?

[John (Los Angeles General Contractor)]

I'm 64.

[Dave Ramsey]

Okay. Are you ill?

[John (Los Angeles General Contractor)]

I have another, another month or two. No, I'm not ill. No.

[Dave Ramsey]

Okay.

[Zach (Atlanta Power Utility Contractor)]

Just.

[John (Los Angeles General Contractor)]

I think more than any probably what's your.

[Dave Ramsey]

What are the two boys do? One runs what? One runs operations.

[John (Los Angeles General Contractor)]

The other one does what everyday operations. The other one works in the field.

[Dave Ramsey]

Okay, so like a super.

[John (Los Angeles General Contractor)]

Basically, yes.

[Dave Ramsey]

Okay. All right. Because you know if you're doing this much volume, you're doing more than one job, correct? Okay.

[John (Los Angeles General Contractor)]

Correct.

[Dave Ramsey]

All right. Huh.

[Zach (Atlanta Power Utility Contractor)]

So.

[John (Los Angeles General Contractor)]

So it's the dilemma is one of them is run every operation, does a phenomenal job with everything is super detail oriented, hyper focused, engaged, organized, everything you could ask for employee. The other one is not in this Category, but it's a family business. How do you, you know, and then, and you know, the one has been worked for me for probably up to 13 years now. And you're looking to take it over and I want to pass it off. But what we presently have. I bury them. And so you would bury him?

[Dave Ramsey]

Why would you bury him?

[John (Los Angeles General Contractor)]

Yeah, just too much stress, too much pressure. Not properly staffed or positioned.

[Zach (Atlanta Power Utility Contractor)]

So.

[Dave Ramsey]

Okay, wait a minute, wait a minute. So he's running operations for the whole thing?

[John (Los Angeles General Contractor)]

That's correct.

[Dave Ramsey]

And there's six or 11 team members.

[John (Los Angeles General Contractor)]

Correct.

[Dave Ramsey]

What's the difference in running operations and running the whole thing in an organization this size?

[John (Los Angeles General Contractor)]

Well, I'm, I'm working on the whole backside dealing the office and bidding.

[Dave Ramsey]

So he's running production.

[John (Los Angeles General Contractor)]

He basically. He has run production.

[Dave Ramsey]

He's not running operations. He's running production. You're running operations, correct?

[John (Los Angeles General Contractor)]

That is correct.

[Dave Ramsey]

Okay, that makes sense. Okay, so you're, you're set, you're doing all the customer interface.

[John (Los Angeles General Contractor)]

On the, on the backside right now? Yes.

[Dave Ramsey]

So he's, who's making the sale?

[John (Los Angeles General Contractor)]

He's making the sales right now.

[Dave Ramsey]

Oh, so, so, and somebody comes and wants to do a big remodel or wants to build a custom home. They, they, they're talking to your son.

[John (Los Angeles General Contractor)]

That is correct.

[Dave Ramsey]

Okay, so what is it you do?

[John (Los Angeles General Contractor)]

Basically? I, I, I run the office. I do all the, the billing, the.

[Zach (Atlanta Power Utility Contractor)]

Ordering.

[John (Los Angeles General Contractor)]

Interaction with subs, contracts and the like. Subs, subcontractors.

[Dave Ramsey]

Yeah, I know, but why are the subs not being run by the job?

[John (Los Angeles General Contractor)]

It's mostly the paperwork coming through me. So I'm basically running the paperwork in the office for those guys.

[Dave Ramsey]

Okay, okay. All right.

[John (Los Angeles General Contractor)]

So it's really a matter of trying to figure out.

[Zach (Atlanta Power Utility Contractor)]

Of course you got, so what you.

[Dave Ramsey]

You just need bench depth for what you're physically, tactically doing. So if someone was doing what you were doing and they worked for the president of the company, who was your son, and your son kept doing what he's doing now and had the title of president, and he had a COO that did what you do. He could do the customer work, the job management and so forth. And then you'd have someone doing the accounting and the logistical sub operations out of the COO's office, and you put them in there and you pay them 50 or $100,000 a year to do that.

[John (Los Angeles General Contractor)]

Sure. And, and that's somewhere we're trying to lean towards. But then I also have the situation of the, I don't need to sell the business. I Mean, you know, there's a value to everything, right? I mean, I can't just slide the whole computer over with all the books and the, and the bank statements and so on. So here you go. Keep going.

[Dave Ramsey]

Where.

[John (Los Angeles General Contractor)]

Where his income is going to jump dramatically because I'll step out of the picture and won't be drawn an income.

[Dave Ramsey]

That's a different subject. Okay, sure. But the first subject is, okay, there's three components. There are two components here that are very, very important. One is for succession plan to work, you've got to have strong leadership that can run the organization. We just discussed how to build that out. You're going to have to bring someone on and you're going to stay another 12 months and you're going to get your bench depth covered and they're going to do what you do. And their new position is going to be COO in son's going to be president and that's his day job. Okay. That's your leadership team. His leadership team that can run the business for you guys. Then there's ownership. Ownership is separate from working there. My oldest daughter does not work here and she is one of the owners. Okay. Rachel Cruz is a Ramsey personality and she's one of the owners, but she doesn't run operations. Her brother Daniel is the president that runs operations here. Okay. Runs the business. And so that's his day job. Her day job is Ramsey personality. You've got one son whose new day job is president, who has a COO reporting to him that does the job you used to do. And you've got a son in the field that gets paid to do the job. Now your son, when he gets promoted to be president, you may give him a bit of a bump. You should, okay. And that's going to lower profits. Then the profits are going to come to the bottom line. And you still own the business, but you no longer work there. Certainly see how you separated the ownership versus working there. So you've got a day job and then you've got an ownership. Then you get to decide, okay, out of these profits, how do I want to share it with these two boys, these two men that are my sons, as an ownership position. So you could give, you know, 5% of the profits to the son in the field as an owner, but not because he's working in the field, just cause he's an owner.

[John (Los Angeles General Contractor)]

Sure.

[Dave Ramsey]

And then you could give 10% to your son that's the president of the profits. You don't even have to give the stock over for right now. And that's a first step or two. Later on you know, you could have just in your will that the whole thing goes to some mix of the two of them. Is that your only two children?

[John (Los Angeles General Contractor)]

I've got three others.

[Dave Ramsey]

Okay. What are we going to do with them?

[John (Los Angeles General Contractor)]

Well, they're not part of the business.

[Dave Ramsey]

So they're. So. So you don't intend for them to get any of it.

[John (Los Angeles General Contractor)]

There. There is another dilemma.

[Dave Ramsey]

Okay.

[John (Los Angeles General Contractor)]

I mean if to walk into it and are technically rewarded to some degree or compensated for it.

[Dave Ramsey]

Now they're compensated because they got a job. Certainly that's why they got. That's why they're compensated. So. Not because they. Not because they hit the DNA lottery and ended up being your kid and there's. And you're successful. So they got a job and that job pays. You don't pay them more than they're worth for their job, do you?

[John (Los Angeles General Contractor)]

No.

[Dave Ramsey]

Okay. No, no. So, so there's. If you keep this real separate in your mind, it helps you walk out of there. First thing is we have to create the leadership team that can run it. With me being an absentee owner, just checking in with my president son and a couple of the other leaders. And I could have a leadership meeting once a month as the owner that doesn't work here with the leadership team that's running it. And how can I help as the owner. And then you do the books. They have the books done by the coo and you review the books, we close the books and I take the profits and put em in my pocket if I'm you. And then the next step would be to start to share the profits with the two that are there if you want to. And then the next step is to figure out long term, what are we gonna do with the ownership as you age and. Or die. How are you gonna break that up and how are you gonna hand that off? And there's no wrong answer. You could choose to give it all to the President's son. You could choose to give 75% to him, 25% to the one, the other one that's working. You could choose to give it evenly to the rest of the kids, which would make it hard for the president's son to run, by the way. I wouldn't recommend that. But. So you got five kids, right?

[John (Los Angeles General Contractor)]

That is correct.

[Dave Ramsey]

Yeah. So you can figure out, you know, maybe president's son gets 51% and the rest of them split up 49. I don't know. You can make it up, right? Or, and all that Means is not that they tell anybody what to do. It just means they get paid out of the profits.

[John (Los Angeles General Contractor)]

Okay. That's one angle. I never looked at it.

[Dave Ramsey]

Yeah.

[John (Los Angeles General Contractor)]

I appreciate that input.

[Dave Ramsey]

Yeah. So if you'll separate the leadership team and the operations of the business as one category and the ownership is another category, you can start to see a path to create a one year exit ramp or 18 month exit ramp or whatever on your succession plan. And you'll get new energy from doing that. And you can telegraph that to the customers, you can telegraph it to your sons, you can telegraph it that I haven't decided what I'm doing with the ownership aspects to the rest, to everybody. I'll let you know on that later. But I am going to let you know right now that we're elevating so and so to president as I step away sometime in the next 12 to 18 months. As soon as I get my bench depth done here. I got to train somebody up tactically to do what I do every day so they can report to the president's son. The son. That's the president. That guy. So cool stuff. You're a good man, John. You're closer than you feel like you are. You just need to treat this like a building project. We need a blueprint, a timeline and a budget. Right. And let's lay it out and just execute. And then you'll look up and the house will be built. And that's exactly how. It's just another project. That's all it is, folks. Remember, better a wary warrior than a quivering critic. This world needs more high quality leaders. So take courage and lead. I'm Dave Ramsey, your host. Thanks for joining us on Entree Leadership. If you're a business owner who's been grinding it out and rarely gets time to step back and think clearly, I want to tell you about something special. The Live like no one Else cruise is a seven day experience in the Western Caribbean with many and the Ramsey team. This isn't just a vacation. It's an intentional time away to reset your perspective and celebrate the progress you've made financially and professionally. And in 2027, we're bringing entree Leadership at Sea back. That includes special Entree leadership breakout sessions you can sign up for designed specifically for business owners and leaders. You'll get practical teaching, real Q and A and focused time to think through your business with people who understand what you're carrying. Space is limited. Learn [e-mail] events or click the link in the show notes.