"I Don't Think You Understand How Bad This Is"

Summary

Summary of "I Don't Think You Understand How Bad This Is" The Ramsey Show Highlights | Release Date: May 16, 2025

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Introduction

In the episode titled "I Don't Think You Understand How Bad This Is," Jessica shares her struggles with her newly established indoor baseball training facility. Hosted by the Ramsey Network, this discussion delves deep into the financial challenges faced by small business owners and offers expert advice on managing and overcoming such hardships.

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Jessica's Business Journey

Starting Out Strong

Jessica and her husband embarked on their entrepreneurial journey by launching an indoor baseball training facility in December of the previous year. Initially, they were optimistic, having started debt-free and securing an SBA loan of $325,000 to fund their venture. They maintained a substantial reserve, keeping $40,000 in the bank to cover initial expenses, including a security deposit.

Facing Financial Strain

Despite their optimistic start, the business has encountered unforeseen challenges. Jessica explains:

"We've put pretty much everything we have into it, and it has the potential, but we're just trying to figure out some more ways to bring money into the business to try to increase that to make ends meet." [00:06]

Although the facility has generated revenue—bringing in approximately $52,000 since its inception—the monthly lease payment of $30,000 has outpaced their income, leading to significant financial strain.

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Financial Breakdown and Challenges

Debt Accumulation

To sustain the business during its initial phases, Jessica and her husband have accrued substantial debt:

• Credit Card Debt: Approximately $30,000 across personal and business cards.
• 401(k) Withdrawal: Jessica had to tap into her husband's 401(k) to support the business.
• SBA Loan Interest: They are currently in a six-month draw period, paying about $2,500 in interest monthly, with expectations of increasing payments as they utilize more funds.

Revenue vs. Expenses

While the business is generating revenue—peaking at $18,000 in the last month—the expenses, particularly the high lease cost, are unsustainable:

"So you're working for free while going hundreds of thousands of dollars into debt?" [04:03] – George

Jessica confirms the ongoing financial bleeding:

"We're bleeding money every month." [03:34]

Additionally, insurance costs amount to roughly $2,000 monthly, further exacerbating their financial obligations.

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Expert Analysis and Advice

George Kamel's Insights

George Kamel provides a realistic assessment of Jessica's situation:

"I don't think you understand how bad this is." [05:59]

He emphasizes the importance of financial clarity and strategic action:

"Get to a point where you're trafficking only in math... Knocking on every single door of every coach... That's the only way you can survive." [07:15]

George recommends detailed financial planning, including listing all debts and monthly expenses to gain a clear understanding of the situation.

Dave Ramsey's Recommendations

Dave Ramsey concurs with the urgency of the situation and offers practical steps:

"You need to talk to the landlord and explain what's going on and see how quickly you can get out of this lease because it's going to continue to bleed money for the foreseeable future." [06:03]

Further, he advises:

"You need to sell all the assets you can on the equipment, get out of the lease with as little damage as possible, and then go get full-time jobs, both making six figures and clean up the debt of the failed business." [09:00]

Strategic Marketing Efforts

Both experts highlight the necessity of aggressive marketing to increase revenue. Jessica notes that her husband has strong connections in the local sports community, which they are leveraging to attract more clients.

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Current Coping Mechanisms and Future Plans

Personal Sacrifices

The financial strain has taken a personal toll on Jessica and her husband. Jessica is currently undergoing treatment for OCD, which limits her ability to work, while her husband is seeking remote employment opportunities to support the household.

Exploring Solutions

Despite the bleak financial outlook, Jessica remains hopeful. She is exploring options to sublease part of their space to alleviate some financial pressure. Additionally, they are considering expanding their marketing efforts to reach more potential clients in the local sports community.

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Conclusion

The episode "I Don't Think You Understand How Bad This Is" serves as a poignant reminder of the challenges faced by small business owners. Through Jessica's story, listeners gain valuable insights into the importance of meticulous financial planning, the dangers of over-leveraging, and the critical need for adaptive strategies in the face of adversity. The expert advice from Dave Ramsey and George Kamel underscores the significance of confronting financial hardships head-on with clear, actionable plans.

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Notable Quotes:

• "We're just trying to figure out some more ways to bring money into the business to try to increase that to make ends meet." – Jessica [00:06]
• "I don't think you understand how bad this is." – George [05:59]
• "You need to sell all the assets you can on the equipment, get out of the lease with as little damage as possible, and then go get full-time jobs..." – Dave [09:00]

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This episode is a crucial listen for aspiring entrepreneurs and small business owners, offering a candid look into the financial hurdles of running a business and the strategies needed to navigate such challenges effectively.

Transcript

[Jessica]

Brought to you by the EveryDollar app.

[Dave]

Start budgeting for free today.

[Jessica]

My husband and I started a business here just the end of last year, and we are making pretty good money, but it's not quite enough to make ends meet. And at this point, we've put pretty much everything we have into it, and it has the potential, but we're just trying to figure out some more ways to bring money into the business to try to increase that to make ends meet.

[Dave]

What kind of business?

[Jessica]

It's an indoor baseball training facility.

[Dave]

Okay, and how you said you've sunk everything into it, what does that mean?

[Jessica]

Pretty much. We started completely debt free. We pulled an SBA loan, ended up being about 325. We put. We had a very large chunk of money in the bank when we started. Part of that was going towards our security deposit. The other we kept was about 40,000 in the bank. Now we're to the point where we have about 30,000 in credit card debt. We've used my husband's 401k and our entire savings is put into it as well. There were some factors that came up that we weren't really expecting for, and that money ended up going towards the business.

[Dave]

Was the business ever profitable to where you weren't needing to go into debt for it?

[Jessica]

Well, I mean. Well, we're not really behind yet on the business. I mean, the money that we spent on credit cards and stuff was actually to get the business open and started. We've brought in about 52,000 since we opened December, like mid December. So it's making money. But I mean, our lease payment's 30,000amonth, so we're not making enough.

[George]

Yeah, you're not making money.

[Dave]

Dang.

[George]

What, What? Your lease payment is 30 grand?

[Jessica]

Yeah.

[George]

What is your. What's your. What's your debt overhead? What have y' all. What have y' all taken out?

[Jessica]

Well, we don't really have. I mean, the business essentially runs itself and we don't have hardly any overhead. Like, our utility bill is about the highest we pay.

[Dave]

Well, your debt payments are your biggest.

[George]

No, that's your debt payment.

[Dave]

You said 325 on an SBA loan.

[Jessica]

Mm. We actually haven't started. They gave us a six month draw period. So we haven't actually started paying that payment yet. We've been paying the interest on it, which has been about, I think about 2,500. The last one, I think come in, give or take. I'm expecting those to increase. Now, obviously, since we have used the funds from the Loan. So that drop period closes and then we should start seeing the first payment come through.

[George]

You don't know what the payment's going to be?

[Jessica]

No. Well, we do and we don't because when we, when we talk to them, basically they told us it's been, it's been a rough go with them, but basically they told us we have a six month draw period. We only pay interest until then. Obviously the interest will increase every month as we're spending more, you know, utilizing those funds from the bank.

[Dave]

So is this like a line of credit from the bank up to 325?

[Jessica]

No, it was an actual lump sum. Huh.

[Dave]

Okay.

[Jessica]

Yeah.

[George]

And what else? You said you max your credit cards out. How bad is that?

[Jessica]

About 30,000 we had. I mean, well, two of those are personal cards and one is a business card. But all it went towards the business we started with nothing on those cards.

[Dave]

And when did you start this business?

[Jessica]

December 10th.

[Dave]

Of like we're talking a few months ago.

[Jessica]

Yes.

[Dave]

And so far it's making what, 15k a month?

[Jessica]

Last month I believe we brought in about 18,000. A month prior, about 16. And our first month was a bigger month coming in.

[Dave]

But Your lease is $30,000.

[Jessica]

Correct.

[Dave]

So you're bleeding money every month.

[Jessica]

Correct. And we're waiting on our realtor, actually hopefully today to give us some information on having a tenant come in to part of that space to sublease it out, which we're hoping will help.

[George]

Yeah, but you're not gonna, you're not gonna get 50%, right?

[Dave]

You need this thing to be making 75 to 100,000.

[Jessica]

Well, we, we're not actually paying ourselves out from the business and we don't really have any overhead. So if we can, if we can make.

[Dave]

That's the scary part. How are you guys living?

[George]

Yeah, how do you eat?

[Jessica]

Well.

[Dave]

So you're working for free while going hundreds of thousands of dollars into debt?

[Jessica]

Yeah, so we were both working right up until we opened the business. I am currently in an IOP OCD treatment program. So I have a couple more weeks of that before I can go back to work. My husband is, I think he's doing interviews today actually to take on remote work from our business while he does that. At the same time, we need to be making about. I mean, we can make ends meet and actually profit on about 45,000amonth.

[George]

There's no way.

[Jessica]

We don't, we don't have. I mean, because we don't have any.

[George]

What about your insurance? You have to be insured in case a kid gets hit by a. By a ball or turns his ankle and sues you for the whole thing. What's your insurance?

[Jessica]

Our Insurance is about 2,000amonth, I believe. We had to have general, and then we had to have workers comp as well, even though we don't actually have any employees, but.

[George]

Okay, so are you never going to take a vacation.

[Jessica]

At this point? No. I mean, that was the goal. But yeah, at this point, we. Our intentions were to pay ourselves out, obviously, from the business, and that didn't work out. And so we've kind of burned through savings up to this point, both being there all day, every day trying to make that successful. And it's to the point now that we're going to have to go back to work and do both at the same time.

[George]

Have you. Have you sat down? If you haven't, please. Like, anytime somebody's in this level of stress, whether it's in their marriage, with their. With a new business, there has to be a moment in this chaos when everybody exhales and you and your husband get a whiteboard and you write down on that whiteboard every single person you owe. And then you also, on that whiteboard, write down every single dollar it costs to run this thing every month. Because right now, y' all are robbing Peter to pay Paul. You got money coming in one way. Some of this is borrowed. You got a credit card over here. It just feels like it's everywhere. I don't think. I don't know if you can. You can't see me and George. I don't think you understand how bad this is.

[Jessica]

Yeah, it's. We're. We're pretty scared and we. I mean, we don't. It's kind of hard because there's certain bills that we know are coming that we don't know what they are because we haven't seen them yet. Like our. Our utility bill, we're estimating probably about 5,000, but we haven't actually seen it yet because our building is a split space. So the other side doesn't have a tenant yet. So the landlord didn't actually even split the utilities until not even 30 days ago. So we don't even know.

[Dave]

I think you need to talk to the landlord and explain what's going on and see how quickly you can get out of this lease because it's going to continue to bleed money for the foreseeable future.

[George]

I mean, how you're talking about getting a hundred percent more business. How do you. How do you expect to go about doing that. Do you even have enough Little league in high school and college players to utilize your facility?

[Jessica]

We do, actually, yeah. It's kind of a huge market for it here. And when we started the business, there was nothing, I mean, there was nothing within 30 minutes of us. And we've had a lot of people coming in, at least, I mean, for weather permitting. Obviously that changes things, but I do, I guess, with the potential that I've seen, and I feel like there's a way to do it, there's got to be another way I can bring some more money into it. I'm just kind of stumped as to how.

[George]

Let me tell you this. You have to get to a point where your feelings are very important, but you have to get to a point where you're, you're, you're trafficking only in math, right? Because if you feel you should know how many little league teams are actually fielded in a 30 minute radius of your house, if you haven't already, you should be knocking on the coaches doors of the middle school teams, the high school teams, the junior college teams, university teams, giving them special deals, going 24, 7. I mean, if you're not knocking on every single door of every coach over and over and giving them coupons, and I mean, that's the only way you can survive. And if you haven't done that, then maybe you've got a shot. But the fact that you don't know, I mean, you guys are just like, no, it's a big market. Like, man, you need to know how, how many little league players are in your area. Right?

[Jessica]

Yeah. When we did our projection for the business, in order to qualify for the SBA loan, we had to have an entire. I mean, I had to have stacks of paperwork detailing exactly what's in our area, exactly how many kids, exactly how many teens. I don't have it sitting in front of me right now, but we do have all that detailed out. My husband's been coaching for years, so he actually has a lot of personal relationships with high schools, you know, the leagues, everything. So he's, he's reaching out to all those people as well.

[George]

Okay, but here's the thing. If he is, there may become a moment that y' all realize you're over your head and it's not going to work. My hope here is that there's a hundred percent more people that y' all haven't reached out to yet.

[Jessica]

Right?

[George]

Then you've got a shot.

[Jessica]

If there's not, what, what does that look like as far as exiting a business, it's not profitable.

[Dave]

You need to sell all the assets you can on the equipment, get out of the lease with as little damage as possible, and then go get full time jobs, both making six figures and clean up the debt of the failed business.

[George]

Yeah, and maybe, maybe reach out to softball teams too and see if softball, like if there's an equally large softball market in your area too. May that's a chance. But yeah, otherwise you're selling assets and you're just gonna go beg to the owner of this building. Hopefully your lease isn't a five year lease or something, but yeah, this is in a really gnarly way. Y' all need to sit down with a whiteboard and be very honest about how much you owe.

[Dave]

Create your free every dollar budget today.

[Jessica]

The simplest way to budget for your life.