It’s Like Planning Your Own Funeral

Hello, everyone. Welcome to the 21 Hatts podcast. I'm your host, Lauren Feldman. This week, Jay Goltz tells Sean Bussey about the latest stop on his journey to figuring out whether an employee stock ownership plan is right for his business. Jay's latest adventure includes waking up at 4:30 in the morning at an ESO seminar in Minneapolis too anxious to sleep. Oh my God, what am I getting myself into here? And deciding to leave the seminar and drive back to Chicago. But on that 6 hour return trip, Jay says his ESOP anxiety turned into clarity. In fact, he thinks he's pretty sure he knows now what he wants to do. Of course, he has said that before, and we're still learning more about ESOPs this week hitting upon an interesting issue. ESOP enthusiasts love to tout the benefits of turning employees into owners, but are they really owners? And is that the right message to send them? If you bought 10 shares of General Motors' stock, Jay asks, would you tell your neighbors that you're an owner of General Motors? Plus, we also talk about when business owners should ignore their accountants and whether Sean and Jay expect their employees to say something if they see another employee doing something they shouldn't be doing. Even in good times, owning and running a business can be a lonely pursuit. Our hope is that these weekly conversations brought to you by our principal sponsor, the Great Game of Business, will let owners know they are not alone in facing challenges. Same thing with our daily newsletter, the 21 Hats Morning Report, which Ek magazine named the best newsletter for business owners and which you can subscribe to for free at 21 hats.com. You can also find transcripts of our podcast episodes and lots of other articles and interviews. Joining me this week on the podcast are regulars, Sean Bussey, CEO of Kinesis, which is based in Portland, Oregon, and works with small businesses on marketing, culture, and strategy, and Jay Goltz, CEO of the Goltz Group, whose companies in Chicago include a picture frame business, artist frame service, and a home furnishing store, Jason home. The episode is titled, It's like Planning Your Own Funeral. Welcome, Sean and Jay. It's great to have you here. Earlier this year, you guys attended an ESOP seminar in Portland. You had a miserable time and left early, but, um, being the glutton for punishment that we know you are, Jay, you recently attended another ESOP seminar. How long did you last at this one? Actually, I got through the first night and the next day, but I did leave early in the morning after, which is part of the story, but I only missed one class. And the only reason I keep going back is because you keep goading me into it, so you get some credit for it. No, I, I'm seriously, I was turned off, but you're not wrong. You've kept telling me, Jay, don't let the message from the sales people or whatever turn you off this concept, and I, I, I, as I said last time, I was on, I was back to 50/50, but I really believe I have some clarity now. Well, tell us what you learned there. OK. So first, the agenda looked better than the last one. I go to the first class and it's for CEOs, which was a mistake. I sat in a room with 30 people, and I realized there were 2 entrepreneurs in the room. The rest were put into that job. So like, they're not entrepreneurs, different perspectives. I looked at all of them and I said, Can I just ask you something? I keep hearing about all these regulations and trustees and Maybe lawsuits. Do any of you ever wake up and wish you weren't an ESOP? And they looked at me like I was at a vegetarian convention, and I said, Hey, does anybody ever have a taste for a hotdog? I mean, nobody said a word, and I realized, these aren't entrepreneurs. These are people that were put into CEO jobs, and it's not the same thing. What's the difference? The difference is, I'm not used to having a boss. I've done everything I wanted to do for 40. 5 years. I've never answered anybody. These people that were in the room have always been employees. It's different. When I said, have you ever wished that you weren't, they didn't even know what I was talking about, because to them, oh my God, this is the greatest thing ever. Look at me, I'm in an ESOP, whereas me, I own the business. So for me, it's a possible, you know, downgrade. For them, it's an upgrade. So you could just see the looks on. I, I realized I'm in the wrong room. So that was the first class. The next class was for beginners, so I figured, OK, this is good. They had 3 panelists, and the guy started by saying this is the first time we've done this. We really want to try to help people with their understanding, blah blah, blah. So he starts talking about the loan and the trust, and there's an inside loan and an outside loan, and amortization schedules, and I said, I said, wait, wait, wait. I go, my head's spinning. I don't know what you're talking about. And my guess is, I'm not the only one. Is anyone else confused? So once again, I looked around the room, no entrepreneurs in there this time. Nobody says a word, like, like they really got what he was talking about, which I'm sure they didn't. So he went through it again and he started to say, well, there's some synthetic equity. It's not really, OK, so I started to get what he was saying. And then afterward, he came up to me and he, he thanked me for stopping him. And he says, you know, I'm trying to fine tune this. And then he said to me, this is the key thing. He said, Listen, give me 10 minutes in front of a white board. I'll explain it to you. You'll get it. That's all I needed to hear. And, and I'm, I am gonna sit down with him because he was a tremendous resource to find there. I actually made like 6 connections that were well worth going. So got through the classes. If he could explain it easily in 10 minutes with a whiteboard, why didn't he just do that there? That's a good question, isn't it? First of all, he was with two other people, so he wasn't in total control of the thing. They in fact didn't have a whiteboard there, which they should have. And, and you know what, I totally, he, he's, he's a, he's a professional trustee. He's worked for ESOPs, he's bought companies. This is a really solid guy and I'm sure the next time he does the, the, the class, it'll be way better, um, and he recognized it. But truly, when they start talking about the, first, they make it sound like You can't give anything extra to anybody. It has to be solely based upon their salary. And then the next minute they're saying, well, you've got this executive competence, and I, whoa, whoa, whoa, wait. And it was, it really was confusing. You're, you're saying, just to make sure that's clear, you're saying that your understanding is you have to treat all your employees the same, whereas they were introducing this wrinkle where it sounded like you could possibly pay people who've been there longer or have higher positions. No question, this is the phrase synthetic. That's what was the word he used. I think that means phantom stock, whatever that like a bonus plan, right, right. The point is there's an ESOP, but then there's also you can do what you want internally. So there are two different things. Um, I've got a schedule with him next week. He's gonna call me. I'm, I am confident that they, they keep. Talking about how complicated this is. You know what? This isn't rocket science. It's really not that complicated. They just don't know how to explain it. So, the end of the story is that was the end of the first day. I wake up at 4:30 in the morning. I don't usually get anxiety ever, but this time, I woke up with this thing like, oh my God, what am I getting myself into here? It was 4. 30 in the morning. Luckily, I drove from Chicago to Minneapolis. It's a 6 hour drive and I thought, you know what, I'm just gonna drive back to my office. 11 o'clock, I'll be back in my safe zone. And on the way back in the car, I finally started to realize, here's my new phrase, these people create ESOP anxiety. They create it. I didn't go there with it. I went there with an open mind, excited about it. By the time I got done hearing about the money and the loans and the amortization schedules and maybe being underfunded, and then they talk about trustees and regulations and boards, and then they talk about all your employees communicate, communicate, communicate, and, and I realized none of these are really a problem really. The math thing, that's why you hire these companies, they'll help you figure it out. The trustee and the board of directors, you know what? It's good for me. I've, I have to replace myself basically. That's what this whole idea is. It's gonna take more than one person. That's a good thing. And even while I'm still coming to work every day, that'll be a good thing. I'm gonna choose them. I'll get some smart people. All a good thing. And then the people part, that's the joy part of it. I mean, how can that be so, as I said before, I read one book, 4 different places, he keeps talking about. Hard work, really hard work, really hard work. At some point, it's like, God, am I really looking for really hard work? And I would argue, really sitting down with your Employees telling them that they're going to get shares of stock. I wouldn't call that hard work. I'd call that a joyous occasion. So I'm feeling good about the whole thing now, but I had to process it. Let me ask you, I think you called me on your way back, and I asked you why you woke up at 4:30 in the morning and what the anxiety was about. And I think you said that you felt like you were planning your own funeral. Yeah, yeah, that's what, yeah, I felt like, you know, this whole thing is about transition and, and about making sure things go well when I'm not there anymore, and you can't help but think about This is, if I wasn't gonna die one day, I wouldn't have been there. I, I would argue that most people that do ESOPs, or many people do ESOPs are doing it because none of us are gonna live forever. It's not something you wake up and go, oh, I think this is great. You do it because you got a problem. You got old. I mean, it's a problem. So after being there, it, it really, and, and, you know, anxiety is subconscious. It was part that and it was just part all these potential problems. The woman that that runs the Minneapolis chapter, I had a nice talk with, she came up to me after one of my sessions that I spoke up and she agreed with me, they need to do a class for just entrepreneurs, no employees, no 2nd generation, no 3rd generation, just. Entrepreneurs, because we have a different angle on this. We're taking our baby and we're giving it away, and that's very different than some of the other perspectives. And out of the 900 people that were there, I don't know that there were 50 entrepreneurs in the room. I really don't. So it's difficult. 900 people is a lot. Yeah. And they were mostly employees. I mean, you can't have the same conversation with employees. With owners, they took over their family business with there are different messages and I'll tell you absolutely the key people I met, whether it's the nonprofit people or some of the advisors, everyone agreed that the messaging in the industry is horrible. Everyone agreed, everyone knows it. They just. You know, the marketing messaging. Terrible. All right, Jay, I'm sticking to my position that you should not dismiss this because they're bad marketers. Absolutely, no, I'm totally hot on it now. I think that ESOP thing is a lovely, great thing for the right people. You're totally hot on it, and you mentioned the joy of being able to tell the employees that they have a, a, a stake in the business. Let, let me, I want to. Both of you about this. I feel like we've been peeling the onion of ESOPs for really a couple of years now and just constantly learning more. And I felt like something hit me when I was at the Great Game conference a couple of weeks ago, which is that I keep hearing two distinct stories. One of them is owners who've done an ESOP telling about the day that I called. All their employees together and they said something along the lines of, I want you to know, I'm announcing, I've decided to sell the business, and I want you to meet the new owners. And the new owners are you. And it's, it's a really, it can be a really emotional thing. People tear up. It's, it's inspiring and it sounds great. But the other story that I keep hearing is from owners who've done an ESOP who say, you know, the only problem is the employees, they really don't care. They've got 30 years to go before this pays off for them, and they don't really feel like owners. Their lives haven't changed in any measurable way. I have the answer to that. Here's the answer. I would never call them owners. I would say you're getting some stock in the company. Well, that's my question. Are they owners or not? I think ESOs are great, and I think Jay should consider it and everybody in this kind of position should consider it, but I, I don't think it should be oversold. And I think telling employees that their owners might be overselling it. What do you think, Sean? Yeah, I do. I mean, if you think about it, it's, it's hard for an employee to understand a worldview that they've never experienced, right? So, you know, it'd be like plopping somebody on a foreign island and saying, OK, now you're part of this culture. It's like, what is the culture? I don't know. I've never been here before. So, I think a lot of education is probably necessary to help employees understand what the opportunity is for them on a personal level and what the opportunity is for them on a business level, and, and maybe that's part of why the message you get. is this is really hard and it's a lot of work and it's very complex, is that as much as it's a technical challenge, you know, you got to fill out the right paperwork and sign the documents, blah, blah, blah, blah blah. I think you and I have both kind of come to the same conclusion that it's actually probably not as complex as it's made out to be, um, because you have a bunch of, I don't know how to put this in a kind way, but You have a lot of left brain people doing the presentations and discussions, when what really you need are some right brained people to help talk about what this means, and those are usually marketers or sales people. I think you're 100% right. A lot of ESOPs too, I've noticed this, like there's sort of a bifurcation. There's either the like professional engineering or architecture firm that becomes an ESOP. And I think those organizations. It's easier to communicate and and for the employees to figure out, oh, I see what what being a being an owner means. Because engineers, that that model is a partner model. So a lot of them have thought about what would it mean to be a partner and to have ownership. But if you talk about a business that's like making stuff, and you have a lot of frontline employees that make minimum wage, forget minimum, even $25 an hour. Yeah, even $25 an hour, the gulf between their reality and being a business owner is, is incredible. Um, so I think that's the challenge. Yeah. My answer is simple. If you bought 10 shares of General Motors stock, would you tell your neighbors that you, you're an owner of General Motors? No, you would say, I have stock. I don't think they should throw out the word owner. If you say you're owner, the first question could be, oh, am I gonna get a raise? Uh, well, no. Oh, am I gonna get flex time? I've, you know, I wanted, uh, no. Oh, am I gonna be able to figure out how we're gonna run the, uh, no, oh, does that mean I'm never gonna have fired? Uh, no. Oh, can I have one of those donuts? Yes, have a doughnut. they're not, they, they think owner, they think they can do whatever we're versus saying you're gonna get a share. You don't have to backtrack from that. You don't have to play defense. You just say we're doing it ESOP. Yeah, I think that, I think the message really should not be, you're now owners. I think the message should be, we have created something if we run it right, will benefit all of us a lot more and especially as you move into the later years of your life, right? I think that's the key with the later years of your life. And that's the thing. A lot of these people that you're describing, they, they have a mortgage due at the end of the month. That's what they're focused on. Well, or I'll tell you the other problem, they're gonna think, what you think I'm gonna be here in 20 years? You, you're crazy. I mean, I started the downplay when we interview people now that we've got people here 30 years because if some of these 23 year olds don't want to hear, they don't want you to, what, are you serious? Do you think I want to be here for 30 years? I mean, I think the answer is, first of all, I was told that you really don't. To accumulate any decent money for like 4567 years. This isn't a quick rich scheme. That's exactly the phrase one of them used. But my point is, if you don't oversell this, and you just say, you're gonna have stock in the, in the company, and what that means is that, OK, great, but you certainly shouldn't go tell everybody they're owners because you're just asking for, oh, I thought I was an owner. What do you mean I can't take off Fridays? I, I mean, you're just asking for it. I mean, I've never heard of a situation that does it the way you're describing. Jay, because that's part of the mystique of this, I think, part of the aura. You want your people to feel engaged, you know, they have a stake in the outcome. They're employee owners now. OK, you can say employee owners, but you could just make sure they understand that they're getting stock, blah, blah, blah. And like I said, you don't oversell, so you have to start undoing it when they go, well, no, that doesn't mean you can do whatever you like, you don't have to leave yourself open for that. And here's the thing, there's plenty of smart advisors out there. I'm sure they've been through this 100 times. I'm sure they can help navigate this. That's kind of what I figured out after digesting this all. You're not out there on your own. These companies are very good at doing this. There is no reason to have anxiety. There really isn't. Now, is this right for everybody? No. If you don't have the right employees, if you don't have a big enough company, if you think that you could sell for a much bigger multiple to somebody that has a strategic buyer, then maybe you want to take the cash off the table. OK, if you really aren't concerned about your employees um retirement, there's lots of reasons why this doesn't fit everybody, and I have no argument with any of that. But for someone like me, I got to tell you, it fits really well, which is why it was frustrating to me that for someone, it fits so well, they managed to get my head turned around like, oh my God, what am I getting into? What are you referring to when you say it fits you so well? What fits? It fits this way. Here's why for me personally, it fits extremely well. I have a very strong management team. 12, I don't want to retire. I, I, I, if I sold it, then what? You go to work for the company? I've seen lots of people do that and they tell it was the longest 2 years of their life. I have no interest in doing that. So 3. I do care about my employees and their welfare, and I am concerned about their retirement. 4, I don't believe there is some strategic buyer that's gonna give me twice as much money. I got a weird business. It's not a plug-in, and I don't need to squeeze every last dollar out of it. Like, so this fits me extremely well. And here's the point. Nothing else does. You could say, what are your other options? Well, my other options are do nothing and leave a complete shit show when I'm gone, which happens all the time, which is why most companies just crumbled in. Over the last 45 years, I've been to 3 or 4 auctions of places that framed pictures and I just like, I always think, wow, is this gonna be me one day, there goes your wrecking, there goes your two wheel truck. Frequently, not, not a lot, more than that, this is what people do. They do nothing and the whole thing just blows up. That's why most companies don't. Survive. So that's one option, do nothing. That's an irresponsible option as far as I'm concerned. And the other option is sell it. That doesn't work for me. I, I wanna go to work. I, I, and, and I wanna take care of the employee. So this one, this one is not, this isn't a compromise. This is an elegant solution. This accomplishes all of my goals, and I do not see a problem with it at this point after thinking about it, as you said to me the other day, Lauren, I should stop going to these seminars. Good point. Um, I probably should. Jay, I, I love you, man, but I see one potential problem, and I'm curious if you've thought about this. So you just recognized, as is my theory too, there's not a strategic buyer out there. Um, probably the reason for that is that it's a declining industry. You've talked about how many frame shops have gone out of business in your lifetime and how they continue to go out of business and how you are. people are framing, how do you set the next generation up for success in a business that is is declining? Oh, I have an easy answer for that. I don't know this. It's, it's mature. It's not growing like users, but it's definitely not, you don't think it's declining? It, it may be a little bit, but it's, it's pretty stabilized. More importantly, in my particular case, my wholesale side where I sell to other frame shops around the country is doing very well because we have a much colder line than everyone else, and it was picked by people that actually use it. So that's got lots of growth and my home store's got lots of growth. So I do have some growth vehicles still. Here's the other thing. I'm not looking to grow at 10, 15% a year anymore. I got to tell you, if I grow at 6%, I'm just perfectly good. It's big enough. So yeah, I absolutely have thought about that. If it was just the frame, retail frame business by itself, you know, I don't, I'm confident the framing industry is not going out of business. It's just is, it's, it's the baby boomers are retiring. They're doing less framing, pictures are on the wall. There's, but it's stabilized. The framing industry is not going away. It's just, it's kind of getting right sized, but I do have those growth things. So I, I truly don't have. I really can't think of a thing that I'm gonna wake up one day and go, oh my God, what did I get myself into? I think this is going to stabilize the company. I'll give, it'll give stability to the employees long term, and it will help their retirement, and there'll be just a little lift, just a little, a little more engagement from people, just a little, like, I'm not 10%, like 2%, whatever, and then maybe some good PR. So I think there's lots of upsides to it. The the good PR will come because you tell everybody that your employees are owners, right? Yeah, I believe so. That I, I think that's part of the reason why all these businesses we've been talking about do in fact tell their employees that they're now owners. They want the bragging rights. I think you can get your cake and you do what they want. I think you can message your Right, without people thinking, oh wait, we're all getting a raises tomorrow. I, I do think there's ways of doing that. Um, I'm gonna tell you what might be the most interesting part, which is why the industry has been, if you talk to anyone in it, they're not happy with the amount of ESOPs in the country. It's like been flat for years. There's not that there's only 6500 ESOPs out of. a million businesses. Now granted, 90% of them are too small to do it, but still, there, there are more than a million businesses. OK, whatever the number is, there's only 6500, 7000 ESOPs in the country. You have to think to yourself, wait, how is that in 50 years? I'm going to tell you one of the problems. What's the first thing people do when they even hear about an ESOP? I'm gonna tell you my experience. I come back from the thing. I talked to my accountant, been my accountant for 25 years, smart guy. I tell him the thing went I really figured out, I think this is a great solution for me. Same. Well, you know, a lot of, a lot of fees. There's a lot of fees, and, you know, they're a pain in the ass. And I said, OK, but it, it's whatever pain there is, it's gonna be worth it. And he goes, Well, you should look into that, but then you should also see what the company's worth in the open market. And I had to say. You just don't listen. I have told you 20 times. I'm not selling the company. I actually wrote out an entire sheet that I shared with him at lunch a couple of years ago with my emergency drop dead sheet for my wife and kids to give them instructions with some insight as and in there, I put his name. I said, so and so is gonna tell you to sell the company. Ignore him. This is the problem. People think, oh well, the accounts don't understand him. OK, maybe he does, maybe he doesn't. I don't know. There's two parts. The first part is some of the accountants don't understand him, and the second part is, they just know the numbers, they don't appreciate the other part of business, because in my, in my mind at this point, an ESOP is about love. It's about loving your, your business, about loving your employees, loving your family, loving your customers. If you had a problem with love, would you call up your accountant and ask him for advice or her? I don't think you would. They don't get it. All they know is the numbers on the paper. Oh, well, you could get more money. Even though I've told them 20 times, I don't want to retire. I want to go to work every day. It, it doesn't register. All he knows is, well, maybe I could get more money. Someone else, and no matter how many times I told him this, he won't get off of it. And this is why a lot of people don't even look into ESOPs. They talk to their lawyer or their accountant, and they're completely dismissed immediately. Oh yeah, they're a pain in the ass. Hey, where do you want to go for lunch? And that's the end of the conversation. I'm confident of that. I haven't met one accountant or I'm sure there are some out there that get it. But the few people I've talked to, my friends, the lawyer says, oh, I don't think you'll get the evaluation you want, and the accountant. The 22 different people like, oh, they're a pain in the ass. That's what I always hear. The problem there, Jay, is that you have a values misalignment, right? You have vendors who are serving you who don't share your same values, right? And, and, you know, or don't get them, or just don't, don't get them or appreciate them, you know, yeah, right. It's, it's like, why do people go into accounting? Do they go into accounting because they love people and can't wait to see their teams flourish? Very rarely, right? So you've got an entire industry, both on the CPA side, but also on the legal side where the motivations are just very different than you. And so if you've got these industries that you need to pass through in order to do an ESOP, they just I bet it's 80/20 or maybe 991, you know, like they just don't see things through the same lens. I think that's changing because I just think you're seeing a cultural shift in, in our country away from like business is designed to just extract maximum wealth and forget everything else. Um, so I think there's a shift there. But if you look at the, I mean, you're a guy, right? You see you've been working. With him for 25 years, right? He's probably a baby boomer, right? I, I don't think he's a Gen Xer. Baby boomers were told their entire life, the purpose of business is to maximize value for the shareholder. They were never told the purpose of business is to create a place where people can thrive, a community gets the benefit from the business being in it. No, no, forget about that whole socialism part or whatever. How about how about just you want. Be happy. No, how about forget about the, the sharing. How about the owner wanting to be happy? Not the outcome. It's not the income, it's the outcome. How about making yourself happy? It would make me happy to know my employees are taken care of. That's what I'm saying just about for my own personalist. Well, I'm just saying the socialist thing is fine, but the fact is I'm not gonna start preaching to you, oh, you should share the wealth with the rest of the community because I don't, if you want to, you should do that. But if you don't want to, uh. OK, I don't think Sean was talking about sharing the wealth that's what you're talking about, isn't it? No, I'm talking about. Come on, Lauren. He needs some Oregon. You know what he's talking about. No, it, it is, it is recognizing that there are other stakeholders in a business, and employees are stakeholders, your neighbors are stakeholders, your vendors are stakeholders. Like, these are people who have a stake in the business being successful and caring about them. Like, is that such a Crazy fucking idea. No, no, but that is an opinion. No, that is an opinion because I do know people who say, hey, I paid them. It's not, they don't deserve and that is an opinion. So it's, that's why I'm saying it is. And, and look, like, I guess I would say this, we've had 40 years of doing it this other way, right? Where it's all about the money, and you see intense dissatisfaction with business in that regard, for sure. So like maybe there's a better way, right? And you talk about happiness, like, I'm way happier running my business, you know, in a, in a way. That actually recognizes the contribution the employees are making to it. That and that recognition is both in terms of the power and control I give them, but also the financial compensation. I take home way less money than I would if I were to look at it through purely a financial lens. But at the same time, I have very little turnover. I have tremendous engagement, so I think ultimately I win. No, you win like I win because you're happy. You look at your thriving employees and it makes you happy. It's not just money. Yeah. Well, that's our opinion. There are people who say, oh, it's just, it's the money. I know someone who sold this company for a zillion dollars. He couldn't care less about, uh, all the employees, whether they have retirement. It's not his problem. And like, OK, I, you know, I don't feel that way, but I'm not going to trash capitalism is kind of my point. I think it's all depending on what your view is. Look at like the rates, just look at, you know, the data, right? In terms of business owners, divorce rates, suicide rates, mental well-being. Like you look at those folks, people who run businesses, they are not happy because mostly they've subscribed to this ideology that business is here basically to extract wealth, which creates tremendous downside in lots of other arenas. And I just look at the people who are happy running their business, and they generally think about the whole picture and how to recognize the contribution of other stakeholders. And I think one of the key elements why they're not happy is they can never have enough. They can never have enough and I'm way past that. I, I never, I don't know if I would have said that 30 years ago. I'm way past that. There is such a thing as enough, and I'm not preaching anybody though. I'm not gonna go tell another business owner if another business owner just wants to sell his company or her company and go put the money in the bank, hey, I. You know, it's their business, literally and figuratively, it's their business. When we've had these conversations in the past, you've told us that one of the reasons for your uncertainty is that you haven't been sure what your two kids in the business want to do. Where's your thinking with that at this point? I've completely come to understand it's better for them. There will be an infrastructure in place, and the reality is, it's better for them if you do an ESOP. Yeah, because it puts some infrastructure in place that the pressure's off of them a little bit, and the reality is, if I'm lucky and my father lived to 84, 84, if I'm working in 15 years, which is possible, I would hope my kids are going to be pushing 50, like they might be done with. Whole thing. So this puts a nice infrastructure in place. It shouldn't be a problem for anybody. There's no downside to it, and it's only 30%. It's not, and then I get some cash out. It all works. It really just works. Here you talk about it, Jay, it seems to be that should you do this when you pitch it to your employees, The better, uh, way to pitch it rather than saying, oh, you're all owners now is talking about the stability that you were referring to. The idea that the people who are running the business now will continue to run it and it's not going to be sold to private equity or some other owners holding me. What if they find them? Yeah, is that possible? I think I've been told somebody told me one. No, I, I'm telling you they certainly recognize I'm 67 now. No one's gonna walk up to me while somebody. Did actually, but most people aren't going to come up and go, Hey, Jay, you're looking a little old. You know, I'm only 35. I put a lot of time into this place. What's gonna happen? I've gotten ahead of that. I'm not gonna wait for my ass. I told him, I said, Trust me, I want to make sure this company's going long enough that I'm gonna give it my best shot, that you, you can retire from here. So I've already started talking to people about, I'm putting this in place. You hit the right word for stability because you go sell it, as we all know, it frequently gets messed up. I, you know, what's interesting is I so thinking to the question about How do you pitch it to employees? I think there are two issues. One is that there's the frog and the boiling water problem, which is that, you know, OK, Jay, you're 65. I mean, you, 67, you can, I don't know, let's say you work another 15 years, like, to an employee, they're not thinking about it every day that Jay's getting older and one day this business might not be here, right? It, it's, it's like that the boiling water piece is like, oh my gosh, one day the owner has a heart attack. I'm not saying you, but like, Nobody sees it coming as an, as an employee. Uh, you know, I think owners think about this tremendously, but I don't think employees are thinking about it. So when you suddenly say, hey, you're an owner, you're solving a problem that they weren't even aware of. They didn't know they were in this pot of boiling water until it happens. And what a lovely message. Not that you're an owner as much, but what a lovely message. I want to do everything I can to make sure this company survives me for everyone's sake. What a lovely message to everybody. So here's the thing, here's the second problem. I don't think employees, until they've gone through it, know how shitty it is when a business gets transferred. OK, so 20% of the time it's great, 80% of the time it's not. And then 20% of that 80% is terrible. Like everybody loses their jobs, right, kind of thing. Or they go broke. They go broke all the time, right? So I, I think it's a problem that is not well communicated in the marketplace because we celebrate the sale of businesses. We are not honest with ourselves about what actually happens to employees through these transactions. Yeah, sure, sometimes it's great, but a lot of times it's not. And those articles are rarely written. So I don't think employees actually recognize without a lot of education, that what you're thinking about is actually important. I want to hear a little bit more about your account. Is this a rare instance of the two of you not being fully aligned, or has this been an issue in terms of how you run the business for most of those 25 years? He doesn't get much involved with day to day stuff, though I had another thing with him 10 years ago, I looked into buying a universal life insurance policy, and I was surprised to see that if you buy a universal policy, this particular one I bought. If I die at 85, it would pay like 6.4% return on the money, not an investment, just the payout from the face value of it. So I say to the insurance guy, how can the insurance company afford to pay that kind of return? He goes, Easy. If they thought you were going to keep the policy to the day you die, they never sell it to you. They make all their money on the people that cancel the policies. Over half the people that buy those policies cancel them. So, if you hold on to the policy, you know, people get divorced, their spouses die, their kids die, their kids aren't talking. There's lots of people run out of money. There's lots of reasons why people cancel life insurance policies. If you are 100% confident. That you're going to pay it to the day you die. It's a good deal. So I tell him all this. I did a whole spreadsheet I laid it out. He says to me, Do you know what commission those salespeople make? I go, Yeah, what do I care? He couldn't get past that. He just couldn't get past that. He, he, even though I did a whole spread, he couldn't get past the fact that the salesperson was making, you know, 300 on the sale or something. Is that The way he thinks about your business in general, more focused on the fees that you pay than on the, yeah, just I, I really don't have any, I don't sit down once a year and go over the business stuff with him, and I, I just don't because I've learned over the years. He's, he's a, he's a downside thinker or just, no, he's a good accountant. He's a very good he's not an upside thinker, right? Like what's the upside potential versus the down. He's not an entrepreneur, right? Jay, I'm curious. I, I know you have a CFO now, so maybe this doesn't make sense for you, but earlier in your career building the business, did you turn to your, uh, accountant for advice? Listen, I've had lots of years, I didn't make enough money for sure. And then you pull the string and they go, your overhead's too high. So that's not always the case. I've said this before, I'll say it again. I can't say it enough times. It is really Sad. That the banks and the accounts, not one of them said to me when I was growing at 20% a year and I'd have a 3% bottom line, like, hey, idiot, raise your prices 5%, it'll slow growth down and your bottom line will double. Nobody said that. So the answer is, no, I've never gotten great advice. It reminds me a lot of the early days of the pandemic when the PPP funds were coming out. I was talking to this lawyer, and he's, he's a very cynical human, and he said, well, there's a strategy where you take the PPP funds and then you just close your business. And, and essentially, you kind of wait out the storm. And I'm like, yeah, I mean, I guess, he's like, why wouldn't you do that? And I told him like, well, because I'm not an asshole, you know, like, no, this is the problem. It's, I'm gonna give you the word. I think it's, we believe that businesses have souls, that's why. Because we have our businesses have souls, and that includes our employees and our customers. We believe they have souls. And when you're just when you're a lawyer or an accountant and all lawyers do is deal with problems, it's not like they are dealing with celebrations or you call a cynical, I might just say occupational hazard. They just see problems all day long. Yeah, that's fair. You know, if you were an emergency room doctor, maybe you'd stop driving cars because, oh my God, everyone driving a car is getting into an accident. We're almost out of time. I want to ask you guys 11 more quick question. We've kind of touched on this a little bit in the past, but I, I'm curious. How do you handle situations where somebody in your business isn't doing something right, you're not aware of it. Another employee spots it. Do you expect employees to come to you and tell you that someone else is doing something wrong or something they shouldn't be doing? I have a very easy answer to that. I have work with and I have work fors. Not everyone's to work with. They come to work every day, their workforce, they come to work every day, they do their job. I wouldn't expect them to have the confidence in whatever. Come and tell me there are plenty of people that work for me. I absolutely would expect them to say something, and they do. I, I don't think you can make a blanket. Some employees, you should expect that for how much money they make for your relation with them and other employees, it's asking a lot to think that somebody's going to come and go to the boss and say, hey so and so, they don't want to get stuck in the middle. I get that, so I think it goes both ways. What about one of those workwis if the person they've spotted doing something is further up the ladder than they are? I've had it happen. They're kind of ratting on one of their superiors. Do you want them to do that? Absolutely. Call it ratting. This is part of the problem, high schooler. It's not. It's looking out for the best interests of the company. I had a twenty-some year old walk into my office and go, Jay, you got to get rid of so and so, the vice, yeah, and that's why he's running my company now. Yeah, I absolutely expect that. Sean, do you feel the same way? Because I've been in situations like that as an employee, and one of the things that occurred to me was, well, suppose I do say something about this and something happens. And other employees are aware of it, they're just going to remember that I got somebody in trouble and wasn't loyal to a colleague. They're not going to look at me as someone who, you know, had the best interests of the business at heart necessarily. Maybe they will, maybe they won't. What what do you think, Sean? I mean, I can only speak to my experience. The thing that I worry about most, having been through it, is when low-powered people don't feel like they can have an honest conversation about somebody who has more power than they have. You know, so think of this as like middle management. If middle management is doing something wrong or it's just really debilitating to the organization, do the people down in the trenches feel safe enough to come to me, right? And I've had an experience where several people didn't feel safe enough to do that, and I really, really, I, I, this is a while ago, but I realized like, wow, I've got some issues in myself where I haven't created a place where people feel like they can come talk to me about these things. I just had a manager tell me that two of his employees came up to him, new employees, and said, we're thinking of quitting because of the way so and so talks to us. So he went and talked to the other assistant manager. Sure, and he thinks he's straighten it out somewhat. And I go, you know what, I don't go to my, my factory much anymore because of the whole COVID thing. So I don't even know some of these people. I said, call these two guys into the office that did that. He calls them both in. They're probably a little freaked out. What's the owner want to talk about? I just said to them, I just want to tell you, I started this company with the idea that people were going to work together for a common good and take care of customers. I really appreciate you speaking up and saying something about that issue. Thank you. That's what we're counting on, blah, blah, blah. You got to think they left their feeling good and they spoke up to the guy. So that is the problem in business. And Lauren, I have the answer for you. You worked in corporate screwed up environments. There's the truth to that, really? Yeah, and actually, I mean, what's, so what's interesting is the situation I'm describing, which, I mean, to be fair, it happened once in my 23 years, but The person who was the problem came out of the corporate world. And what I realized in hindsight was, she was a wolf in a bunch of, you know, in a flock of lambs, you know, in terms of she really understood how to manipulate uh and and play politics. And like we didn't do that, right? And so somebody came in and was like, really good at taking folks and either making them feel like They weren't safe enough to say anything or to create these weird alliances. It was terrible. You just summarized, that's exactly the conclusion I came through. Now, I don't know, I haven't worked in it, but from what I've seen, some of these companies. All they do is play politics. So how do I look good? Who, who makes me look bad? Who should I make look and they spend all their energy on, on politicking instead of in a collaborative environment, which I believe we have. We're just focused on taking care of customers and making things happen. Yes, taking someone into that other environment is, I tell them on the interview, I say, listen, if you take the job and we offer to you. This is either gonna be a great experience or a nightmare, all for the same reason. We're on an adventure, things change. 2, we don't do the politic thing here. There's nowhere to hide. If you do well, everyone's gonna know. And if you screw up, that scares some people off and that's good because that's what I want to do. And, um, it, it's, you're 100% right though. That's one of our advantages being a healthy small company is that we can be mission driven and collaborative. I don't think. You can describe most big companies as mission-driven and collaborative. Well, and the thing about it is, it's a small company, you can't afford to get that wrong. Like you, you just, I mean, it's not that's all we got. All right, my thanks to Sean Bussey and Jay Goltz and to our sponsor, the Great Game of Business, which helps businesses use an open book management system to build healthier companies. You can learn more at greatgame.com. Thanks, everyone. Thanks for listening. Wait, wait, don't leave yet. If you have a question or a comment that you'd like the 21 hat's owners to address, send it to me by replying to your morning report or by email at lauren@21hats.com. That's L O R E N at 21 hats.com. Do it now before you forget and don't be afraid to tell Jay what you really think. You can take it. And if you got something out of this conversation, help us reach more business owners. Tell a friend, subscribe and review us wherever you get your podcasts. Follow us on Twitter. Subscribe to the Morning Report at 21 hats.com. This episode was produced by Jess Thuberon, founder of Blank Word Productions. OK, now you can leave. Thanks for listening, everyone.