It’s Like Planning Your Own Funeral

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week Jay goz tells Shan busy 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 ESOP 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 6h 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 Shawn 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 magazine named the best newsletter for business owners and which you can subscribe to for free at 21h hats.com where you can also find transcripts of our podcast episodes and lots of other articles and interviews joining me this week on the podcast are regular Sean busy CEO of Kinesis which is based in Portland Oregon and works with small businesses on marketing culture and strategy and Jay gos CEO of the gos 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 Shan 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 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 goting me into it so you got some credit for True no I seriously I was turned off but you're not wrong you've kept telling me Jay don't let the message from the salespeople whatever turn you off the concept still and I I as I said last time I was on I was back to 5050 but I really believe I have some clarity now well tell us what you learned there okay 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 two 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 in 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 hot dog 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 45 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 cuz 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 okay this is good they had three 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 in an outside loan an amortization schedule 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 okay so I started to get what he was saying and then afterward he came up to me he thanked me for stopping him and he says you know I'm trying to find tun this and then he said to me this is the key thing he said listen give me 10 minutes in front of a whiteboard I'll explain it to you'll get it that's all I needed to hear and and I'm I am going to sit down with him CU he was a tremendous resource to find there I actually made like six connections were well worth going so got through the class can I ask you 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 and 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 compens and I whoa whoa whoa wait and it was it really was confusing you're you're saying just to be 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 there 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 they're two different things um I've got a schedule with him next week he's going to 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 had drove from Chicago to Minneapolis it's a 6-hour drive and I thought you know what I'm just going to drive back to my office so 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 created 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 realize none of these are really a problem really the math thing that's why you hire these companies they'll help you f 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 going to 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 going to choose them I'll get some smart people all 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 four 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 going to die one day I wouldn't have been there I would argue that most people that do esops or many people do esops are doing it because none of us are going to live forever it's not something you wake up and go oh I think this is a great you do it because you got a problem you got old I mean it's a problem so if being there it really you know anx 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 second generation no third generation just entrepreneurs because we have a different angle on this we're taking our baby and we're giving it away and 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 wow yeah and they were mostly employees I mean you can't have the same conversation with employees with owners they took over their F family business with Entre they're different messages and I'll tell you absolutely the key people I met whether it's the nonprofit people or some of the advisers 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 stake in the business let me I want to ask both of you about this I feel like we've been peel the onion of esops for really a couple 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 they 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 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 esops 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 a worldw that they've never experienced right so you know it be like plopping somebody on a a foreign Island and saying okay now you're part of this culture it's like what 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 Jay 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 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 brain people to help talk about what this means and and those are usually marketers or sales people no 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 Motor 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 owners the first question could be oh am I going to get a raise uh well no oh um am i g to get Flex time I've you know wanted uh no oh am i g to be able to figure out how we're going to run the uh no oh does that mean I'm never going to get fired uh no oh can I have one of those donuts yes have a donut I mean they're not they think owner they think they can do whatever versus saying you're going to 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 it's a I think the 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 or I'll tell you the other problem they're going to think what you think I'm going to be here in 20 years you're crazy I mean I started the downplay when we interview people now that we've got people here 30 years because that some of these 23y olds don't want to hear they don't want you to what are you serious you think I'm going to be here for 30 years I mean I think the answer is first of all I was told that you really don't start to accumulate any decent money for like four five six seven years this isn't the quick Rich schem 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 going to have stock in the in the company and what that means is okay great but you certainly shouldn't go tell everybody their 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 have never heard of a situation that does it the way you're describing it 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 okay 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 a hundred 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 anxi 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 is a strategic buyer that maybe you want to take the cash off the table okay 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 fit 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 one two I don't want to retire 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 two years of their life I have no interest in doing this so three I do care about my employees and their welfare and I am concerned about their retirement four I don't believe there is some strategic buyer that's going to give me twice as much money I got a weird business it's not a plugin 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 show when I'm gone which happens all the time which is why most companies just crumble end over the last 45 years I've been to three or four auctions of places that frames pictures and I just like I always think wow is this going to be me one day there goes your Wrecking there goes your two wheel truck frequently not not a lot freak more than not 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 want to go to work I I and and I want to take care of the employ 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 as is my theory too there's not a strategic buyer out there um probably the reason for that is that it's 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 fewer and fewer 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 that it's the it's it's mature it's not growing like users but it's definitely not it's you don't think it's declining it it maybe a little bit but it's it's pretty stabilized more importantly 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 storees 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 gotta 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 borers are retiring they're doing less framing pictures around 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 going to wake up one day and go oh my God what I get myself into I think this is going to stabilize the company give it'll give stability to the employees long term and it will help their retir ironment and there'll be just a little lift just a little a little more engagement from people just a little like I'm not talking 10% Like 2% whatever and then maybe some good PR so I think there's lots of upsides to it 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 C you two and they one I think you can message it right without people thinking oh wait we're all getting a raises tomorrow I do think there's ways of doing that um I'm going to 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 6,500 esops out of a million businesses now granted 90% of them are too small to do it but still wait there they're more than a million businesses okay whatever the number is there's only 6,500 7,000 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 Esa I'm going to tell you my experience I come back from the thing I talk 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 lot of fees there's a lot of fees and you know they're a pain in the ass and I said okay but it it's whatever pain there is it's going to 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 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 going to tell you to sell the company ignore him this is the problem people think oh well the account don't understand them okay 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 them 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 are they don't get it all they know is the numbers on the paper oh well you could get more even though I've told them 20 times I don't want to retire I want to go to work every day it doesn't register all he knows is well maybe I could get more money from 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 account and they're completely dismissed immediately oh yeah they were paining 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 law 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 valuation you want and the accounts the two two different people have to 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 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 accounting because they love people and can't wait to see their teams flourish very rarely right yeah 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 8020 or maybe 991 you know like it 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 El I mean your guy right you see you've been working with him for 25 years right he's probably a baby boomer right 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 just social no how about just you want to be happy no how about forget about 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 socialist Jay I'm just saying is fine but the fact is I'm not going to start preaching oh you should share the wealth with the rest of the community cuz I don't if you want to you should do that but if you don't want to okay I don't think Sean was talking about sharing the wealth with the rest talking about isn't it no I'm talking about come on laury 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 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 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 it at 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 but that's our opinion there are people who say oh it's just it's the money they 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 okay 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 dependent 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 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 going to 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 infrastructure in place that the pressure is off of them a little bit and the reality is if I'm lucky and my father lived to 848 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 the 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 it all works it really just works here when you talk about it Jay it seems to me 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 owner who than me what if what if they find them yeah is that possible I think I told somebody told me what no I I'm telling you they certainly recognize I'm 67 now no one's going to walk up to me well 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 going to happen to I've gotten ahead of that I'm not going to wait for him to ask I told him I said trust me I want to make sure this company's going long enough that I'm going to give it my best shot that 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 freak gets messed up I you know what's interesting is 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 okay J you're 65 I mean you 67 67 you could 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 pieces 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 say 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 okay 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 accountant 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 till 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 to 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 them all this I did a whole spreadsheet I laid it out he says to me do you know what commission those sales people 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 30 grand 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 just yeah just I don't 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 account he's not an upside thinker right like what's the upside potential versus the downside risk he's not an entrepreneur yeah 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 overheads 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 r your prices 5% it'll Slow Grow down and your bottom line will double nobody said that so the answer is no I've never gotten great advice 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 you 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 you know like or no this is the problem it's I'm going to 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 one uh one 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 withs and I have work fors not everyone's a work with they come to work every day they work for it they come to work every day they do their job I wouldn't expect them to have the confidence and whatever to 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 ECT that for how much money they make for your relationship 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 work withs 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 you call it ratting this is part of the problem high schooler it's not readying it's looking out for the best interest of the company I had a 20-some year-old walk into my office and go Jake you got to get rid of 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 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 powerered people don't feel like they can have an honest conversation about some 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 is 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 real I I this was a while ago but I realiz like wow I've got some issues in myself where I haven't created a place where people don't feel like 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 and he thinks he straighten it out somewhat and I go you know what I don't go to my my factory much anymore because of the whole Co 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 talking about I just said to them I just want to tell you I started this company with the idea that people are 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 gotta 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 some 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 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 it's exactly the conclusion I came through now I don't know I haven't worked in it but from one 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 bad and they spent 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 going to be a great experience or a nightmare all for the same reason yeah we're on an adventure things change two we don't do the politic thing here there's nowhere to hide if you do well everyone's going to 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 absolutely not that's all we got all right my thanks to Sean busy and Jay goz 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 Great game.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 hats owners to address send it to me by replying to your Morning Report or by email at Lauren 21h hats.com that's l r n at21 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 21h hats.com this episode was produced by Jess Theron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]