Should We Tell the Employees?

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week Sean busy Jay goz and Laura Xander talk about the buying and selling of businesses Laura thinks her recent purchase of a small distribution business could change the trajectory of her whole company helping her finesse the challenge of selling wholesale products to her retail competitors Jay meanwhile has been trying to help an aging business owner sell the kind of business that too often just Fades away underlying both discussions is an intriguing question while it's common practice for owners trying to sell their business to keep the potential sale a secret fearing employees might otherwise flee is that really the best approach or is it actually a betrayal plus we answer a listener's question about finding the right balance between being a kind boss and being a pushover and we play a quick game of who said it Alon Musk or Mr Burns even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations will let owners know they are not alone in facing challenges same thing with our daily newsletter the 21 hats Morning Report when CH magazine recently 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 regulars Sean busy CEO of Kinesis which is based in Portland Oregon and works with small businesses on marketing culture and strategy Jay colz whose companies in Chicago include a picture frame business artist frame service and a home furnishing store Jason home and Laura Xander who is CEO of Jimmy beans wool a digital yarn store based in Reno Nevada and mateline Tosh a yarn supplier based in Fort Worth Texas the episode is titled should we tell the employees welcome Sean Jay and Laura great to have you all here Laura let's start with you a few months ago I think you told us you were really excited about possibly buying another business and then I think you decided against buying it in part because you didn't want to take on the additional Hassle and the additional risk anything new yes so we did decide to buy a small business it's a distributorship so it's not the one that we were looking at about 9 months ago so this is a small kind of it was a one-woman operation and we are operating it out of Texas we do have something else on the horizon but I can't tell you and I don't want to do it but I think it might be the right thing for the business I don't know what we're going to do we got to figure it out sounds like we should talk about that Laura oh my God yeah it's a tough one it's it's a business that we could get it for Pennies on the dollar again from a business standpoint it would be a great fit but I don't know if I want to work that hard so anyway yes is it a business with a lot of employees um not a ton no um not a ton a manageable amount but we did acquire a distributorship October 1st I think it was October 1st October 3rd or something we moved it to Texas and actually what I was doing this morning I'm in Texas right now is training the team here on how to manage that business and we have a great staff here and you know we've got a great computer system that this business just kind of folded itself into and it actually we bought this distributorship and our now the exclusive North American distributor of this iconic brand that's been around for 130 years from Scotland from the Shetland Islands and what ended up happening was we realized that we could also distribute a couple of other things out of our space in Texas so we are now going to create a Distribution Company so that it's less confusing to the end user so we're going to create 528 Supply 528 Supply will be based in Texas and it is going to distribute this yarn from Shetland it's going to distribute mateline TSH it's going to distribute another yarn line from the Netherlands potentially our handbag line so we're building you know the flexibility and Doug is working on the software um for this right now so that we have the flexibility to grow our distribution I'd be really curious to know like Jay I know you've got decades maybe centuries of experience in this area before Jay responds to that Laura let let me ask you no my lawyer will be responding I'm respond you did this in the last century didn't you yes I did actually Laura you said that you're trying to eliminate confusion is the confusion you're trying to eliminate the fact that you have a business Jimmy beans wool that is a a retail e-commerce business and this is a distribution business you're discussing that sells to stores that compete with Jimmy beans wall yes exactly she's doing exactly what I did and that's why I have a separate company that we sell molding to other frame shops around the country so yes I actually do have some experience with that that I'd be happy to share with you yeah I would love it I mean and yes correct Lauren because people you know these yarn shops are a little confused and they're like wait you know do I look on the Jimmy beans website for the inventory that we want to order for our shop and trying to build something that's flexible enough that we can grow it um and to try to take kind of the Jimmy beans name out of it some so that every time somebody places an order they're not thinking about their competitor there's another fun fundamental issue which is you know the framing industry is very similar to the industry you're in are they going to be mad at you oh I don't want to give her business she's a competitor and the answer to that is because I've certainly had to deal with that if I didn't own this gigantic retail framing business I couldn't have brought these moldings in and I could have never got the expertise to run this business as we do so the answer is it's good for everybody I'm not opening stores around the country you're not opening stores around the country I couldn't do the wholesale thing without the retail thing so most of the customers have figured out you know what this is good for them and they're able to leverage off of our expertise of being retailers and picking the right moldings you're in the exact same situation if you didn't have this large retail presence you wouldn't have the expertise to run such a good wholesale business so they're all benefiting from that 100% And you know our goal is to be the best wholesaler you know and we want to have really great customer service and really good turnaround in the same way that we did that on the retail side you know that's our competitive Advantage is that we make life easier for you our mission is to help small business owners be successful here's the issue with in our industry the people that are Distributing frames many of them most of them do not deal with the end user therefore they don't know if there's problems with the molding we know about it 10 minutes after it comes in cuz we eat our own dog food as they say we're using the frames ourself exactly you're selling product right to the end user if there's a problem you're going to find out about it in 24 hours so it helps you maintain the inventory curate the inventory quality control the and that's the same thing I have so like I said it's actually an advantage that you're both wholesaling it and you have the connection to the customer I think one thing is worth clarifying Jay when when you refer to your business is a gigantic retail business you're saying it's gigantic by framing industry standards yes you sell primarily if not exclusively in the Chicago area right no only in Chicago no it's just Chicago but my point is my my main location is probably 15 times bigger than the average frame shop so we use a lot more molding than most frame shops would use but but Laura's Situation's a little bit different and more complicated because it's e-commerce and she's selling all around the country competing directly that's true maybe I think it's very similar well the the other there are some people that just simply do not want to buy product over the internet and they're going to go into the local store so yeah you're right it is a little more complicated because we're not selling nationally uh direct to the customer but there's still some the point is there are some people that won't buy from her I'm sure I'm sure there's some 100% yeah they won't buy from you and the answer is okay fair enough you can do what you want but there's other customers it's kind of like the old phrase if you can't beat them join them the question is are they better off working with her or do they really think they're going to cause a devastating blow to her if they don't buy from her they're not going to so they're better off working with her because as she's just Illustrated she's got some iconic Brands now how cool is that yeah we have iconic Brands and we've got great service and like you said I mean we eat our own dog food so I mean we knit with these Yarns and we understand it one small difference Lauren between our industry and Jay's is that the physical you can buy stuff online but you have to be able to go into a shop to learn I mean you don't have to but you go in there to learn new skills to have in-person Community you know I mean it's not transactional you know these independent yarn shops so you know we can't compete with that online that's not our goal so we're really trying to drive people into these yarn shops how big is the industry do you have a clue yeah about a billion dollars okay in the framing industry I've determin and I've had big suppliers agree with me when I come with this number I believe the Custom Framing industry not the big chains independent framing stores I think it's a$2 billion industry which in the scheme of things we're like rounding error for cocacola I mean we don't most bus most companies you know of are bigger than either of our Industries so we're a tiny little spec of the you know GMP yeah same I think something that's interesting about both of the your businesses is it feels to me a little bit like clothing in that I can buy clothes online but I really hate it I really hate that process because you just don't get a sense of the fabric you don't get a sense of the fit it's so annoying to have to return things and from what I know about artists and people who are creative they really want to touch the thing feel the thing see the thing and I think that's a little bit of a built-in Advantage for both of you in terms of your customer base well my biggest Advantage is custom picture framing by definition is not a good thing to be shipping no I mean you're hinging the artwork so it doesn't get Dam you're shipping artwork and it's not like a frame poster all the time sometimes it's what's called hinge where it's I don't even know how you can ship that and not have it get destroyed so it's extremely difficult to ship framed artwork plus picking it out you're looking at a computer screen and the frame is represented by an eighth of an inch sample it's just it's not ideal so that's my advantage and Laura's Advantage is that people want to talk to other people so we both have businesses that are far better served by the local vendor than and they want to and feel right you know like Sean said there's one other thing to think about I always like to evaluate how sophisticated is the manufacturing base in terms of the ecosystem and an unsophisticated manufacturing base is usually to your advantage because meaning from like an e-commerce and Technology standpoint because it's hard to go direct to customer for long-term manufacturers and my guess is in your industry Laura that the yarn manufacturers are probably not awesome at like e-commerce and so you've got probably a really long Runway before they even think about doing it right maybe I'm wrong on that that's just a hypothesis I don't I don't know your industry that well no it's a great point in other Industries it's a super risk because some of these manufacturers are getting really good at marketing and going direct to Consumer I have the answer to that we're in such tiny industries that the quote unquote big suppliers in the industry are little companies whereas if you're in other Industries you're competing with $100 million dollar a year companies and we're n yeah that's a good point Laura has this changed the way you think about the potential for your business yes 100% I think the pivot here is going to be for us to be a distributor and I think you know we've watched our retail business in Reno it's just very stable it doesn't it's not growing much you know we've tried I know Jay says when you say retail yeah I mean it's our brick and mortar and then it's our e-commerce I mean those together are retail to me we're selling to you know the end user and those channels aren't growing a ton in the way that they used to grow um for a variety of different reasons so we found I think I was looking at our numbers it was something like you know 10 years ago 90% or 100% of what we sold were products from other people and now it's like 70% of the stuff that we sell are products that we either make or distribute ourselves that's where our growth is our growth is not in the sales of products that other people make you know we'll continue to do some de product development and Manufacturing ourselves we have our own yarn line coming out uh in a couple of months but I really think to Jay's point because we have the retail store and the e-commerce we now have the expertise we have the staff we have the connections to the Mills and to the manufacturing to be able to start doing things at a greater scale that we couldn't do before um and that distribution I mean we've got people coming to us all the time do you want to buy our company do you want to start something you know now that we have proven over the last three years with the acquisition of this Matalin Tosh brand that we can work with yarn shops and they're not all going to quit working with us because we're quote unquote Jimmy beans and a competitor we've kind of proven that we can operate in the best interest of the yarn shops and operate our own yarn shop we think that there's a ton of opportunity and we think we can do a really good job of serving the local yarn shops and from a um from kind of a hippie perspective that's the best thing to do for our industry is if we can do things to help keep our industry and keep these local yarn shops profitable then that helps the entire industry because that keeps more people coming into the shops you know we create more knits we create more crocheters you know blah blah blah blah blah that's such a change of philosophy too because like when I was coming up in my business I was always told competition competition competition do not talk to others who are trying to do what you're trying to do secrecy secrecy secrecy and I really think we've shifted from a competition Centric landscape to a co-op petition Centric landscape we have to well and part of it is just access to information right right so now you can't protect all that stuff anymore so you better embrace it like lean into it it's funny that you would mention that cuz you know we are developing our own yarn line that's coming out in a couple of months and it's with our Mill in Peru and we had this conversation about the mill in Peru is fair trade certified so if you're going to put the fair trade mark on the label you have to say where it came from you can't just say it's fair trade you have to say it's fair trade and it's spun by this Mill and so we have this conversation is do we want to put our source on the label and we decided yes 10 years ago no but now we do because now everybody knows right it's no secret like if you want to find a place to buy yarn you know you can access that information Laura can you tell us what the difference is between the decisions you've made to proceed to to buy and and build in the distribution area versus the business you decided you did not want to buy yeah that's a great question it's funny Doug and I were just talking about this the other day the company that we did not buy was another e-commerce SL retail company and so it was very similar to Jimmy beans it just had a different audience it had a different curated selection so it would be like Banana Republic buying Old Navy and actually it was kind of the reverse you know it was a little upscale you know we thought it made sense cuz they had a customer list that was somewhat different than our customer list and and they had developed some proprietary products that we thought would be a really good fit and I don't know that that was a bad idea but it just somehow it just seemed more complicated you know they used a different software platform blah blah blah blah blah but where we're leaning into now is more on the volume side and using our strengths of again distribution you know space in Texas is inexpensive compared to Nevada or Chicago or Seattle or New Jersey so space is more inexpensive we like I have told you before we have a waiting list of people who want to work here so that's not a problem so let's lean into those things and we're already set up to serve hundreds of wholesale customers so let's just serve them more if that makes sense I think one of the issues with the deal that you turned it it continued to get more complicated as it went along you kept finding out things that were not good yes and I remember telling you whatever you find it's going to be three times worse when you actually end up in there so that was smart that was smart yeah yeah and this one that we did just by is very like I said I mean it was one woman running it who worked 20 hours a week like simple simple simple simple yeah and I love simple because then we can just go and put our own stamp on it and do it the way we want to do it maybe I missed this earlier what's the kind of Technology level that she's at right now and where do you want to take it uh I could share the website with you which I think was built in 1982 or 19 like it's so retro that it's almost cool you know it's got like the three dots um I mean it's funny we were just training on like the email platform that she's using it's basically AOL oh my gosh it's a source of great fun actually so there's nowhere to go up but up and I'm finding for me personally because it's all about me personally right I actually love this challenge of kind of turning things around you know and taking something that's got a good core or a good base and then just exploding it so yeah we have all kinds of really fun technology goals she's got a chain of fa machines there you don't even want to know she wouldn't take new new customers would call and say hey I mean I'm getting we're getting like two or three new customer requests new shop requests um a week because she would just tell them uh I'm busy you know call me back in 6 months Laura you've now bought a number of companies you bought a company in China you bought a company in Vietnam along with the ones we've been discussing what have you learned about the process I've learned that I love it I mean I it's my favorite part buying a business is your favorite part oh absolutely are you kidding like it's like traveling you get to explore and you get to look at their p&l like looking at all the different financial statements and you know that tells you this whole story of you know what's been happening and learning about their business and learning what's working and what's not and what you could do differently and what you could do you know not better but better yeah I I love it absolutely love it all right I want to talk about how hard it can be from the other side meaning to sell a business Jay I know you've been kind of mentoring someone who's trying to sell a business and I think it's from what you've told me it's a difficult situation that a lot of business owners find themselves in could you tell us a little bit about that well a little history from my observation and since I have a lot of frame shops I sell to it seems to me probably 90% of frame shops just close one day no one takes it over because we would know somebody would call and say hi I just sold the shop to so and so it doesn't happen that often and I realize that a lot of them can't sell because they don't make enough money and no one's going to pay money to just buy a job you know know they're making $30,000 a year or something and no one wants to pay money for that this particular case it's somebody I've known for years and he built a he and his wife built a very successful nice business and bought a building which I told him to do years ago and it worked out great and now he's attempting to sell it and he hired the business broker and he found the best one he could find but I just accidentally found out he was trying to sell it I happen to go to a wedding out of town and I found myself right in front of his store so I went in there and he wasn't there but he called me back and he told me he was trying to sell it and he's been trying since February and they were getting no traction and I looked at the proposal from the the business broker it's like not good not good in what way lots of ways the first thing was and I'm learning this from other places the first mentality for people who do that stuff is oh we got to keep it a secret well that's a problem I just happen to have gotten an email from a buiness business broker that goes Art and Framing business in the midwest is looking to sell so I signed the NDA and I found out who it is and it's like it's pretty hard to play that to go and try to keep everyone secret and at the same time try to sell it did you do that Jay because you were thinking you might be interested in buying it I don't know I figured it couldn't hurt to go look at the financials and get an understanding of it I don't know I just figured I had nothing to lose and I figured I'd check into it especially since I'm trying to help this other guy I'm just trying to see what else is out there and I I I so I I convince them stop hiding behind this tell them you're selling it wait tell who you're they're selling it the population put it out there instead of this vague Fram shop art business for sale and you well that's pretty St a lot of businesses do that because they don't want the employees to know or or vendors I think I know and I'm suggesting that the cures worse than the disease I'm suggesting tell the employees just tell them they know you're in your 60s they know this is going to go on forever get over it tell them you're looking to sell it you're going to find a buyer that's going to take care of them and take care of the business trying to keep this whole thing secret I just think is problematic and then you run into the problem of how does your long-term employees feel when they find out behind their back you've been trying I just find the whole thing I squirm thinking about it so Laura Sean do you guys have any thoughts about that I don't know that's a well Laura you do know you bought these companies did their employees know well three of them didn't have any employees okay that makes it simpler yeah it was much simpler mine TSH being the exception yeah that was the exception yeah so they had 30 40 50 employees no they didn't know I mean I think they kind of knew they kind of knew they were in fear they knew it was going to go away unless somebody bought it yeah which is why I'm saying I think the the the the concern over like I said they know you can't go on for what's wrong with sitting down with people and saying listen guys I'm going to put the business up and I'm going to find the right buyer and and letting him know about it and he fully embraced it now it's going to use their name and everything his employees all know about it I guess the fear that I heard you know with the one that we didn't buy you know they really didn't want their employees to know and I'm with you I'm like why don't we just tell them and I guess part of it is what if it doesn't go through and like this didn't go through and they were going to continue to operate it you find someone else but the fear was that the the employees will leave why would they though that's my point especially if you say Hey listen and when it sells I'm going to give you all a nice bonus from the you know there's ways of mitigating that for instance agreed I have a a guy that was probably 15 years older than me and he he's he manufactured frame pictures and I was real friendly with him and I used to say to him hey one of these days I'm gonna buy your company so he calls me one day Hey listen I you know I've decided I need to sell I said okay I'll come out Thursday give me a tour and we'll talk about it he calls me Wednesday no you can't come everybody knows who you are and if they see you they're going to know what's going on okay uh well all right well call me back when we can do it some other time didn't hear from him again instead he sold it to his his son's friend who was a CPA the guy bought it took out a line of credit and it was bankrupt within six months and now the guy died it turns out and now I'm at the auction thinking it didn't need to go this way it just didn't I probably could have kept the thing going and I just think that this paranoia of oh my God everyone's going to find out that the downsides are so dramatic I'm going and the guy was in his late 60s at this like who do you think you're kidding my understanding is anything under five million you're getting not awesome representation right well you're getting one step above retail Realtors Right One Step Above This is so interesting Jay cuz it you know what it makes me think about is compens ation and how for the longest time compensation was this like secret Black Box you didn't talk about it you know it was all about secrecy and then a number of businesses figured out well actually if we if we peel back the the reality here and we start to share with our employees and then we educate them about what it takes to run a business and you and then you then you have open book management and and generally you see open book management companies have higher morale lower turnover oh Sean you're really going to open this box right now oh totally oh my God I was going to say Lauren please shut this wait Lauren I'm waiting for you to shut this down please look Jay you're the one who's advocating for for transparency no no I'm big you're not wrong you're not wrong Sean just to clarify when you said talking about the issue of compensation were you talking about business owners being open about their own compensation or what they pay employees the latter essentially what Jay is advocating for is treating employees like adults right and saying to them hey you know I am transitioning out this I'm at a different phase in my life because they're going to figure this stuff out themselves right and I would categorize it here let me put it in a different package I would call this destructive secrecy yes whatever you think the advantage of the secret it ain't worth it like really it would be the end of the world if you actually sat down with your employees and told I mean it's just it's just not worth the trouble and people are so p and I see it all the time when you on on listings for businesses most of the time they don't even tell you who they are and you're thinking what's the big secret here yeah maybe someone will go oh I've seen that place or oh that's right near um where my brother-in-law lives there's lots of reasons why listing the name of the company could be a benefit to selling it but instead everyone's got this paranoia I I think the thing that's really interesting is that just like with open book management you can't just like throw out everybody's salary into a spreadsheet and share it with everybody it's a whole process of education and kind of bringing people into this in a very methodical way and I think the same goes for if you're going to put something on the market you can't just like plaster it out there because then employees are going to wonder what's going on but I think your idea has a ton of Merit because if you educate folks especially with a lot of these businesses where let's just be real you know a lot of these employees it's a job it's not really a career and so it's like if they they generally know they're being cared for and that the owner is being thoughtful about the transition like I think a lot of them are going to stick with it but if you don't give them any information they're going to make stuff up and the making stuff up is the toxic part well not just that but let's think about this everyone talks about oh I care about my employees I don't know how you can look yourself in the mirror and and and then say all we have to have a meeting all right everyone um I've sold the like what how do you do that to people I totally agree right that's a betray that's a betrayal yeah right I mean oh and I care about you so much I've been keeping the I've been making the meetings at night and I would ask the question what's the point what are you afraid of really at the end of the day he was afraid well customers will hear about it so what you're you're looking for a buyer who's going to take care of the business like I said this guy's in his 60s like I just I just had a customer say this to me the other day she goes and maybe I should take this as an insult she goes you can't close this business she looks I go okay I'm with you on that I'm not going to I'm working on a plan here I must have thought God I must have looked bad that day or something but and then it turns out talking to this woman she's also in her 60s and she's got a business with 375 employees and she stays up at nights worrying about it oh wow so I had a really nice conversation with her about it about you know some plans and what you can do with it but people got to get out of their own way sometimes about there's nothing wrong with saying I care about my business I care about my employees I care about my customers I'm looking for a transition and we're going to be putting it out there so what are you doing I'm working on a big plan which I will reveal he's going to ESOP it all right you just I don't know I'm thinking I'm looking into things like esops no I am I'm looking into that the funny thing about that Sean is he's interested in in going with employee ownership which will require him to share numbers with his employees open book management I'm looking into selling Parts 30% doing in ESOP it's very interesting so I'm looking into it it's very interesting before we get too far away I want to go back to one point we were talking about which is the issue of not having really qualified Brokers dealing with businesses like these and it you know it's it's easy to lose sight of the human side of this you know you think about the numbers and the listings but you know somebody puts their life into building a business and you know it means a lot to them they hope to get something out of it at the end and then they're stuck dealing with people who aren't really qualified to to help them in many cases Sean have you seen anything work for those under five million businesses that struggle with this yeah I mean I don't I don't think any of my clients have been under that $5 million threshold that have either bought businesses or been bought I think it's a Grist Mill I mean I just think it just it just grinds these who what does that mean that's fancy you use a lot of fancy words sorry no no chis Mill it means they just turn them through they put a bunch of listings up they see some of them sell they just put some more up and put some more up and they just keep throwing crap at the wall sometimes it's six and sometimes it doesn't there's just not enough money in it I mean I think that's the problem it's it's a little bit like uh selling a house you know for $250,000 at a 3% commission it's just not very much money for a realtor so why are they going to put that much work into it I'm curious because again you know we get people coming to us all the time and and there's a lot of turnover in our industry as well most of the businesses are doing half a million dollars in sales you know like you said with a lot of the frame shops the owners are paying themselves $30,000 as salaries even 50 let's say 50 there's nothing left there's nothing left so what do you sell that business for I mean with all the news about tech companies being sold for multiples there's a lot of misconception about how much your business is worth well let me tell you my experience which I believe would be the same for you they think when you say what are you selling the business for well I've got uh $8,000 worth of molding and the equipment's worth it they think they're going to get their they're going to get their inventory and their equipment out of their equipment at Price yeah no one gives a they'll get they'll literally get 10 cents in the dollar for their inventory and eida is a foreign term to them most of them have never heard of the phrase e right earnings before interest taxes they don't they don't know about that they don't real so I have to explain to them you're asking someone to give you $100,000 a year $100,000 or2 200 whatever it is to make $45,000 why wouldn't they just go get a job and pay nothing yeah yeah that's a big one do you think they overv value the inventory because they see it on their balance sheet and they think that that's what it's worth or is it just an emotional thing that's what they paid for what they paid for they paid for it right they're sitting on inventory and equipment and then they'll throw in well there's Goodwill none of that means anything if the bottom line is Oh I left out another big piece which probably is the same in your industry and then the the $45,000 they're making there's a big wink wink in there like they didn't put it on their tax return because they pocketed all the cash I left that part out I keep telling people you really want to get wealthy pay taxes go borrow money act like a real business because they're still operating in the 1930s mentality of three things don't pay taxes don't borrow money and don't trust anybody like that's not going to work it'll it'll work you'll make a living your whole life but I don't know anybody who's really done well that subscribes to those three things so they don't even have evidence of what the grow sales are because their kid comes in Dad I need to buy new shoes Okay register if there is a register these days they open the cash drawer and they give the kid a hundred bucks I mean that's how it works all right we're almost out of time I want to I want to do something a little bit different I have a quiz for you guys this week I've taken a few questions from a quiz published by the new Republic I'm going to read three sentences to you you have to tell me whether each one was spoken by Elon Musk or by Mr Burns on The Simpsons oh my God is there a prize no here's the first sentence the politicians and unelected bureaucrats who stole our Liberty should be tarred feathered and thrown out of town Elon Musk or Mr Burns Elon Musk I'll go with Burns just to be a different I'm going with Elon Musk Elon Musk no yeah number two that's my lesson for taking a vacation vacations will kill you Elon Musk or Mr Burns Elon Musk musk Mr Burns Elon Musk okay last one I would tell those people they will get to see their families a lot when we go bankrupt that's musk um I would say burns on that one yeah Elon Musk they're all Elon Musk you know what I'm afraid of and this really bothers me that Elon Musk is now another face of this is what an entrepreneur is and the guy is clearly brilliant no doubt about it well he's raising a little bit of doubt I got it but he's clearly a genius I'm not arguing that but I'm afraid that the word entrepreneur now oh well there's and like I don't want him to be representing entrepreneurs he's so far out there yeah he's in his own category at this point mhm I I open this can of worms but I'm going to close it one quick last thing quickly Jay you got an interesting question from a from a listener tell us what the question was she wants to know she's a somewhat new manager and she's struggling with she says how do you balance um being the nice boss with not being a pushover and I think most people at some point struggle with that concept totally absolutely you know one thing that has really helped me a lot um and I hate to jump on like the beray brown bandwagon but I read a book that she had written wait who would that be bernee brown she's the vulnerability PhD she did his head talk so she's all about how we should be more transparent and more vulnerable and she's Laura's spirit guide um she is not okay I have no interest in following up on this but go ahead no but she wrote a book that I did read and um the statement that has really stuck with me is be clear but kind clear but kind and so I just keep kind of wow remembering it's about being clear but you can still be nice I and I heard a story um from a monk which also helps me a ton he says his advice is always be kind but honest so if you see somebody on the street that you know but that you don't like instead of when you see them Crossing you don't say hey it's nice to see you because it's not nice to see you I don't want to see you you say oh it's really sunny out right now you know or something like that so always being honest and so those two things together have helped me okay can you hear my eyes rolling in my head I just don't want to be distracting I would say the answer to that is I believe that that firing somebody or telling them listen you can't do that is not not being kind so I would I believe I'm always kind but I believe that the answer to not being a pushover is everybody knows what the what the program here is we need to show up on time and take good care of customers and and be respectful to each other and when they're not they're told listen you can't do that again and you that's not being a pushover so I do not think there is a conflict between kind and being a pushover I don't either but there are those of us who aren't um as self who aren't as far along the journey as you are and so worry a lot about what other people think of us we want people to like us and so excellent you've nailed it I'm just saying that this clear but kind is a stepping stone to learning how to set those boundaries and how to be um a little more direct and forthcoming and not worry so much because I know I'm being kind okay very good I fully accept and and and I well put and I would say that's in in your whole thing you just said the answer to what I would say to people was that okay for me to say did that you said it all very well but I would say this is the difference between oh was one of those jokes again okay I would say I fully understand and can appreciate what you're saying the one piece I would say is I gave up a long time ago thinking that everyone was going to be happy with everything that I recognize when I tell someone you know what we were told when we interviewed you we told you the first week you need to be here on time customers expect you on time you don't have to buy into that you don't have to agree with that but I'm just telling you if you can't get to work on time you really should be working somewhere else but Jay that's an easy that's an easy example okay but there's others and it doesn't matter there's 50 others the point is when I'm done with that conversation I don't go home worrying I hope I didn't offend them I hope they're not mad at me I don't think about it I recognize that's my job and I'm on a good and Noble cause here and I don't have to apologize to people about having standards and about taking taking care of customers and about treating other employees with respect I don't to apologize about it I don't feel bad about it and I'm saying to you your next level of Enlightenment is you're going to eventually and I mean this I believe you will eventually get to yeah they're not always going to like what I tell them got it well and but you just nailed it with the next level of Enlightenment yeah the woman who is asking you this question she might be seven levels down right so she's got to figure out what are what's the one change I can make to be a little more clear and kind she can't jump those seven levels to get to the top of the hill like where you are so what are those steps that we gradually kind of have to work through to gain that confidence and to understand that it's okay that not everybody likes us see and my answer to that is very simple kind is not part of the equation we should always be kind kind means you're not insulting people you're not yelling at people so take kind out it should be clear and responsible meaning so you need to understand if you come in late whatever the situation is if you ship another order out without making sure that we've got a signed credit app on it I'm going to feel terrible about it but you're going to get fired that afternoon so it's about hooking the respon this is the pushover part so my antidote to the pushover part is clear very clear that if you do this again you're not going to be working here but Jay you know part of it I think is what Laura was referring to which is you've been doing this long enough that you know what your standards are it's more difficult for someone who's figuring that out what are you willing to put up with especially in the middle of a labor shortage I'm not criticizing anyone I've been through the same thing myself it's not like I just can't I took me years to figure this out and that's a great point on the labor shortage Lauren so I think like one of my biggest fears is that everybody's going to quit and they're going to leave you know it's this fear of Abandonment so what if I criticize this person or what if I set them straight and they quit and they leave and now I've got to do the job and now you know or it all goes to and my answer is that's not it'll happen occasionally but if you take if you subscribe to that you're working for them and the customers going to get screwed 100% but it takes some time to get comfortable and to understand that it's not the end of the world when they quit and when they leave we got to go but we haven't heard from Sean on this Sean have you ever been a pushover have you ever worried about that oh yeah I mean I think most entrepreneurs want to want to please and Delight people at some level at some point in their career absolutely I I think that the one of the better antidotes to this challenge is to do the work ahead of time to understand what your working agreements and values and acceptable behaviors are in the organization and then to talk about that over and over and over again and make that part of the hiring process make that part of the job descriptions you know because the best outcome is you can ask the employee a question and say Hey how do you think your behavior X aligns with our value Z and the best outcome is they look at you and go uh I don't think I actually am aligned with that value exactly let's talk more about that how do you know so so giving them Clarity on what's acceptable and what's not before the event happens and so that when it happens you can point to it and look at it I think that's the the advice I would give them that's a key word acceptable here's the key holding people responsible does not make you UNC kind that's my point that word it it just had nothing to do with it telling PE having a customer come in at 9:00 and the do locked and no one's there to take care of them does not make you unkind to say to the person we need to open the door on time I mean it's not kind to the customer because that's where the problem with this whole thing is every time you let this Behavior continue that's not part of your mission statement the customer is paying for it that's the problem the customer is paying for it and I don't want to punish my customers so one other quick solution Lauren before we have to go is or you can do what I did and just hire somebody that can be you can continue to be a pushover and just hire people that aren't pushovers to manage everybody else sure maybe no not that's not a terrible strategy that works yeah it's easier I like that I mean that's knowing knowing what brings you Joy and then structuring the organization to minimize the there's more than one way to solve a problem totally and actually learned a ton from watching you know our general manager be clear and kind all the time all right I could talk to you guys all day but we can't do that my thanks to Shan busy Jay goz and Laura Xander thanks for sharing guys 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 n21 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]