The Toughest Conversation

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week Paul Downs Jay goz and Laura Xander don't hold back Laura and Jay both say their sales are coming in well below expectations not surprisingly Jay has a five-point checklist that he's using to assess and address his shortfall Laura's situation involves a marketing team that she says has been feeling stressed and is coming apart with lots of crying and arguing they're just collapsing she tells us Paul meanwhile says his sales aren't bad but he's got one employee who's been holding them back the employee who's been with Paul for 10 years has been spiraling up late says Paul who's dreading what he calls the toughest conversation a conversation he fears will leave the employee devastated in such situations Jay says he's found it helpful to rank himself from 1 to 10 on the hard ass scale if Mr Rogers is a one and Jack Welch the take no prisoner's former CEO of GE is a 10 where do you want to be if you pick four or five J says you're probably going to go out of business 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 a magazine named the best newsletter for business owners and which you can subscribe to for free at 21h hats.com we can also find transcripts of our podcast episodes and lots of other articles and interviews joining me this week on the podcast are regulars Paul DS who is CEO of Paul DS cabinet makers which is based outside of Philadelphia and makes custom conference tables Jay goz CEO of the gos group 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 mine Tash a yarn supplier based in Fort Worth Texas the episode is titled the toughest conversation welcome Paul Jay and Laura it's great to have you here let me start with you Laura welcome back I gather you you've been on vacation in Alaska yeah we went to Alaska last week and went to like a little remote island just with us and a couple other people and did a little bit of fishing really got away no cell service um it was amazing super amazing but coming back from vacation not so amazing uh it's brutal just super brutal how so I mean you leave for six days and that's just six days worth of work that piles up that you still have to figure out how to get through so it's not like the work goes away You're Just postponing it so you come back and you get six 00 emails in your inbox that you got to go through and billions of slacks and all the messages that well I waited until you were here to talk to you about this urgent matter and blah blah blah you go from being relaxed and not having any responsibility to showing up and just having everything in front of you so it's just a culture shock it's always a little tough I don't know about how how you guys feel well are you delegating enough because I got to tell you I I haven't been I'm going away next week but there's no way I'm coming back to you know I'll get a bunch of junk emails but it's not like people are asking me a lot of stuff because I got other people doing this so the question is are you delegating enough to other people why is it all going to you um because we're in the middle of a transition um and we're basically starting two new businesses within our business so that's why I'm working more now um probably the last two months or three months that I've worked in a long time and so I worked non-stop for about four or 5 months and then I was able to take four or five months and kind of work part-time and now I'm back to we're at another inflection point and so I'm back to working nonstop for a little while it won't be forever I'm wondering whether a vacation without internet is a vacation because I travel but I I can just see my emails and see like okay is there anything really critical and that's actually more relaxing to feel like I can just keep tabs on things and know that I could act on it I don't think I've ever tried a vacation without internet no I got to tell you I totally agree I know that I can just clean up the stuff and I can take me whatever half an hour and I'm done and I just know that I'm not coming back to it's not that I got to do a lot on them but you know you still got the emails you got to go through and I do find it very relaxing to just put a little time in clear the deck and then go and pretend like you're a normal person and do nothing yeah I'm I'm actually about to take the first weekend ever without internet and uh I'm a little worried about it cuz I just like to know what's going on I don't need to do anything it just makes me feel much happier if I have a sense of what's happening in the company um I don't know I just I you know the first two days of the vacation um I'm still like 100% in it and I'm still checking emails and everything and then it's like I just kind of I totally check out for a few days and that's just kind of how it's always been I don't know I mean that's just my personality she's in a different situation and that you're traveling with your husband who also runs the business so that's different than someone like me that leaves it's just me going in your case you're both going so that does add a different level of absenteeism yeah and you know my personality better or worse is just I'm either all in or I'm all out you know and that's and when I'm all in I'm all in um I don't do moderation very well so it's hard for me and it can be very stressful I don't know some I mean there's sometimes you know when I go on a trip and I do check in every single day you know and I and I do I mean I check in just a little bit to make sure there's nothing that's like a fire that's going on but you know the little stuff that's not super urgent I don't want to deal with so sometimes I like to just check out Laura how did the business do while you were way oh it's fine I mean these businesses run themselves you know I mean I'm not in the daytoday it's the trying to like I said we just launched a new brand so we basically are creating a new business and we launched that while I was gone have you told us about that what what is the new business we're doing our own private label yarn brand so working now with the Mills that we work with to get our product for Texas um we've decided to just work on margin you know I mean sales at Jimmy beans in our Arena location our sales of other people's products have continued to just slowly Decline and Decline and declin so we decided to create another one of our own kinds of products that's what we just launched a couple of weeks ago and yeah and sales are down but but why is that why why have sales of other people's products going down do you know it's a great question a variety of reasons as far as we can tell so one is that a lot of other people's products have gone out of business seven years ago we probably did uh I don't know $2 million a year worth of brands that now don't exist anymore all right that's interesting yeah so they just they go out people age out you know I mean they they tend to stick around for about 7 years you know 7 to 10 years and then they just get tired of it and part of that probably is like the nature of our industry is it's a craft-based industry so a lot of people start their businesses and start their brands because they love the craft and they think you know they want to be surrounded by the things that they love and then after 5 to 10 years it gets exhausting you know that's when the honeymoon wears off wait add to that it's exhausting and they're not making as much money as they thought they were going to be making exactly exactly yes y it's where the passion it's bad math exactly have you ever thought of putting together a a business support group for your own vendors and uh totally absolutely do you do that or you just thought about it um no we've done it in various forms over the years um it's funny you ask so the business that we bought in last October we are Distributing a yarn out of the Shetland Islands you know in Scotland and we're going to do a retreat now next summer next July and we've decided that the retreat is just going to be for business owners it's going to be for store owners so we can all go to Scotland you know there'll be about 15 of us and share best practices share stories you know I'll talk about the financial side of things blah blah blah so yeah we've done like we've had book groups for store owners um all kinds of stuff that's a good idea or tell us about the brand that you've started uh what are you calling it is it a high-end brand so the brand is called yarn citizen um and it's a brand that's based on it's all being good citizens of the world of the environment of the yarn Community you know and remembering that we're all part of this passion together the first wave of products that we're that we have launched came from us being in Peru last year and the mill that we work with it's a fair trade Mill they've got like their supply chain is just impeccable you know they pay a lot of attention to making sure that everything every step of the way is um sustainable and ethical and they process all of the sheep tops all the wool tops all the alpaca you know all these different fibers from around the world but a lot of it comes from Peru and South America they have all of these leftovers of these different fibers so we had them upcycle all of these leftovers into a new product that obviously because it's upcycled you know we'll never be able to recreate it exactly the way it is I mean it's a we created a big batch of a few thousand kilos of some particular Yarns and we dyed them in particular colors and you know blah blah blah blah blah so we just launched you know an alpaca wool blend yarn and then we launched just a full wool blend yarn and these Yarns are they're sustainable in that or they're at least they're environmentally conscious and then it was stuff that would have been waste that we have been processed into something and then we have really put a heavy focus on being price conscious like I just went to this event right before um we went to Alaska in Colorado and kind of did a little focus group and was showing people the yarn and I'm like look at the fiber look at the Quality you know what's the hand in other words like how soft is it and how much would you pay for it and everybody's like uh probably about $25 you know for one of these Hanks of yarn it's 100 gram and we're pricing it at 14 so we're trying to make sure that people know that sustainable doesn't need to mean that it's ridiculously priced except you don't know that it's a nice concept but the fact of the matter is maybe the $14 isn't going to pay the bills and you don't know that yet correct me if I'm wrong I mean it's I just the phrase conscious what did you say consciously pricing I find that to be a funny term like oh it's either you do it consciously or you screw everybody like how about well I'm just saying that in casual conversation we're on a podcast so this isn't really casual conversation well no but we are being conscious what does that mean conscious like no one's going to pay too much but what if that doesn't pay the bills I mean that's how the world works I mean there's a lot of people that are trying to it does pay the bills cuz I'm pricing it but but you haven't done it for long enough to know whether wait what do you mean I'm saying have you done this long enough yes I do I did a p&l you did a p&l forecasting forward yeah I mean I've been making handbags forever okay so the reason you can charge 14 is because you're using scrap so the cost of good the cost of materials is minimal yeah I mean we're making great margin in fact we've priced this so that we can wholesale it so that shops can sell it as well and so we've actually just put it in five different stores and I've got tons of History through the handbag line that we've done you know so I know what our manufacturing costs are I know what Duties are I know what Customs are I know what shipping we're C shipping it so you know blah blah blah so I know what the bottom line cost is per unit I know what we can charge I know if we're going to pay sales reps I know if we're going to you know if there's outbound shipping okay so my whole point is rather than consciously pricing you're value pricing it because you can you've got the cost down so you've been able to give a good value for okay it's value pricing it is value pricing but when you say value pricing that makes me think of Walmart and this is when you say consciously pricing I'm thinking of that's just that that those two words just don't go together they just don't well maybe not for you but what what about Haze pricing where you're just kind of aware of what's going on but not really yeah yeah exactly yeah anyway I buy the concept sounds good you're trying to be you know good to the environment to the employ all that all that works can I say sustainably priced sure great there we've got a good compromise done just say fair price no you can't say fair because again that says there's either fair or unfair pricing fair enough wow you've done it again Paul Laura you've talked a lot about um emphasizing your margins it sounds like you could have gone for a higher margin here did you debate that and if so why' you decide against it because this is a hole in the market Market um because there's an opportunity there and there's nobody who's doing this I mean if we wanted a higher price then we would just be right next to all these other different brands I gotta tell you I don't have a problem with the phrase opportunity pricing I don't have a problem with that you found an opportunity you got the stuff cheaper you figured how to get your cost out I think that's a lovely phrase opportunity pricing why don't you just call it pricing yeah I mean really everybody who's pricing is just figuring out some some scheme to to do it it's all pricing it doesn't need an adjective you're just pricing and you decided this is how you're going to think about it so Laur is that one of the did you say there two businesses that you're introducing yes and then I'm building another team um to work on our subscriptions long story short we hired somebody a couple of months ago who has a ton of experience 30 years of experience in the industry is it was an opportunity she we reached out to her she had been thinking about uh I don't we found somebody right we got her from her other job um we weren't looking for somebody specifically we didn't have a job opening but the opportunity presented itself so opportunity hiring yes opportunity hiring so we got opportunity pricing and now we opportunity hiring okay great so we brought her in and that um to and we weren't really sure exactly what we were going to bring her in to do I mean we knew kind of at some level but over the last two months we knew that it would just kind of shake out and she was okay with that and we were okay with that and you know she has a skill set that nobody else has and it has just it has caused some issues you know there's some resentment there are people who are feeling threatened there are people who are you know our sales are really far down you know we're down almost half a million in sales and some of our team is just kind of collapsing under the weight of that pressure and that stress and so we bring somebody in to help wait are we sure these two things are related you've made it sound like it's because of this hire that all this happened is that no is that a clear-cut direct line or no it's actually the other way around I mean our sales were down so we found somebody that we thought might be able to help us and we brought her on to help us increase sales through different mechanisms and and yeah and it's just it's she's not she's remote and everybody else is here in Reno for the most part and there's some resistance to having somebody who's remote and who has this experience so long story short we're going to build a team around her and we're going to launch a couple of products around her and basically create a small business within a business um so I just hired somebody else to days ago I've got another interview tomorrow for somebody that I think we're going to hire basically we're going to we're taking this team from one of the from a business that went out of business last year and we're pulling you know the best people from their team and hiring them and we're going to recreate the winning parts of the business that went out of business within our business if that makes any sense do you know why they went out of business I do yeah cuz we thought about buying them yeah I know great question Paul okay so for people that don't have a scorecard let's just review you said you hired someone okay the reality is one your sales are down two you hired this person with Great Expectations she was going to help fix this because of all her experience three she's remote it didn't gel well there's some problems there four you're going back to re integrate this thing because you still believe that's going to be the the way to fix all of this is that true did I just give the right order okay thank you well done okay I'm with you Laura what sales exactly are you talking about you have a number of different businesses that you've been describing are you talking about sales uh to yarn stores around the country um those sales are down yes and then our those are the sales that are down no all the sales are down so almost all the sales are down so yes you are correct so that includes your e-commerce business that you you that you sell uh yourself through your website yes but for this particular conversation what I was talking about was the e-commerce sales but here's a major question that we're all dealing with or many of us is that down compared to a year that was artificially High because of the pandemic and people being home is that just the is this just the the the uh hangover from the fact that we all got more business not all of us some of us got more business because people were home and spending more money or do you think this is actually down from where it should have been not factoring in that you know last year was just a fluky year because of the pandemic can you tell yes excellent question and actually I'm going to look at something real quick while we're talking but really excellent question and I should rephrase it it's not that necessarily that our sales are down it's that we are not hitting the goals that we set at the be together as a team at the beginning of the year we are missing the goals significantly me too I thought I was being fairly conservative but I'm not hitting the numbers I want and for when you're ready I'm just going to share with I have five things I'm looking at to fix this and I think they go I think they apply to most businesses so when you're ready I will unveil that yeah no go for it I mean that's so I'm looking let's hear it Jay we one of these Jay bullet point list awesome let's hear it you're the perfect people to be honest with me because we all have similar kind of businesses we're selling to Consumers and you know we're selling products we're not selling services okay so wait a minute what about me you I say you too I say that we're all in the same consumers well no but you're selling you you're selling products you're making products we're all in the product business that's the point okay number one and I'm doing this all myself we should all be looking at our websites because everyone you talk to most people oh I'm working on okay well maybe it's time to fix it I went to my own website and realized we were still using a phrase from the pandemic in my new store that's downtown for framing it said we encourage you to make appointments Walkins welcome and when I read that it's telling me like gee we're kind can't handle the business and I said we should just say feel free to make a res an appointment Walkins welcome just a little tweak like that I don't know how many people went to our website and were thinking oh they can't handle the business okay so I'm looking at my website for sure that's one two just take a break and look at your competition and think they getting some business from me somehow and in my case I don't think so so it just couldn't hurt I need to just take a pause and look around at who else is out there three if business is off and you still got the same overheads which most of us do I don't think you can ever look at this too much relook at your pricing models like gee are we charging enough like in my case the real estate tax in Chicago have gone crazy even though I'm not in Florida or California my insurance rates keep going up more than inflation so my overheads have gone up and I need to factor those in so pricing is three four not necessarily in this order do you have any people that just aren't getting the job done that you've talked to numerous times that you got to grow up and bite the bullet and say yeah I think we need to make a CH yeah um I did that last year and I think I'm really clean now with that but I'm paying a little price for last year trying to fill in the voids there but but but I took care of that one and then the last one is which I got the same thing like you are there any Trends going on that I need to pay attention to like I've recognized that the good days of picture framing are over the Baby Boomers pushed this whole business and now the Baby Boomers are old and aren't framing as many pictures and it's it's a more challenging environment in custom picture frame business I can make up for it in some of the other businesses but I've had to acknowledge I can no longer build in the natural growth that I used to build in because it's a mature Market it's not going away I still feel great about the framing industry but it's not the market it was in 2000 and I put that into my projections so I Believe by doing these five things I will get to where I need to get and I think that this applies to most businesses well you left out W go ahead that's why we're doing this did you experience any particularly good or bad luck cuz things happen at random that actually I mean CO's a pretty good example of that like nobody planned for that just happened and then the government pumping billions of dollars right that's a whole other conspiracy theory I might put under Trend yeah no for sure that the pandemic did last year's numbers nobody can look at him and go well this is normality it was a normality and we need to factor that into to okay where are we getting back to some kind of normal flow of business and yeah so when you do your budgets well is our forecasting skills yeah yeah I'm not that far off but I'm off you know I'm off 6% here and you know 9% there now do I think I might be able to make it up in the last four months of the year yeah but this is where I always say optimism is the gift of the entrepreneur and also the exposure I you know maybe I'm being optimistic and I shouldn't be I don't know I'm still grappling with that I'm not even optimistic I'm like this is going to happen like I know how to fix this and this is what we're doing and I happen to be I don't know when things are down like right now it drives me to reinvest so we've hired a number of people over the last six months that have great experience so it's just taking a little bit of time you know for them to for the momentum to kick in and for some of these new ideas and we're in an inflection point what we've been doing for the last so we got the artificial bump from um Co that was great uh we worked really hard for it but you know we got those numbers and it's not just business as usual so during those couple of years where business was quote unquote easy or sales I guess were relatively easy that masked a lot of things that you know like you said the website I mean technology changes customers Behavior changes like their expectations on a how website works changes over those years search engine optimization has changed dramatically that has changed all of these things so you know we've hired a new graphic designer to come in and just clean every you know somebody with ux experience to go through and clean up our site clean up our newsletters clean up our templates we have half a million people in our database that we haven't contacted in a couple of years so now we've got a big project there's a gold mine exactly exactly so we're just back to mining you know it was that like if you want to use that like the gold was just flowing freely and we didn't have to work for it Aon and we're the team has kind of gone into it thinking it was just doing operating the same way that we've been operating the last few years and those methods just don't work anymore some of them do I mean I'm not saying that everything that we're doing but we need to reimagine so I'm building a couple new teams in invting in new people pivoting in a couple of different areas bringing on you know a new product line and just shaking things up Lori you're you're kind of addressing the big picture there you did tell us before that you set these uh sales goals for the year with your sales team they agreed to them 100% you're not hitting them right what are you saying to your sales team how are you managing that so I don't actually manage on the so we're just talking about on the e-commerce side on the e-commerce side our general manager she's responsible for sales and she manages that team and quite frankly like the team has just collapsed under the pressure what does that mean collapsed uh crying all the time um arguing um there's nothing wrong with crying crying means you care being resistant in meetings to like not being collaborative it's just it's gotten messy it's just messy so good people who have done good work in the past are just not they're just collapsing I mean crying a lot breaking down are you sure that you have given that you're in two locations out of state which I don't envy it's hard enough to do it when they're all you know the same building with you are you sure that you figured out what the core reason for this quote unquote collapses are you sure that you got a good read on that well these are humans so are you ever really sure well if you have I know I guess I'd be more specific have you had sit Downs oneon-one with them maybe in the car even going to lunch to see what's really on their mind to find out what's really I mean when someone's crying that means they've hit the that's like the switch breaker something's really just gone overboard it is something's pushing it did you figure out why they're crying yes the answer is yes and we have figured out and we are that's why I'm working so hard right now is cuz I'm working to fix those problems we're working to take workload off we're working and working to reset the goals to reset the budgets to you know take pressure off uh and move some of our sales expectations into other areas and even from the interpersonal side of things that this you know I got two teams who are Waring with each other so how do we handle that so yes we're on it what are they fighting over who Laura loves more uh probably I mean there might be some of that they're you know just silly stuff if you're not there which we're not it's very difficult from the outside to really know there's there there's six different reasons why maybe there is it because they feel like they're being treated unfairly they feel like someone's not working as hard as them is because you don't is if just pressure that they know the numbers or there's there's is it P is it post pandemic there's way more anxiety out there just there's just way more anxiety exactly there's a ton more anxiety and it's manifesting in many different ways and we've had a lot of different events happen over the last year that have either you know like with personnel as a result probably of the pandemic you know people who have left some so we've had some turnover of highlevel people um over this last 12 months how are your sales doing Paul they're they're okay I mean they're on track to be our second best year ever and last year was the outlier and that was what I was talking about with luck we just happened to have one client who decided to clear their whole backlog of projects that have been sitting around for years uh this is a big defense contractor and I think they were rubbing their hands together after the Ukraine war and realizing that they were about to be as busy as they wanted to be for the foreseeable future so they just did all these capital projects and that that blew our numbers way past where they thought they would be and now we're kind of back to reality so yeah we're okay we've been tracking your uh new marketing campaign here building a new website going after a different kind of customer uh architects who might be repeat customers as opposed to the one-time purchasers that you've uh relied on has that had any effect on uh the way you look at sales are you going to have to hire more people um a different approach for a different kind of customer yeah sort of first first of all news on that we sort of completed the creative phase of the project and then I was presented with a proposal to for the distribution phase of this new content and my marketing agent was pushing a digital strategy where we do what they call programmatic advertising which is basically the kind of ads that chase you around on your phone and wherever you are which I find very irritating but Mark is always swear to God that's the best way to do things and my feeling was that for the target audience we're going after which is a small number of people we probably not going to be really receptive to those kinds of ads that we we want a face-to-face strategy so I just pulled the plug on the entire digital half of this thing and we're going all in on a show where we get to meet certain people face to face and then my feeling is afterwards the followup is the critical part that we start doing regular Outreach and and sending people physical objects in other words doing the thing you can't do digitally which is to put something in somebody's hands and it's sort of that reciprocal giftgiving idea but also I think that our target market is going to respond a lot more to actually having a really interesting piece of wood in their hand as opposed to just a picture of it on their phone and we've never really been very good at at at sustaining any kind of Outreach before so I was just having a discussion with one member of my sales team about okay this is I think I'm going to put this on your plate and it's going to be your job to try to maintain connections with these Target clients and if you can successfully do that then I'm going to give you a much bigger Commission on those jobs because those are going to be big jobs and then simultaneously we're also experiencing that kind of slow watching an employee slowly fall apart one of my sales guys is I think entering some kind of Doom Loop or at least in a bad patch where pressures on his personal life are are leaking into what he does all day and that's causing him to not be as effective A salesperson and then as he doesn't make sales then that increases the pressure on his personal life because he's not about you know blah blah blah blah blah so so that's what's going on I want to throw in to all of us that are bought bues that's a thin line between supportive and doing the right thing and where does it get to where it's just it's hurting the business to a point I am right there because I just ran the numbers on this this guy we have two sales people and we basically distribute the jobs as for the most part it's just like car salesman one comes in goes to this guy the next one goes to the next guy so after I just ran the numbers and since the beginning of 2021 to 2023 one guy's gotten 366 leads the other guy's gotten 370 leads and the guy who got 366 sold 3.7 million and the guy who got 370 sold 6.5 million wow so that's 2.7 million difference now I know that in any sales team there's always going to be the best one is going to be usually not real close to the second and third that there's an uneven distribution but this is starting to become serious money and I'm like I'm not sure we can tolerate this much longer how long's he been with you 10 years yeah no been there done that you know and now here's a guy who's in his early 50s and he's not I don't know where he's going to go if I let him go but well here's my question which has been very helpful to me you know we said around years ago and I said to everybody for those that remember Jack Welch from GE he was always like the driven take no hostages fire the bottom 10% and and there's been a book written about him how he helped destroy Corporate America because all of his lieutenants went out and screwed up the companies they went out to so let's just say that Jack Welch may he rest in peace is a 10 and Mr Rogers is a one so the question is where do we want to be as a company and my argument is if you pick four or five you're probably going to go out of business so we all decided we we think we should be an eight and when stuff like this happens when we cut people some slack and in the reality is I'm probably a seven seven whatever but it was very helpful because at some point when you cut someone some slex somebody once said to me well Jay we're doing that because we're an eight we're not a 10 which is true so the question is if you buy into that concept that to be a healthy profitable company but not necessarily the most profitable and you don't want to be just that driven that you're going to have no compassion for human beings I don't want to be a 10 that's the point so if we all agree we want to be somewhere between a seven and eight the question is where does the seven or eight go to when a guy is starting to cost over a million dollars the sales yeah I'm I mean in my heart I'm probably like a four and I have to really I have to really slap myself in the face to get up to about a six and uh Jay can slap you but that is the toughest conversation because there's two things you have the conversation and either he he straightens up and starts going the other direction or you totally destroy him and in my mind the easy way out is just wait and see what happens which is okay in a lot of cases I certainly have done that I I'm not arguing with that if it takes care of itself to some degree it it does but in every day it's costing me money too and it's costing the company money like if this guy was performing even as well as he did three years ago we would be well past my goals for this year and uh I mean just today he kind of poo pooed a job that it's not 100% lock that it would be a sale but it's about a 65% and he just is having such a bad attitude towards things so I don't know I'm probably going to have to do something soon but the other piece of this is that if I have a talk with him and he storms out and quits then I got to do his job because there's nobody else who can do it and uh I'm not dying to do that although I could do it and so I think the real solution is I need to start hiring for this position and just bite the bullet and maybe have one discussion with him and say I'm about to do this I I would tell you the word that I've used which is this is not sustainable I mean that is the appropriate this isn't sustainable and then then when you say you destroy I would I would argue you're not destroying him he's destroying my old partner used to always say that like you don't you don't do anything to employees they do it to themselves and that's yeah like I'm not a malevolent boss running an exploitive organization so I that is actually true in my case that the employees go off the rails for their own reasons and and our job is to help them if we can but at some point there's only so much we can do and we owe it to the company to take care of business that's right that's right you're threatening the team and then you got to go in the past Paul I think you have tended to hire salespeople off your production floor uh take Woodworkers and make them salese well I have an N of one on that so once I took two guys and and with one it worked great and the other one it worked pretty well for a while and now he's starting to burn out so I can't say that that's necessarily a great uh repeatable process so so what's your plan if you have to hire sales people now I think I'm going to try just advertising for it right now listen the person we need to hire is actually a young architect who knows how to design and is interested in talking to people and the problem is that we're kind of a Backwater in terms of career progression like if you went to an architecture school and you're working in firms and all of a sudden you went and started working for me it would be difficult to get back into or maybe it wouldn't but I think it would be difficult to get back into the regular career track and so I mean maybe I'm just I'm probably just making up head trash now that I think about it but uh like in most things half the people to go into that end up not actually being Architects is my guess that's what it is in most professions except for being a doctor maybe or maybe even a lawyer I think plenty of people that go into architecture probably end up not being Architects there just aren't enough architect jobs around I would think yeah being an architect is often not all that sexy either when you start but the tricky thing is the way we have our sales process organized now the people who are actually doing the selling need to be both technically Adept be able to manipulate software at a high level and be able to just sell in other words get on a phone with someone talk them into it reassure them and that's a that the number of people who are in the center of that vend diagram is pretty small because you can get part of it but not all of it so I may have to consider breaking out these roles and having somebody who can just draw and design and someone who can talk and sell and that's where it gets interesting though no one goes to college and says oh I think when I graduate I want to go into selling really high-end beautiful conference tables no one goes oh I think I'm going to go to school and come out and you know run a picture framing Factory I mean most many of us get employees that there's no degree for that and you find people who have some of the skill sets from the degree but end up saying oh you know what I'm really good at sales because they don't tell you in college there's no grade for salesmanship so there's most of the things that make people successful in the world or many of them they don't test the school creativity Drive tenacity sales ability so there are those people I call them diamonds in the rof I think you can find someone who is you'll find that that weird that diamond in the rough that'll do a good good job but you certainly will have to put some time into it yeah Paul what do you do when you start to look and your existing salesman finds out that you're looking H it's g i mean isn't he gonna know I don't know good question nothing good I presume you tell him an honest conversation this isn't sustainable I'm going to have to be looking for someone I've already had that conversation with him in my head like five or 6 thousand times is he commission based 100% he's no he's he's about now keep it in mind when I say these numbers about what the proportion of Base to commission is that these guys were literally Woodworkers and had real suspicion about being sales guys so he's getting paid a base of 60,000 plus 4% Commission on whatever he sells so two salesman the the lead salesman sold whatever 35 million last year so he ended up making about 175,000 bucks and then which isn't bad as a percentage of what he sold no and he's working 40 hours a week and he can he can doesn't have to wear shoes you know just like all all kinds of easy things about doing this the other guy uh sold a lot less than that and made about 100,000 but look at what your cost on sales on that instead of costing yeah it's a lot higher obviously none of this is attractive as a business owner so it's a problem and I'm just I've been very wimpy about dealing with it because I do feel fear that I'm going to have a conversation that's going to end up with somebody devastated and I just hate doing that it it's just like I've done it a few times in my career where you have a conversation with someone and you just see you just drove a stake through their heart and it's not like it didn't need to be said but it's just such an ugly thing to watch so it's really hard for me to pull myself to it and I haven't quite gotten to the moment where it's absolutely unavoidable yet and that's probably what it's going to take well as always I have a movie that'll help you with this Saving Private Ryan where he was a soldier Tom Hanks was a solder and then everyone convinced him he needed to be more of a human being and he started talking about his family and stuff and then he let the sniper go and the sniper killed him at the end so like we are soldiers and that's the way it is and sometimes you got to do stuff that you just have to take care of business and and it makes trust me it's not like it's easy I'm not suggesting it's easy I've been through it I've done it and the the thing that's that's most daunting about this is in other cases when I had to get rid of somebody like that I didn't have to immediately jump in and do their job afterwards and so that's daunting because I've done a lot of selling you know talk about PTSD like just put me in front of a client I'm great but inside I'm screaming I'm like that picture of the scream that's what's going on cuz I've just done so much selling I I don't know what capacity I have for it do you not do it at all anymore than now Paul I try not to I I jump into certain situations but it's my choice and your other sales guy doesn't have the bandwidth to take on 50% more no I don't know you like I'm not I'm not about to no I'm not going to do that to him because uh could you ask him though I mean what if he wanted to what if he wanted to make 250 a year ask him if he wanted to I don't I think I don't think he does want to but I could ask him that's a good question I haven't asked him hey do you want to do two jobs I don't think you're necessarily making a mistake you don't want to do that job he's there it's cing you a little more than you want well neither of those things are actually a solution either because the the the long-term solution is figure out how to hire for this position and start doing it and uh I've ridden an unsatisfactory configuration for a long time and sort of survived it but that's not not what needs to happen next you mentioned from a business standpoint that paying them combined $275,000 isn't necessarily the best financial approach for the business so could you use this as an opportunity to create a new model I mean maybe your existing sales maybe this is a great opportunity to take 100 grand out of your costs and what if you could figure out how to make that only cost you 50 Grand more so maybe your main sales guy gets an assistant that's not a bad question and that's certainly a possibility but then that means that I'm even more vulnerable if something happens to the other guy and I don't feel like that's uh a good move but how many wives do you have I mean you only have one wife right like aren't you pretty vulnerable to if something happens to her boy you're you're making some assumptions wow well I'm just saying I mean yes that's no I have one wife I'm not sure how that's relevant because I don't need to scale my family at this point and uh what I'm thinking is I've let this situation develop for a long time because it works reasonably well the cost of those guys is not unsustainable a lot of whether we make money or not has to do with what happens Downstream of them and uh so I think that this is one that that I've pretty much built in redundancy for every other operational position we have by making sure people are cross trained and hired and I just haven't done it here and uh and I just need to do it I just need to get my yeah but you're the redundancy yeah but I don't want to be the redundancy you know what I don't think you're doing anything wrong I think you're not a 10 you're a seven or eight and you're giving him some time to see if he can get back to where he needs to be I think you're playing it out it's extremely difficult I certainly have been there and I certainly have spent more than a year or two with with letting it go and do I in hindsight regret it not really because when someone's been there a long time I think you can you sleep at night is the question yeah you know you want to be able to sleep yeah I've had longtime employees who sort of started drifting over the line and and came back and so what I what I haven't done which is what needs to happen next is warn him that he's very close to the line like specifically say it to him like what you did this morning that's not okay and that's a a symptom of a bigger problem I've had conversations with people who you know especially if their personal life is infringing on or affecting their work I've had some successful conversations with people that say do you need to scale back like do we need to kind of reassess your position um because you know until things calm down for you because maybe this is just too much stress for him as well I mean could you come up with I don't know just different expectations or I mean if you're not happy he's not happy either I I had that conversation with him a couple months ago and I sit down with every single one of my employees at least three times a year to uncover these situations and and he said yeah you know like my mom is is a problem and he's got a difficult daughter and you know like there's stuff just like everybody and I'm extremely sympathetic to this cuz I have a difficult situation that causes me to jump out every now and then so it's like I can't necessarily tell people that they can't deal with their personal life when I deal with my personal life all the time of course but uh yeah it it's tough we already are supporting him that I'm jumping in more often and taking some jobs that he doesn't want to do that I think have potential and uh yeah the rest of the team is aware but I think that it's starting to become as I said it's getting close to where it's just has to be dealt with when I was about 30 I was in a business group and all the other people were older than me and I went there one day I had a key guy from the beginning who was starting to fall apart so I tell everyone at the table about it and I'm expecting them to go grow up be the boss you got get rid of him and every last one of them sat around the table shrugging going yeah I got one of those so you're not alone I we're all dealing with if not today we've it's this is what being in business is I don't know how you could be in business and not have this I feel I feel uh want a cigarette do you want have a cigarette different I think I want a drink that's what I want I feel your pain and I think you're handling things responsibly for both the business and the person it is what it is and you'll figure it out and whatever you do will be be the right thing meaning it won't be unfair cuz at some point you have to take care of the business my thanks to Paul Downs Jay goz and Laura Xander 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 and really thanks guys I I appreciate the way you share here wait wait don't leave yet if you have a question or 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]