Your Employees Want a Career Path. Can You Keep Them?

[Music] Hello everyone. Welcome to the 21 Hats podcast. I'm your host Lauren Feldman. This week, David C. Barnett, Jay Goultz, and Kate Morgan wrestle with one of the trickiest challenges for business owners. How to give employees room to grow without losing sight of the company's mission. David points out that every business is on its way to obsolescence unless it deliberately evolves. And one way to do that, he says, is by letting employees experiment and try new things. That approach, Jay says, is exactly what led to his building a furniture business. Plus, Kate and Jay agree that while many aspects of running a business can be stressful, nothing has been more stressful for them than the period when their businesses were growing the fastest. And the owners react to a Reddit post from someone who has found that hiring employees has created more problems than it has solved. Is this just what having employees is like? The owner writes, "Please tell me I'm not the only one losing my mind." 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. In fact, that's the whole idea behind the 21 Hats community, engaging with other owners to get the kinds of insights only another owner can offer. If you're interested in learning more, you can sign up for the Morning Report newsletter, which shows how owners are confronting challenges and seizing opportunities. Just search the 21 Hats Morning Report to subscribe. Joining me this week on the podcast are David C. Barnett, who is based in New Brunswick, Canada, and helps people buy and sell businesses. Jay Goldz, who is CEO of the Golds Group, whose companies in Chicago include a picture frame business, artist frame service, and a home furnishing store, Jason Holm, and Kate Morgan, who is CEO of Boston Human Capital Partners, which is based in Boston and offers recruiting and fractional HR services. The episode is titled, "Your employee wants a career path. Can you create one? [Music] Welcome, David, Kate, and Jay. It's great to have all of you here. We're now in the fourth quarter of what has been a year full of surprises, some of them better than others. And as the hits keep coming, I'd like to ask each of you how you've been affected, if at all, by some recent developments. So, for example, the US government has shut down. I should say we're recording this on Friday, October 3rd. As of now, the government has shut down. Uh, President Trump has announced a new round of tariffs, including on kitchen cabinets and furniture, and the president has also sent the military into Chicago as part of his crackdown on immigration. A couple of those things seem aimed right at you, Jay. Are you feeling any impact? First of all, was in the paper today, travel to Chicago, tourism was at a record high last year. This whole thing is just a complete calling Chicago a hell is just ridiculous. Not that there aren't too many murders here, but it's Yeah. So anyway, no, that hasn't affected me. The tariffs, uh, they keep moving all over. Could have an effect on me. I'm I'm frankly just kind of getting numb to the whole thing to like, you know, there's intellectual and there's emotional. Intellectually, it's frustrating. emotionally. You just have to, at least I know myself, dig in and just deal with it cuz it's just we're in a difficult time right now. But I'm going to get through it just like I have the other 10 times. I mean, I know you've been affected by tariffs previously. You import framing from Europe. Um, and I guess furniture has been affected to some extent depending on where it's coming from. But now there's an industry specific tariff that I think is going to start at 10%. Um, and then there's 25% on kitchen cabinets, which I think based on what you've told us could affect you because it's it's part of the whole housing thing. People aren't moving, so they're not framing stuff as much. They're not buying furniture as much. This doesn't seem likely to help. Have you looked at your cost structure and thought about how much of that? Well, the number right now is 15%. Okay. So, if I have to figure that out and build it in, I'll do it. But this is a whole new phenomenon. I've lived through recessions. I lived through September 11th. You know, the 08 meltdown was horrible. This is a case of at some point, and I know Lou Mosque has talked about this. At some point, you have to say to yourself, I'm going to deal with what I can fix and just ride out the rest of it. Well, well, let me stop you there cuz this is something that you do have to deal with. I think the the the upholstered furniture do you import a lot of upholstered furniture? >> Well, coincidentally, we import furniture, but the upholster furniture, no, comes from North Carolina. Oh, I mean, >> well, that's a break. >> Yeah, it's complicated. I I got so many balls up in the air right now between the business being off and I mean, it's it's a question of what dials can I turn. Okay, I can definitely adjust the pricing a little bit, but um I've got my hands full with other stuff like business is down. My big breakthrough was I realized I really don't need as much space as I have and I'm subleting some of my buildings and I'm going to for big money, not this isn't a little fix. This is a big fix. Like I'm going to free up 20,000 ft of space. So I'm going to make it back, you know? So it's a big picture thing of okay, if your cost of goods sold goes up a little bit, can I make it up somewhere else? And in my case, I'm going to get my rent expense down. That's one thing I can do. >> Lauren, I I want to comment on your comment there. When Jay said he bought his upholstered furniture from North Carolina, you you kind of said, "Oh, well, that's that's good." As as though the tariffs wouldn't affect it, but it will because it it doesn't matter where Jay buys his furniture, as soon as foreign competitors have the price increased by 10 or 15%. It means that domestic manufacturers are then free to increase their prices, too. And this is what was seen with aluminum and steel and all the other commodities that have had these sectoral tariffs is that as soon as imported goods have the tariff applied then the domestic producers are free to raise the prices too. >> That is a a a great point and and it's even more than 15%. The upholstered furniture is scheduled to go up to 30% now as of January 1st. So that is looming. Although I think there may be some reason for Jay to hope that the domestic people won't go all the way. >> What you said is true. It's just in my particular case, we sell better stuff and I'm not selling Chinese sofas for $3.99. So, I don't think it's going to affect me as much as it's going to affect some of these people that sell the low-end stuff. So, but what you said is absolutely true. But I I just think I've got a little protection there and that a lot of the upholstered stuff we sell is custom and that's not coming from overseas. It's a messed up time at the moment to be in business. No question. What about the uh military stuff in Chicago, Jay? I I've seen video of people on the streets. You're a retailer. Does it Do you think it's changing the vibe on the street at this point? >> It's horrifying and the stories are endless. people that have been here for 20, 30 years getting scooped up. I don't know that it's affected business. Um, I'm not downtown, but it's definitely made everybody uh upset or not everybody, but many people are very upset about it. And uh the theater of it, the oh, we're only looking for criminals is is certainly not true. It's a horrendous situation. Just a horrendous situation. Um, and at the same time, the fact is this isn't I don't have to be an economist to know this. If quote unquote, all of the people that were here that are undocumented left, it would force this country into a depression because they buy stuff, they rent apartments, they buy cars, they b you can't take millions at whatever the number is at this point out of a society and not have the GMP go down. You know, it's it's a mess. And I'm not an economist and I'm not in a news show. All I can do is deal with my little microcosm of what I'm dealing with. And I really have to mentally tell myself that. >> Kate, obviously uh with your business, you would not be affected directly by uh tariffs, for example, but are you seeing ripple effects from any of this? >> You know, it's it's so bizarre because for the last three years, it has been a bloodbath in software. And uh I mean we we just we got hammered. Well, fast forward 3 years and you have to remember that the majority of our clients are VCbacked startups. And so when we saw the the layoffs from big tech in 2022, that was where the ripple effect happened. Everybody went into uh vanity layoffs. They were just doing whatever they could to hold on to their working capital. And the VCs were brutal. They they were saying, you know, you have to figure out how you're going to get to uh product market fit. We're not giving you any more money, blah blah blah. A lot of startups uh collapsed. Well, now we're seeing all these VCs, they sat on their money for three years and their LPs are like, "Hey, we gave you this money and we're all talking about AI. When are you going to start investing?" And so we we're we're actually seeing a huge increase that we haven't seen in in three years. Like I actually feel pretty confident. I just hired a person uh was thinking about hiring a second person, but we decided to kind of hold off. But yeah, it's very weird. I do see when we look at the overarching concern with immigration, a lot of software engineers, they come over for their masters and then they stay here and there's quite a bit of confusion on how they're going to process this. And of course, there was some talk about uh having a hundred thousand fee to process an H1. You know, that's not going to go anywhere. Um >> that's not going to happen. >> No. No. Don't you think in some cases the companies will in fact pay the hundred grand and tell the employee, "All right, here's the deal. Uh, we're going to pay you less for five years and we're going to Don't you think somebody's going to do it?" >> No. No. It's It's just too It's too complicated. >> Wait, what what are you saying? Are you saying that, Kate, that companies won't pay that fee? >> Well, it doesn't it doesn't apply right now. And you know, they may they may want to try to apply it to H-1B lottery approvals going forward, but it's going to be heavily litigated and it may never go into effect. >> I'll tell you one thing that's been interesting. I can't think of one person that's quit in the last year. I mean, this job hugging thing is real. I think that people are afraid to leave the job. And I usually have a very low turnover as it is, but it's zero. I got 110 employees. Zero. I mean, that's interesting. I usually it would have been a couple of people. I mean, >> yeah, I I would agree. But now again, it's we're starting to see people picking their heads up and looking around just because again for our our industry, everybody's just so hunkered down for the past 3 years. They're kind of itching to do something new and we're doing it um with lower salaries than they're currently at for equity. Your clients are able to hire people with lower salaries than they had been in recent in recent time, but they're giving up more equity. >> Yeah. Yeah. I'm working with a really early stage startup right now. the founders uh had previously some really big successes and I'm talking to a candidate for them who was making 300 over 300 with his bonus and I'm talking to him about a 200k salary with you know substantial equity but you know he's he's feeling good he wants he's really interested in it. >> Dave, how about you? You're in Canada, so it's unlikely you would think that you'd be directly affected by the US government shutting down, but that means the SBA is shut down and not making loans for acquisitions. I know you have clients here. Is that affecting you? >> Well, not yet. I mean, it's just today, right? I mean, it's it's just brand new. And uh you know, honestly, there's all kinds of reasons why deal closings get delayed by days or weeks anyway. The last time this happened, it didn't really start to have a a serious impact until it had dragged on for quite some time. Um, and I'm thinking of the time back during uh the lockdowns in 2020 when they SBA basically stopped processing new loans in favor of doing all the COVID relief programs that they were managing and so things got delayed by a little while. So, it it's really going to come down to I think the how long it lasts um if if it's going to create a a serious backlog. I know that one of the things I saw here in the local news was um you know for travelers, would there be increasing lineups at uh ports of entry for people trying to cross the border and things of that nature? And uh again, we'll have to see if if people are going to show up to their jobs wondering if they'll get paid eventually, I guess. What about being in Canada? I know people who Canadians that refuse to come to America now given the circumstances like Florida I think's gotten hurt a lot that a lot of Canadians go to Florida in the winter and from what I'm told that it's cut back dramatically. Have you seen that being a Canadian? >> Yeah. I mean I I know plenty of people who used to spend their whole winter down there who are not going this year. Um there's their tourism season in Canada has been absolutely gang busters. So many people who would normally have traveled to other places are staying here and we're seeing it in the in the data that I see in the news. I mean, I'm not directly involved with tourism, but the people that I know who are are saying they're having a really great time in the headlines. But then, you know, I was at a conference yesterday and today where somebody was sharing that certain categories of call it discretionary spending like restaurants, bars, etc. where amongst their clients they were seeing more and more trouble which kind of speaks to an overall decline in economic activity anyway and I think it's easy to attach a lot of what we see to you know the headlines the political news what you know is happening with the president and all this kind of thing but I I think the economy on both sides was starting to slow down before the year started and we're we're slowly starting to see that unfold >> it's always a mixed bag but the one piece I would put into every discussion at this point is it's the baby boomer thing. The fact is every single day 10,000 baby boomers are retiring and that's affected a lot of stuff and in picture framing for instance it sounds silly but the fact is people eventually stop framing pictures because they're downsizing and they don't have any space to put the stuff and the framing industry peaked out in 2000 and as people get older they stop spend money on a lot of stuff. was just watching something on the news that Gen Z they're they're not dating as much because the cost to go out to have dinner is it's just so expensive. So yeah, it's it's just kind of fascinating. >> They're not drinking either from what I've read. >> They do not drink. Yeah. >> Right. >> Which actually I really appreciate my team being uh all kind of alcohol free. It's making my budget go a lot farther. Jay, talking about all of that, I'm curious, have you rethought your uh advertising or marketing budget? Are you still spending money the way you were previously? >> I've cut B. We're still doing the online stuff, the social media, which is beyond me, but just the same old I, you know, I've got three framing locations. I decided, you know what? I'm going to go back on the radio. It worked years ago. I put, I don't know, 30 40,000 bucks into it. And >> this year, >> yeah. Now, attribution is always a problem, but I am in a unique business in that you're in my computer. So, it's not like you're just coming in, buying something, and leaving. So, when you walk in with framing, we know whether you've been there before cuz you're not in the computer. And then we say, "Oh, you're not on our computer. Um, is this your first time here?" Yes. So, then we say, "Oh, where did you hear about us?" And you know, there's only several buckets. One is, "My friend sent me in." Okay, that one's pretty clean and accurate. Drive by the internet, social media. The fact of the matter is almost nobody said, "Oh, I heard it on the radio." Which kind of just it's when I say almost nobody, I mean after three months, three people or something. Now, the problem is maybe they've driven by it a hundred times and the radio ad pushed them over the edge and they said, "Oh, I drove by." So, it's not perfect, but when you spend that kind of money, you'd like to get 10 people said they and they didn't. So, I'm done with that. I'm not doing any traditional advertising. I used to do ads in the magazines. I used to do direct mail. I'm basically counting on my location, counting on my internet site, counting on the social media though. Even the social media thing is a big question mark. Like extremely hard to find attribution with that. So, uh it's a very different world than it was 20 years ago. And I I So, at the moment, I pretty much cut back my advertising budget. >> David, are you doing anything different? I'm making uh more of a an attempt to be live in front of people. I mean, that's that's where I was this morning. I was at that conference of uh of lenders and uh talking with them about the things we do and how we help clients and and everything. And you know, over the past uh well, actually since August, I've been to uh four different conferences. Two of them were down in the States. Um, and just trying to get out in front of people, sort of access different channels of having people meet me. Um, I try to get onto podcasts and things as a guest to to meet new audiences and talk about this kind of stuff and LinkedIn, of course. But I think really this year, the thing I've done differently is try to get into more events where I'm out shaking hands and being one of a very few people who have business cards uh anymore to hand to people. >> That is a sore subject for me. I meet these people and I think seriously you can't print really and they go oh no one uses really no one's using business cards anymore. I I'm just fascinated for $30. >> You're you're dating yourself. >> So my my point is I'm not the only one that's still alive that's still doing business even if I'm 80% wrong. 20% of the people would like to have a business card. So for that 20% even if it's 10% really you can't print some business cards for $40. Sorry I'm not giving up on that one. I just I just use my phone and uh connect with them on LinkedIn. But that I'm sure you do there. Yeah. >> But like I said, I'm not 107. There's still plenty of 169y olds still in business. So until we're all dead, I'll send a notice when I'm dead. You can then stop printing business cards, but until then, like maybe do it for another 5 10 years. >> The problem I have when because I'll meet people who have these fancy QR things on their phone and they'll say, "Scan this." and and I scan it and it'll create a new contact in my phone and then I think to myself, how will I ever find this person? There's a thousand people in there, right? >> And and on my business card, um on on the front side, it's got, you know, your contact details, but I put the LinkedIn QR code on the back side. >> And so if people are more digital, I just flip it over and I say, "Well, scan this for my for my LinkedIn." But um what I always do with business cards when I collect them is I might make little notes on them. And that evening when I get back to the hotel room, I go through them. I sort them. I I maybe send emails to people or follow-ups. And I I find that it's much more it's much easier for me to organize myself and try to do something with those connections if I have those little cards that I can sort of >> and the real question is and why wouldn't they give you a card? Even if 90% of people don't like you got a card, you stick it on your desk. You look at it for a couple weeks. Oh yeah, that's that guy. I got to call him. Like why wouldn't you do that is my question. I mean, it doesn't make any sense. >> Dave, I don't think you know how happy you are making Jay this morning. I I hope you appreciate that. If you just tell him now that you love fax machines, too. >> All right, I'm off of facts. I never was on. He's exaggerating, but no, the business cards for sure. >> Uh, back to 2025. Um, >> are we still in 2025? I'm already in 26. That's how advanced I am. >> It's going to go on a little bit longer. Dave, you mentioned that you were at this conference of lenders. What was the the mood like there? What what were people talking about? >> Uh it was interesting. There were a lot of uh you know sort of veterans there and a lot of younger people there and a lot of the talk was from veterans telling the younger people about what it's going to be like as we get into a downturn. You know, a lot of people in the room had not been full through a full business cycle. And so they had a lot of different speakers that came in. There was an economist from Equifax that came in to talk about the data they're collecting through the the credit reporting that that those guys do with credit reports and whatnot. There was um there were some people from the bankruptcy and receiverhip industry talking about some of the stuff that they were doing. I was there to talk about equipment evaluation and calculating goodwill in small businesses for transactions and lending. Um and there were a lot of um sort of stories shared about problems and things that these different lenders were seeing pop up in their accounts. So it was it was very interesting and I learned a new term. So uh amongst this group of people they have a term a business tourist >> and what what what a what a what a business tourist is is somebody who is not a business person but has somehow ended up owning a business like uh the dentist who buys you know the pizzeria or or something like that. And this is sort of the the canary in the coal mine amongst their amongst their business files is these particular kinds of owners are the ones that are maybe having the most trouble right now. >> Well, I have a new term that I just came up with for these people that I get emails from. Literally every single day I get two or three and I'm calling them stupid asses. This is what they do. They send you an email that says, "Oh, we can they all say the same thing. We can lend you money as low as 1% a month, blah blah blah." and then they just sign it John and then it'll say some name underneath it business loaning blah blah blah but the email address doesn't match that and I don't know why but almost every single time their email doesn't even match the name of the company they sign off on and I'm thinking why would you call you first of all there's no phone number there never is but why would you even email back to these people who that they're like marketing companies or something but I don't understand why almost never Does the email match what the signature is? And like they must send out 8 million of these a day and I don't know did anybody respond must respond? But I get literally two or three a day. >> Yeah. >> Wow. >> Yeah. Same here. >> Yeah. >> Do you have an explanation why the ma the email doesn't match the name? I thought maybe because they're marketing >> Yeah. lead genen. Uh it's probably lead genen companies. >> That's what I think. Yeah. >> All right. So David and Kate, you guys are fairly new to this podcast, although you've been around most of this uh year, but I haven't done with you what I've done with pretty much everybody else, certainly with Jay, which is ask you Yeah. Uh exactly. >> Okay. >> Uh torture torture them by asking you to talk about the biggest mistakes you've made uh in business. Um and I want to give you the same opportunity. So, uh, Kate, maybe starting with you. Can would you be willing to share with us what your, uh, biggest mistake has been running a business? >> Yeah. Um, I know you're probably expecting me to say something like a bad investment or a disastrous hire or, you know, some sort of strategy that gone off the rails, but honestly, my my biggest mistake was how I handled my own mental health. Um, when I launched my business, my company was growing at an incredible rate and I was four years in and scaling super fast. Uh, I treated myself kind of like an unlimited resource. So, when I got hit with a potential lawsuit, it really rocked me. And I I remember like, what do we do when we have a problem? Well, at least for me, I I called my father for support and his response was, well, that's why you get paid the big bucks. Not exactly comforting in fairness. In fairness, USA. Yeah. >> Funny you say that because I my father called me once. I was having a real bad day and he said, "How are things going?" I said, "Oh, you know what? I just had to fire a guy. He's got two kids. I feel bad." And he just said, "Well, you know, people want a job, but they don't want to work." It was like a throwaway line. And that was the last time I talked to him about business. So, I know that feeling of you were looking for some great wisdom and it was really out of his wheelhouse and I in hindsight recognize that now, but it was a disappointing day, but I I totally feel your pain on that one. >> I I appreciate it. Well, I I I can tell you the stress and anxiety um at that time was was pretty crushing. Um so, I ended up I went to a doctor who was very quick, too quick I think, to apply me with pharmaceuticals. Uh, and of course hoping for a quick quick fix, I I jumped at it. After all, he's a he's a doctor. Um, you know, and when you're under under mental duress like that, I mean, it was sort of like taking Tylenol for a broken for a broken leg. So, it it didn't fix me. It wasn't like I was, you know, all out of, you know, benzoed up or something like that, but it did it dulled me. Um, my drive waned. Um, but worse, my creativity vanished. And for for me, creativity is what for I believe separates business owners from entrepreneurs. >> So, wait, here's the interesting part for me because I totally identify with everything you're saying. My question is, it doesn't sound to me like you had you tried your father, but we're all freaks. The fact that our fathers we think should know better than us, it's not the case. The question is, did you not have another business person you knew that was a little bit of a mentor that you could call up and that would say to you, hey, this is what happens in business. I didn't. And as a result, I was stressed out just like you were. And I also went to the doctor, except this was 40 years ago before the whole thing with everybody's taking medication for stuff. He gave me muscle relaxings because I said I had horrible pains in my stomach. And the very next day I coincidentally read that stress causes terrible stomach and that's exactly what it was. And he didn't know to tell me that and I I figured out it was stress. So did you not have anybody you could call to walk you off the ledge? I eventually got there because I did eventually join um EO which was super helpful but I was in that fog for two years and that first year my revenue dropped 10%. The next another 11%. And I think I think we can all say numbers always tell a story and mine were it was really screaming for change. And so I I I ditched the meds. I rebuilt uh on mindfulness, holistic practices, uh less wine and dropped caffeine like 100%. >> Did you figure that those steps out all on your own, Kate, or >> Yeah, it was I mean it was a lot of selfreflection. Um because I was like why why am I dropping uh so much revenue there? there was no reason aside from me just not feeling it. So I really had to pick myself up from by the bootstraps. And I will uh say that my forum from EO really helped just make me feel a little bit more grounded to be able to push forward. >> Were you working out at all? >> Yeah. Oh yeah. I'm I'm a I'm a big runner. I gotta tell you, you just described why I do this podcast because I feel bad for all the entrepreneurs out there that are on their own, that are stressed out, that are trying to figure this out. And I had nobody to go to and you had nobody to go and I I did join groups and that helped. But people need somebody to talk to like to help them understand, hey, this is what we signed up for, but there's ways of fixing this and work. I will tell you, I wouldn't have told you this 20 years ago. I truly believe working out is a critical piece of this, that I feel much better when I work out and I can handle it better. And I wasn't. I was just stressed out all day long. And I feel bad for all those people in the world who are on their own trying to figure this out because in other quote unquote professions, whether you're in an accountant, a lawyer, you've got people in your office that are older than you that are going to help you. You're in business for yourself. You're by yourself. And that's why I do this podcast. And I feel really thank you for being on this podcast. Thank you both of you because I believe and Lauren, thank you. I believe we're doing good for people that are out there trying to figure out how to navigate this because it's not easy, but it is fixable. >> Yeah, Jay, you're so spot on. So, I I can tell you I modeled my business after a company I worked for um that was wildly successful. Um the two founders did amazing um before the dotcom telecom implosion and then 911. But when that that company crashed, when all that went down, the two founders eventually drank and drugged themselves to death. >> Wow. >> But you know what's interesting? I mean, that's that's awful, obviously. But what I find interesting uh about your story, Kate, and yours, Jay, is that the stress hit you at a time when your business was growing dramatically, >> like crazy, 30%. >> That's what everybody thinks they want. And um you know, it's just so interesting that that kind of success can produce that kind of stress. Well, if you think about it, we have only 4% of companies get over a million dollars on average. That's it. 4%. So, when you're getting over two, two and a half, three million, you know, you you can kind of feel like you're a little bit at the end of your your abilities. And um you you have to figure out how to structure things. And even when I got out of that that fog, I I was able I brought in my uh business coach and that following year we grew 27%. So I think you really have to, as Jay was saying, you have to surround yourself with people that you can feel a little bit more grounded, have some guidance. Um just have that hand on this on your back, you know, so you don't feel so alone. I literally when I'm telling literally was laying on the floor at home. I could not get up and I always thought people that did that were exaggerating. I went to the hospital in an ambulance because my neighbor was a doctor and he goes, "Oh, you better go to the hospital." It was absolutely 100% stress. I had a key guy working for me that I needed to fire. It was the first time I ever went through that. I was worn out and it was 100% because of that in hindsight. And I have never had anything. I have never had a back problem since. It was 100% stress brought on by not knowing how to deal with stuff. And um it's it's brutal. And I will tell you, I want to tell everyone this. I had a customer once tell me, Jay, the bigger you get, the harder it gets. with a capital B. It is much easier when you start to figure out how to do this. And you can figure out how to do this. I don't I'm not stressed out. I haven't been stressed out in I don't know 20 30 years. But when I >> You're not thinking clearly, Jay. >> Well, I I I Yeah. No, I I don't It's not that I don't have some pressure now. Trust me, I do. I am nothing like when I was 32 and I was had kids and three kids and I was trying to get it to all work. I had to grow into it. And I tell people if you've been in business three, four, five, and you're still a newbie, like this takes a while to get the sea legs to deal with it. And if you stick at it, you will get there. >> Yeah. Yeah. >> Thank you for sharing that, Kate. Uh David, how about you? >> Yeah. I think that the the biggest mistake I've made in business is not thinking about the career path of employees. So when um when things started to grow for me and I started to look, you know, when you go from being sort of a solo person to adding that first helper, I had in my mind a certain role and qualifications that would be required and I and I found someone to fill that. Um, and you know, the the problem, the mistake I made was I did not see the the path forward for that person because they they had the ability to to grow and develop and do more than what they were doing for me. And I think in failing to create that path for them, what I what I did is I probably created a realization in them that if they were going to get ahead and earn more money and do more with their career that they were going to have to leave. And that's what happened. And I realized later like, hey, you know, I could have had them do this and that and this and that and it, you know, I would have been paying them more and then we could have grown more quickly, I think, and then added another person to sort of backfill them. And so that I think is one of the mistakes that kind of uh set me back a little while. And then when I hired again, I was very much more cognizant of this aspect of of business. Now we're a team of five and and I think about it every year when we do our annual planning. I think about how I can see people developing and growing and and how I might help them grow with me because you know it sucks to start off with someone new. Like it takes a long time for the new person to learn what they're supposed to be doing and learn about your business and all that kind of stuff. Um all those stats about turnover being expensive are absolutely correct. >> So in your case, it's also partially about which is the same I've hit looking at your business model. So this person's talented and good at it. gee, I can charge more for that or we can start offering these services. And it when you say career path, that's basically looking at your business model and going, "Wow, I can build a company around people that have this kind of talent." Cuz that's exactly what I did. I didn't wake up one day and say, "Hey, I think I'm going to get into the furniture business." I hired someone for nothing. I mean, she was a $14 an hour or something. Kid, she turned out to be extremely gifted at at this thing. And I built a multi-million dollar furniture store because I recognized she was talented and I kept her around for 20ome years. And that was one of the mistakes I didn't make. You know, I made every other one, but that is one I I >> It's hard. It's hard though when you're when you're building a business and I I because of the startups I work with, I ask them your job description is going to be the pain point for today, but you need to start thinking about what does success look like 12 to 18 months out for this person because they have to be thinking about evolving that that resource. So, um, yeah, I think a lot of companies have have challenges with that, particularly when we had just the wild west of of hiring. Nobody was nobody was thinking ahead. And I I feel bad because I think the younger generations kind of got hammered about how there was no loyalty. They were all about entitlement and they wanted raises and all this. They just wanted some inclination of where they were going to go. >> You just said it. It's hard, but it's doable. That's the point. It is hard, but there's no question once you figure out what you're doing, this is all doable. >> Well, are you sure about that, Jay? I mean, I can imagine a lot of business owners listening to this and thinking, I run a small business. This is what I do. I can't be inventing all different kinds of things to try to keep my people happy. I run this kind of business. If it works for you, great. If not, then we're going to have to move on. How hard was it for you to develop that path that you decided you you wanted to develop? >> It gets back to knowing yourself. Do you have the mentality to grow with this? And some people don't. And that's okay. Um the smartest thing one guy once said to me, he was older than me. He was about 50some. I was 30ome. He said, "Jay, everybody knows at some point in their life they've got limitations. It usually hits hits you when you're 50." And I said to myself, as a 32-year-old, that's pathetic. And then I hit 50 and I realized he's right. I don't have the mentality to build a hundred million dollar company. I just don't. And it's okay. And it comes down to knowing yourself. >> My answer is that and this is what I tell people who who want to buy a business is I I warn them that all businesses are on the path to obsolescence because the world around us is changing all the time. And the way business was done in any industry 15 years ago is not how it's being done today. And so there there has to be some kind of evolution and iteration happening all the time in every business to avoid falling behind the curve. And unless you're going to be someone who's literally going to allow your business to slowly fade away over a decade or so and then just shut it down when you're not making any money anymore, you you've got to have some degree of creativity in trying and experimenting with new things. And you know, in Jay's example, he saw a door open with a pathway that that led down to the furniture road and probably thought, "Hey, this aligns with the framing. You know, people are decorating their homes. There's a connection." >> Yeah. And so it would make sense to me. And um you know, once you owned the real estate, you then had some kind of commitment to be able to take advantage of the space you had, right? >> Boy, that you are so smart. Really, that is truly the key to the whole thing is that I was able to buy the right real estate and that was why the whole thing started to work. I call it connected by design. Little double meaning there. Very smart. Thanks for being on today. >> Really? No, that was really that was really smart of you to figure that's exactly what happened. I figured out I'm in the home furnishing industry. I could buy the building and that's what drove the whole thing. >> All right, we only have a couple of minutes left. As you guys know, I sometimes like to throw kind of a case study situation at you drawn from a question that I've read on the small business subreddit. Um, so I've picked out one for today that actually kind of relates to what you were just saying, Dave, about the the mistake that you made. Uh, let me read this to you. An owner writes, "I don't even know what to do anymore. We went from a small team of 3 to8 since April, and I thought hiring would solve problems, but really it just created new ones." Like now instead of being stressed about delivering, I'm stressed about training people to do the work. We had this new guy just joining seems smart with good portfolio and spoke well during the interview. I put off a complete day to talk with him about everything that we do, tools we use, our process, file organization. He's proactive asking questions and taking notes, which made me think finally a good candidate amongst them. Next day he calls me over to his desk and he asked me something about where we keep docs. Uh which I clearly had explained to him yesterday. Are you kidding me? It took him just a day to forget that. And it's not just him because someone who's been here a month still sends email to the wrong person and there's many cases like that. My business partner says we need better documentation. But when I'm answering the same question on repeat being behind on client work and starting to get sharp with people who are just trying to learn, I know this is an investment and that after 6 months they'll be solid, but right now this is very timeconuming and I'm not sure it's worth it. Is this just what having employees is like? Please tell me I'm not the only one losing my mind. >> Yeah, I can I can I can answer this. >> Please. >> Uh he's he's investing in the wrong place because every business has systems. The problem with his business is that the systems are in his head and he hasn't properly documented how they do things and he has doesn't have some kind of playbook or or company wiki or you know these things go by different names but that you should be able to sit down with a new person and say here's the flow of how we either you know handle a client file or how we manufacture our widget or whatever it is the business does. We go through these various steps and here are the different people in our organization and here are the job descriptions and the roles that they cover and here are the tools that everybody uses and this is you know your role and this is the stuff you're going to be doing and here are the tools that we have you know established for doing those roles and it's all right here because nobody can drink from the fire hose in one day and learn everything about a business and expect to have it top of mind. There's always going to be that need to refer, right? Well, where did they say they did this? Where'd they say they did that? And if it's if you instead of spending a day trying to teach someone everything, you you show them how to use your documentation so that they can find what they need on their own or know what other people in the company are doing the same tasks. Maybe they can go talk to their colleague instead of the boss, right? That's what's missing in this organization. >> Yeah, I I would agree 100%. For my team, we are so well documented. I love it because I have my own specific track that I train new employees, but then I can push it off to everybody else so I don't have to deal with people because I'm not the most patient person. >> I think that is incredibly valuable and right. There's another piece of this I wonder though, which is in addition, did he check their references? Where did they come from? Maybe they were just fired from the third job because they can't remember doing I don't know. I just I'm not >> You know, it's interesting to me that he said he thinks they'll be solid in six months. Um which suggests that maybe they he did hire the right person. >> Why does that make you think he hired the right person? >> He thinks they're going to be good um down the road. >> He's frustrated that they're not picking it all up right away. As Dave said, despite, you know, not having uh the processes in place that would make >> he emphasize he spent the whole day with them. And my argument is that's part of the process. The other part is to find out why did they leave their last job. He didn't mention and they got, you know, great references. I didn't hear that part of it. So, I don't know that that isn't part of the problem. Well, like there there's two ways to learn a story, right? you you either um read it in a book and you can refer to the book or you have someone repeat the story to you several times or you watch the movie several times and you learn it through osmosis and if you don't have the proper documentation in place for someone to refer to then the only option is education through osmosis and folklore and that takes time and he recognizes that. he's saying in six months time this person will finally be able to regurgitate what I tell him after I tell it to him another 30 times. It it just takes a lot of effort. >> And I was going to say, Dave, in your your business, I mean, you you must see this because that that was part of the value when I was looking to sell my company was just how well documented. So they could just plug in new people without having to have me. And when I was at that point going to sell my company, I was only working on my business 5 hours a week because I had it so well documented. But yeah, hiring you have to have the right person as well. >> All right. My thanks to David Barnett, uh, Kate Morgan, and Jay Goultz. As always, thank you guys for sharing. Really appreciate it. One thing before you go. Everything we do at 21 Hats is created by entrepreneurs for entrepreneurs to help us all learn together. If you get something out of listening to these podcast episodes, consider joining the conversation. You can do that by joining the 21 Hats sounding board, a Slack channel where you can tap the wisdom of a very smart crowd or by becoming a founding member and joining our monthly Zoom forum where you can be part of conversations much like the ones we have on the podcast. You can sign up for both by subscribing to the Morning Report. If you have any questions, you can email me at lauren21hats.com. And if you get something out of this podcast or out of the morning report, please tell a friend, tell an enemy, tell every business owner you know. Your word of mouth owner to owner will always be the most effective way to build this community for all of us. Thank you. It means a lot. This episode was produced by another entrepreneur, Jess Stubberon, founder of Blank Word Productions. Thanks for listening, everyone. [Music]