I work 3 jobs and I know one of my bosses is tight on money and I said if you need to I can always pickup extra work at my other jobs and pull back here rather than loosing the job entirely.
interesting conversation for sure. Not sure how I would respond as an employee, because I would much rather have the good stable salary rather than the instable "promise" of a better salary, unless I really trust the owner to not be greedy and to not run the business into the ground. Like Dave says it would have to be a very candid conversation, with a lot of history between the owner and I, for me to not consider this a soft layoff. Also, the potential "good" salary would have to be much higher than 90k -> 110k. Because going from 90k-> 70k would be painful, and given what the owner is saying would likely be the next few years. It can't just average out, otherwise I'm just going to go get another job. It has to have some real potential for wealth building to compensate the risky nature of it. All said and done, the employees aren't going to care that the owner didn't correctly plan his finances correctly, especially if they're high performers.
I think his best option would be to try Dave’s suggestion with new employees. Start them off lower at 60-70k and give them the same pitch Dave said. Give them opportunity
I've been in sales for a while now and I can almost guarantee you will lose 2-3 of these people and you will be hard pressed to find replacements in this day and age.
Guy sounds like he is paying himself all the money LOL. Taking a huge salary... Hes put the business upside down. Recruitment has VERY little overhead. So fuck knows what he is doing with the money...
It was 5m in revenue. You have taxes, insurance, healthcare, unemployment, retirement, commercial rent, more insurance, normal bills like internet, phones, email, website, electric, cleaning fees, payroll costs, lawyers. The list goes on and on and on. He's probably spending 250,000 dollars on health insurance alone for his 10 employees
@@peters6850 I own 2 retail businesses that do almost $4m combined. I have 50 employees and a partner. I have higher rent than this guy and much MUCH higher COGS and I still bring in 20k/month after taxes. I can assure you, you're incorrect. You're citing internet and electric as expenses? Those are so negligible it's silly you even mention that. Insurance? He has NINE employees dude.
That was good question - ‘how many of them are entrepreneurial?’ The opportunity to earn more by creating more value / selling is not appealing to most folks. But even if he just appeals to the two who are entrepreneurial is a great opportunity- it has the potential to improve the business’s revenue stream for sure.
The problem selling that is demonstrating it. All of them wil thinking: Is he going to want to change compensation, again, when times get better? Why should I trust him?
From my own experience I wouldn't trust him. His salaries are already low, he's not profitable enough to stay in business and wants his workers to keep him in business at their expense.
@@_Y.Not_ I would want ownership % or future payment guaranteed (in writing of course) and a stated amount if he decided he wanted to fire me. When it comes to money, you can't trust anyone in my experience.
It seems pretty obvious Dave doesn't support work from home because he wants everyone to be a part of the culture, a part of the family and therefore be less likely to leave of their own accord
I wouldn't go for this as there is no guarantee that the business will ever be profitable enough in good times to pay me enough to make up for the "cut" in low times. There is no way I would trust an employer to be honest enough with his profits. I was hired for a job and one of the "benefits" was profit sharing, majority of the time I received nothing because the company didn't do well enough, they still used profit sharing as a pull in their compensation package to hire tho. Particularly sales people, if you are a good sales person you can have your choice of jobs and his salaries is already low, he's not profitable enough to stay in business and wants his workers to keep him in business at their expense.
Dave is confused about the state of the labor market. There are plenty of low-skilled jobs offered, but for technical positions like tech, the labor market is considerably worse than during the lockdowns.
depends what you mean by “down”. quality employees are being retained and can make more by job hopping - low skilled low effort employees are no longer able to coast by and get paid for nothing. the market is still fine and correcting to the norm from both perspectives (employee and employer)
@@monkas7270 I was a fang Sw engineer, and I can tell you it is not a fun time to be searching for a job. Definitely harder to find a job than normally at least in tech.
@@cw5948 IT companies are seeing the writing on the wall with the economy. Similar happened during the pandemic overreaction but I don't think the government can keep things hobbling along for much longer..
Some of the best employees you could offer a non-controlling small interest in the company that you could buy back at a later time with stipulations they would have to put in so many years time to earn that percent interest. I do not pay any of my employees a high salary. They would do the minimum and likely sit on their ass. I pay them a very small salary and the rest is based on bonuses and incentives. That way I attract the superstars and they actually tend to make way, way more than the industry average. If you have a bunch of mediocre employees on payroll just to scale to a big revenue number that can be cyclical and crush the business in an economic downturn. If the business is based on high volume and tight margins to begin with then you might want to evaluate the industry all together or the sector within the industry you are servicing and look at another approach. The superstars enjoy the challenge to make more. The lazy employees that just want to collect a check at whatever company that hits their salary number tend to be the worst workers.
Guy sounds like he is paying himself all the money LOL. Taking a huge salary... Hes put the business upside down. Recruitment has VERY little overhead. So fuck knows what he is doing with the money...
How is 50 K getting paid "high" in a $5+ million revenue stream? For 10 people? That is $500k. Where is the other $4.5 MILLION going? Betting the boss is a greedy weasel.
I believe he pays his 100+ contractors as well which would be where most of the revenue is going. He has small margins. The difference between what hes making from the contractors and what hes paying the contractors is his true profit, split between 10 people and other overhead expenses. I could be wrong, but I thought the same as you until i read the comments
I work 3 jobs and I know one of my bosses is tight on money and I said if you need to I can always pickup extra work at my other jobs and pull back here rather than loosing the job entirely.
He increased their base salary to 50😂 I’m glad Ramsey told him that was low.
I want to keep my top sales people but I dont want to pay their bonuses...and their base is only 50. This guy is a 🤡
5 million in revenue with 450K payroll? What are his other overhead costs?
@@stevedavenport1202 A girlfriend that has a credit card spending addiction.
interesting conversation for sure. Not sure how I would respond as an employee, because I would much rather have the good stable salary rather than the instable "promise" of a better salary, unless I really trust the owner to not be greedy and to not run the business into the ground. Like Dave says it would have to be a very candid conversation, with a lot of history between the owner and I, for me to not consider this a soft layoff. Also, the potential "good" salary would have to be much higher than 90k -> 110k. Because going from 90k-> 70k would be painful, and given what the owner is saying would likely be the next few years. It can't just average out, otherwise I'm just going to go get another job. It has to have some real potential for wealth building to compensate the risky nature of it.
All said and done, the employees aren't going to care that the owner didn't correctly plan his finances correctly, especially if they're high performers.
I think his best option would be to try Dave’s suggestion with new employees. Start them off lower at 60-70k and give them the same pitch Dave said. Give them opportunity
I've been in sales for a while now and I can almost guarantee you will lose 2-3 of these people and you will be hard pressed to find replacements in this day and age.
A good episode from Dave would be about greedy business practices and bad owners and partnerships. Great show!
Where's the 5m going? 10 employees and the top one makes $80k?
Right? If my restaurant with incredibly high margins made 5m, we’d all be rich.
Guy sounds like he is paying himself all the money LOL. Taking a huge salary... Hes put the business upside down. Recruitment has VERY little overhead. So fuck knows what he is doing with the money...
Prob rev - so they have to pay contractors still.
It was 5m in revenue. You have taxes, insurance, healthcare, unemployment, retirement, commercial rent, more insurance, normal bills like internet, phones, email, website, electric, cleaning fees, payroll costs, lawyers. The list goes on and on and on. He's probably spending 250,000 dollars on health insurance alone for his 10 employees
@@peters6850 I own 2 retail businesses that do almost $4m combined. I have 50 employees and a partner. I have higher rent than this guy and much MUCH higher COGS and I still bring in 20k/month after taxes. I can assure you, you're incorrect. You're citing internet and electric as expenses? Those are so negligible it's silly you even mention that. Insurance? He has NINE employees dude.
Love that operating board members concept.
That was good question - ‘how many of them are entrepreneurial?’ The opportunity to earn more by creating more value / selling is not appealing to most folks. But even if he just appeals to the two who are entrepreneurial is a great opportunity- it has the potential to improve the business’s revenue stream for sure.
Agreed. If they were entrepreneurial they would… probably start their own staffing business
@@jacobhinsey That was my thought.
The numbers not making any sense. 80kx10= 800k and 6.5 m rev is just breaking even? Wth is this business?
@grantguy8933 if you look at publicly trade companies payroll is 1/8th of sales for a company making zero profit.
Yeah he made $5.2M this year. He should have no problem having $1M in payroll + $200k in benefits while being profitable.
@USpatriot741776 the average business breaking even on nyse has revenue 8 times payroll. To do 1.2 in employee compensation, that 9.6 million.
Great episode
I agree, very interesting.
Places are understaffed because they don't want to pay OT. Corporate greed
The problem selling that is demonstrating it. All of them wil thinking: Is he going to want to change compensation, again, when times get better? Why should I trust him?
From my own experience I wouldn't trust him. His salaries are already low, he's not profitable enough to stay in business and wants his workers to keep him in business at their expense.
@@_Y.Not_ I would want ownership % or future payment guaranteed (in writing of course) and a stated amount if he decided he wanted to fire me. When it comes to money, you can't trust anyone in my experience.
It seems pretty obvious Dave doesn't support work from home because he wants everyone to be a part of the culture, a part of the family and therefore be less likely to leave of their own accord
I wouldn't go for this as there is no guarantee that the business will ever be profitable enough in good times to pay me enough to make up for the "cut" in low times. There is no way I would trust an employer to be honest enough with his profits. I was hired for a job and one of the "benefits" was profit sharing, majority of the time I received nothing because the company didn't do well enough, they still used profit sharing as a pull in their compensation package to hire tho. Particularly sales people, if you are a good sales person you can have your choice of jobs and his salaries is already low, he's not profitable enough to stay in business and wants his workers to keep him in business at their expense.
Dave is confused about the state of the labor market. There are plenty of low-skilled jobs offered, but for technical positions like tech, the labor market is considerably worse than during the lockdowns.
depends what you mean by “down”. quality employees are being retained and can make more by job hopping - low skilled low effort employees are no longer able to coast by and get paid for nothing. the market is still fine and correcting to the norm from both perspectives (employee and employer)
@@monkas7270 I was a fang Sw engineer, and I can tell you it is not a fun time to be searching for a job. Definitely harder to find a job than normally at least in tech.
@@cw5948 IT companies are seeing the writing on the wall with the economy. Similar happened during the pandemic overreaction but I don't think the government can keep things hobbling along for much longer..
Caller is greedy...
YEP!
I'm not sure if he is greedy but he is not profitable enough to stay in business and wants his workers to keep him in business at their expense.
Some of the best employees you could offer a non-controlling small interest in the company that you could buy back at a later time with stipulations they would have to put in so many years time to earn that percent interest. I do not pay any of my employees a high salary. They would do the minimum and likely sit on their ass. I pay them a very small salary and the rest is based on bonuses and incentives. That way I attract the superstars and they actually tend to make way, way more than the industry average. If you have a bunch of mediocre employees on payroll just to scale to a big revenue number that can be cyclical and crush the business in an economic downturn. If the business is based on high volume and tight margins to begin with then you might want to evaluate the industry all together or the sector within the industry you are servicing and look at another approach. The superstars enjoy the challenge to make more. The lazy employees that just want to collect a check at whatever company that hits their salary number tend to be the worst workers.
Just lay off a slacker or two.. problem solved?
Guy sounds like he is paying himself all the money LOL. Taking a huge salary... Hes put the business upside down. Recruitment has VERY little overhead. So fuck knows what he is doing with the money...
What he says is that he wants to restructure payroll because he ends up paying himself little to nothing so I have no idea where the money is going?
How is 50 K getting paid "high" in a $5+ million revenue stream? For 10 people? That is $500k. Where is the other $4.5 MILLION going? Betting the boss is a greedy weasel.
I believe he pays his 100+ contractors as well which would be where most of the revenue is going. He has small margins. The difference between what hes making from the contractors and what hes paying the contractors is his true profit, split between 10 people and other overhead expenses.
I could be wrong, but I thought the same as you until i read the comments
lol, the pay structure worked to get employees in but now that people are making money it doesn’t work for you lol typical shitty boss