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Yahoo
12 hours ago
- Business
- Yahoo
A 22-Year-Old CEO Asks Dave Ramsey What To Do About An Employee Asking For Ownership. His Advice After A Sincere Laugh? 'Hit The Road, Jack'
A young business owner called into Dave Ramsey's 'EntreLeadership' podcast with a surprising dilemma: one of his employees asked for ownership in the company. The caller, a 22-year-old CEO of an outdoor recreation event company, wasn't sure how to handle it. Ramsey's response was part tough love, part strategic advice, and all classic Ramsey. 'You've got to be kidding me,' Ramsey said with a laugh. 'I have two employees and I just started this and I'm 22 years old. We're not dealing out equity at this point. No way.' Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Invest where it hurts — and help millions heal:. The caller explained he started the business when he was 18 with a few hundred dollars and had grown it to about $500,000 in annual revenue. He hired the employee full-time to help run events while he focused on scaling. 'I pay them a salary,' the caller said. 'And recently they were doing a good job so I gave them 10% profits on merchandise and 5% profits in the business at the end of the year. Even after doing that, they still insisted they want ownership.' Ramsey didn't hesitate. 'Hit the road, Jack. Not a chance. The last thing you need is a partner,' he said. 'The tail's not wagging the dog here. You're the dog, man.' Trending: Ramsey shared how he compensates his own team at Ramsey Solutions: 'I've got vice presidents in this place, I've got executive VPs, my operating board—none of them have a salary. They all get paid off of the bottom line of the company the 15th of the month following. They get paid a percentage of what the company created in profits the month before, and they make really, really good money.' Ramsey made it clear that while the employee may be valuable, asking for equity in a small, young business is 'asinine.' 'What they're really after is more money,' he said. That's why Ramsey recommended that he pay them as if they were a partner, but without giving them actual ownership. Ramsey then outlined a compensation plan: pay a lower base salary and add a percentage of the profits from the events the employee manages. For example, if two events per month bring in $10,000 each in profit, and the employee is responsible for those, paying 15% of that profit would result in strong earnings. You want him making money because the more money he makes, the more money you make, Ramsey said. 'But if every time I hire three people, one of them becomes a partner, we're going to have 73 partners when this thing grows. No, thank you.'One of the biggest takeaways from Ramsey's advice was the need for clean, detailed accounting. He stressed the importance of closing the books monthly and using job-costing methods to track profit on each event. 'If you don't know what you made on those two events, because you're screwing around with your stuff receipts in a shoebox or something, then you can't calculate his pay,' Ramsey warned. 'And you're not going to be paying him, and he's going to be unhappy—and he would be correct.' He also recommended paying commissions on the 15th of the month for the previous month's events, in addition to a regular salary at the start of the month. Ramsey wrapped it up with some encouragement. 'You've got a fun little business going,' he said. 'I hope it grows for you and you get 10 of him and they're all making money off the bottom and you're making money off the top.' Read Next: Can you guess how many retire with a $5,000,000 nest egg? .Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article A 22-Year-Old CEO Asks Dave Ramsey What To Do About An Employee Asking For Ownership. His Advice After A Sincere Laugh? 'Hit The Road, Jack' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
30-03-2025
- Business
- Yahoo
'Being $450,000 In Debt To Make Zero Money Is A Bad Idea' - Dave Ramsey's Advice To Business Owner With No Profit
Starting a business can be a rewarding endeavor, but when the numbers don't add up, tough decisions may be necessary. On a recent episode of "EntreLeadership," Dave Ramsey spoke with Jen, a business owner from Ontario, Canada, who found herself in a difficult financial position despite running a business with significant sales. Ramsey's advice was clear: "Being $450,000 in debt to make zero money is a bad idea." Jen shared that she had left a successful 20-year career to focus on her side hustle, which had grown into a full-time business. After moving the business from her basement to a physical location, sales reached approximately $870,000 last year. However, despite the strong sales figures, Jen wasn't paying herself — and her business was still struggling financially. Don't Miss: 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. If there was a new fund backed by Jeff Bezos offering a ? "I have an opportunity to go back to work in my previous field," Jen said. "Make 100 grand again and get back to earning for my family instead of now having what feels like my business just drain me." Jen explained that her business expenses, including payroll and overhead, were about $20,000 a month. On top of that, the business had accumulated around $450,000 in debt, including a mortgage on the building, renovation costs, and startup inventory expenses. Ramsey pressed Jen on whether the business would be profitable without the mortgage. Jen admitted that the mortgage itself wasn't necessarily the problem — the issue was that sales were declining. Trending: BlackRock is calling 2025 the year of alternative assets. "[$875,0000] is what we did last year, I would say we're down to [$550,000] – we're on track to make [$550,000] this year," Jen said. She attributed the decline to shifting customer behavior. During the pandemic, the business had successfully generated revenue through online courses. But as people returned to in-person events, the business was struggling to scale the same level of revenue with smaller class sizes. Ramsey pointed out that while owning the building might seem like an investment, the business itself needed to generate enough revenue to cover expenses and provide a profit. Ramsey's advice was straightforward: If the business model can't be adjusted to turn a profit, it's time to walk away. "If you can figure out a business model that gives you hope — a business model shift, a pricing shift, a delivery of product shift, whatever it is, the way you're doing the classroom thing — to where you actually are making a profit and you are paying yourself and you can see your way to that," he said. He said if Jen can't do something to turn her profit around, it's time to close the asked Ramsey what he thought about keeping the business open to pay her employees, even if she couldn't pay herself. "It's not your job to just create jobs," Ramsey said. "It's wonderful that you create jobs. And that's a cool thing. But you're supposed to be making money owning a business. That's the point." Ramsey suggested that Jen take 30 to 45 days to brainstorm solutions, such as adjusting pricing or scaling the business model. If those changes don't work, Ramsey recommended closing the business, selling the building, and returning to a steady income stream through her previous career. Read Next: Have $200K saved? Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article 'Being $450,000 In Debt To Make Zero Money Is A Bad Idea' - Dave Ramsey's Advice To Business Owner With No Profit originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
