Ask Dave On Business With Dave Ramsey

We take care of our own

1. Dear Dave,

I’m in middle management, and I was wondering what you can do when an employee is worth more than you’re allowed to pay them.

— Brian

1. Dear Brian,

That’s a tough situation when you don’t have control over financial compensation. At my company, the human resources handbook comes with one mandate: treat people the way you would want to be treated. So, I’ll ask you. If you were the employee who deserved more money, how would you want to be treated?

Here’s the hard truth. If a member of your team can make significantly more money elsewhere, there’s a good chance they’ll eventually leave. However, if I knew that my leader was fighting and trying to convince the decision makers that I deserved more money, plus doing other things to offset the financial issues, it would mean something to me.

There are always other gestures you can make to show someone they’re valued and appreciated. You might let them off a little early when their kid has a ballgame. You could even make a special award presentation to this person, or strongly recommend them for a promotion.

Still, at the end of the day, you either give people what the marketplace will pay, or you run the risk of losing them. And without control over the purse strings, there’s only so much you can do in those kinds of situations.

— Dave

Give yourself time

1. Dear Dave,

I’m thinking about starting an auto detailing business. Do you have any advice on how to start something like this, and what to consider first?

— Justin

1. Dear Justin,

When you’re running your own business, you’ll find out quickly that your boss is a jerk who works you like an animal. Working for yourself is one of the toughest things you can do for a career, and you better make sure you’re doing something you love, because it’ll take years of blood, sweat and tears to be successful. If you don’t absolutely love auto detailing, and if you’re thinking about it simply because it’s plausible or you think you can make money doing it, I’d advise giving up on the idea. If that’s your stance, it’s really more of a side job than a business.

Think about something you’d want to be doing every day five years from now, and have anywhere from 20 to 200 people doing it with you. You’ll always do a better job and have more fun when you’re involved with something you love. And when it comes to running the business, pay cash, have a written game plan, and don’t be afraid to grow slowly. Lay out a smart business plan ahead of time, and know everything from your marketing strategies and cost of start-up equipment and supplies to what your projected revenues are and the per unit charges for all your little widgets. Lay this all out like you had to prepare a report for a college class, and that’s what a business plan looks like.

I’m excited for you, Justin, because you have lots of entrepreneurial spirit. You might not make $100,000 your first year, but who does? Just take your time. Be patient, be smart, and give people a quality product and professional service. If you’ll do those things, chances are you’ll be a success!

— Dave

Team reading

1. Dear Dave,

I own a small business, and I’d like for my team to begin reading certain books. What are the logistics behind a program like that?

— Scott

1. Dear Scott,

I believe in reading. In fact, I believe in it so much that I’ll sometimes go out and buy everyone on my team a copy of a book if I find one that really lights my fire. It could be just a cool little thing I hope they’ll read, but once in a while I’ll find something I feel is really important, and it will become required reading for everyone in the company.

We have seven books that all new team members must read within their first 90 days on the job. They’re short, quick reads, but they all have values and messages I want my people to understand and take to heart. The company buys these books, and they’re all in your new-hire package on the first day. Our leadership team reads books together and discusses them on a regular basis too.

I wouldn’t recommend a common library, Scott. I’d just buy the books for everyone. That way, they can highlight things that are important to them, dog ear the pages and fun stuff like that—the kind of stuff that makes a book your own, you know? It’s a good way for them to be on top of things, and they can go back and use it as a reference guide in the future.

— Dave

Control the overhead

1. Dear Dave,

I own a small business, and I’m having trouble scaling up while keeping expenses down. Do you have any advice for me?

— Josh

1. Dear Josh,

There are two types of expenses: fixed and variable. Variable expenses rise as the volume and size of your business grows. A good example of this would be shipping. The more stuff you move, the higher your shipping bill. Fixed expenses are there regardless of your income. Rent is a fixed expense. The amount doesn’t change, and you have to pay it whether you’re making money or not.

The best advice I can give you in a scenario like this is to take a deep breath, and accept the fact that you need to slow down and grow slowly and steadily. If you let expenses get out of hand you’ll be chasing them and playing catch up for the life of your business. Overhead kills businesses, Josh. It’s the death knell.

— Dave