Last week I spent 5 days learning at the feet of Dave Ramsey and his team about their philosophies on leadership. I attended their top-end event, which they call “Entreleadership Master Series”. I attended solely as a student and a participant, not as a presenter.
It was without a doubt the single most valuable formal education I’ve ever received on Leadership. In true Dave Ramsey fashion it was inspiring, heart-warming, practical, funny, hard-hitting, and it included a very heavy dose of not-so-common common sense about running a business.
I tried very hard to boil dozens of key lessons down to my top 7 personal take-aways:
1. To Be Unclear is to be Unkind – The first question any leader must ask themselves when one of their teammates is underperforming is “are they being led properly?” – a huge part of which centers around clarity. Does the person know clearly who their leader is? Do they have documented (and signed) on 1 sheet of paper what their KRAs (Key Results Areas) and expectations are? Do they have a 1-page sheet that clearly explains all elements of their compensation plan and do they understand it well enough to explain it to their spouse? Is their leader communicating to them consistently about how they are performing compared to the expectations of their position?
2. Sanctioned Incompetence is one of the most common signs of a mediocre leader – The vast majority of organizations have people on their team that everyone knows is an underperformer. Weak leaders allow them to stay and have no game plan for resolution because they fear conflict and they have a scarcity mentality when it comes to replacing them. This destroys the culture because the spineless leader is creating an environment of “sanctioned incompetence” and what happens overtime is the thoroughbreds leave the organization because they want to be associated with and surrounded by excellence – and not mediocrity. Strong leaders demand excellence; or at least progress. Strong leaders do not fear conflict and they protect the best interest of the rest of the team by weeding out those who aren’t performing at the speed of the pack.
3. Small business benefits are different from big business benefits – One of the most freeing pieces of advice from Dave was hearing “small businesses do not need to feel the pressure to provide the same benefits package as big businesses.” His point was not to underserve your employees but to realize that you shouldn’t risk the profitability and growth of the overall small business by feeling pressured to compete with big business benefit packages. Small businesses offer something special: an environment where people actually care about you. Small businesses can be nimble and do things to provide people with flexibility and support to show they care. And, if you hired someone who joined your team because they needed benefits then you hired the wrong person. You don’t want to hire people who need benefits; you want to hire people who are crusaders of your mission.
4. Be slow and thorough to hire – Hiring the wrong person is one of the most expensive mistakes a leader can make. And yet, most leaders have so much work that needs to be done that they are typically more interested in rushing to hire a “warm body” than they are in finding the right person. Take the number of interviews you typically do and multiply it by 3. Include a mandatory interview with their spouse (to make sure they aren’t married to “Crazy”). Require them to submit their personal budget so that you know they can afford to work for you. And most of all, hire people who care deeply about the work that your organization is doing! The delegation and time management challenges that leaders feel is often the result of their own under confidence in the people on their staff.
5. Overhead is the slow and subtle killer of many businesses – Do not let your overhead creep up and up. It starts to happen slowly as businesses grow because it’s easy to add overhead but very hard to get rid of it. Don’t be afraid to rent equipment and outsource to vendors. Even if it makes “dollar for dollar” sense to insource a task, don’t forget to account for the added element of the risk of carrying the additional overhead.
6. Despite everything you hear it is very possible to build a business without using credit! – People will fight to their death on this topic trying to convince you that the only way to scale a business is with debt and it is simply not true. Sure, debt can magnify success 1 out of 10x – and these are the only stories you hear about. But 9x out of 10 debt will only magnify your mistakes. Paying with cash forces organic growth and you spend money differently when it’s your money and not someone else’s money. Build your business with cash! Follow the 20/50/30 rule:
a. 20% of profits should always be added to retained earnings as an “emergency fund” for your business and to use for investing in future growth.
b. 50% of profits should be used to pay down business debt to get debt free. After which you can share your profits with team members, reinvest in the future, and pocket the remaining!
c. 30% of profits (every single month) should be set aside for taxes. Do not assume that you’ll “be ok” when tax time comes; plan for it every step of the way.
7. Integrity is the single most important quality of every part and every person of every business – You can’t do business with people you can’t trust…period.
a. When it comes to vendors…if you can’t trust the guy’s handshake then no contract will ever do you any good.
b. When it comes to employees…if their family can’t trust them to be honest and loyal then your business most certainly can’t.
c. When it comes to leaders…if a person doesn’t have integrity to do what they say they’re going to do and to do the right thing regardless of the cost, then they simply do not have a chance at being a successful leader.
The word “integrity” comes from the root word “integer” meaning whole. There is no separation between personal lives and professional lives. A person is both “whole” and living with integrity or they are not. It might seem silly that I had to spend 5 days with Dave Ramsey to become absolutely convicted and clear on that but it did…and that one idea alone will change the entire trajectory of my future as a leader.
My only regret was that I didn’t attend Entreleadership Master Series earlier.