Dave Ramsey Talks About His New Book

I am very fond of Dave Ramsey.  But I hate business books.  When I worked for the Economist, I once floated the idea of an article in which I would parody business books.  Matthew Bishop, then the New York bureau chief, gave me a very British eyebrow raise and led me over to the rack where they kept the overflow review copies.

"How can you possibly parody this?"  He asked, sweeping his arm across the stunning array, then plucked one out and handed it to me.  The book was called The Way of the Cockroach, and yes, it argued that businessmen had a lot to learn from roaches.  (This was years before Occupy Wall Street made the same argument, more coherently.)

Indeed, it turned out that all the parodies I'd thought of were actually business books, except one, already existed (the lone exception was How to Make a Killing: Strategic Wisdom from America's Top Serial Killers).

So when I got a review copy of Dave Ramsey's new book, EntreLeadership, along with the opportunity to interview him, I had some trepidation.  I was glad of the opportunity to talk to a man I'd spent a lot of time observing from afar, but I was afraid I'd hate his book.

As it turned out, I liked it.  It's attempting to be something different: an all-purpose business manual for the majority of entrepreneurs who spend a lot of time feeling like they're making it all up as they go along.

That's harder than it sounds when you say it.  A manual like that has a lot of ground to cover which means that in many places, you wish each chapter was a book.  And there are vital subjects he doesn't have room for--like accounting, which so many small businesses are so bad at.  Strange but true, many boostrapped startups aren't clear on whether they're making a profit, and someone needs to walk them through the process of calculating that.  (Ramsey says there will be four supplemental chapters going up this fall, the first one, thankfully, on accounting.)

Nonetheless, I actually learned things.  The most novel piece, for me, was the section on franchises, and how to think about buying one.  This is the way that a lot of people get into business for themselves, and I'd never seen anyone walk through the pro's and con's before.  Probably the most useful was the section on hiring, and the two biggest mistakes that small business owners make, in my experience: hiring someone because they're there and kinda seem qualified; and not firing people because it's unpleasant and time consuming.  Ramsey's brand is giving people the backbone to do the things they should, but don't wanna.  It will be interesting to see whether he can translate that to the business world.

Below the jump, my interview with Dave Ramsey about his book . . .

We're coming out of a long recession, and demand is still weak.  Is now a good time to start a small business?

It's the best time to start a small business, because the economy is so difficult.  A lot of people are out of work, and I think that small business is the answer.

What about hiring and firing?  Has the recession changed that?

From a CEO's point of view, there's so much more clutter--a lot of people who aren't qualified.

A lot of leaders have done the stupid thing and fired there most talented people because they're also some of the most expensive people.

I've made some of my best hires in the last 24 months because they were people who didn't want to be treated like a unit of production.  I got a major corporate executive into my marketing team who's making a lot less because we go home at 5:30 and they get to see their family.  We don't pay as much for them up front, but they get more on the back end

I think there's three things to invest in and that's real estate, the stock market, and people.

Can you really go home at 5:30 in a small business?

Yesterday I worked 12 hours, but we just don't make it a way of life--it's not a culture.  You have to stop in small business and take care of things--make hay while the sun shines.

How does a small firm attract the caliber of people?

We had to remember our differentiation: we care about you, and we remember your names and your spouse's names.  

We had a generation that was taught to get a degree and a job.  It's a new world, and I think small business has an advantage in that world.  You have to remember that and tell people.

The other thing is that if you're willing to compensate on production, you can really stand out in a small business.  I've got guys who've been here with me seventeen and eighteen years, and they're doing things with me and making money that they never would have made in their entire lives.

Your best recruiting is word of mouth.The vast majority have some kind of connectivity to us. . . our best hires, our most successful hires, the ones that stick the most. It is truly who you know these days--it's not a good old boy thing, but if you're a quality person who knows quality people . . . it could be the wife of your kid's soccer coach.

You talk a lot in the book about recruiting, and making sure you have the right fit.  How do you know? 

When they start talking about the actual functions of their position do they light up.  That's how you want them thinking about it. What is it that makes you come alive--that's who we want in that seat on the bus.  For example, one of the ladies on our youth resources team had been working at the YMCA with kids.

What about older workers?

I've got a young men who works for me who says you don't need to discover your dreams--you need to recover them.  55 year olds have had dreams--it's just been a while since they talked about them or wrote about them, or those dreams kept them up at night.

I've got a guy here who had a whole life as an attorney who got into a mess, lost his legal license.  He sent me a funny email making fun of  me.  It was really well done!  I hired him to write for us.

How do you get customers?

Inherently, if we're getting ready to start a business, we have an idea who our customers are.  I think we're living in a very special time because you can get to those people with the blog, twitter, Facebook. This is a great time for the Guerilla Marketer.  The days when you used to have to buy expensive TV time and a yellow page ad to get started are gone.

Speaking of which, this book seems like a bit of a shift. Is this a major brand expansion?

Brand central will always be get on a budget and get out of debt.  But in the process of doing that we built a big business, and we wanted to share our playbook. When we do the EntreLeader master series at a resort for a week, I love being there.  These are our pople.

I like to write books where I get a question on the radio, and I don't have an answer for it.  Half of the questions I get, the answer is an income.  But people ask me what business books to read . . . half the business books I read are aimed at the big corporate guy, and not the guy like me, who's got 300 people are less.

You know the Great American Dreams: write a book, write a song

How big is the market for this book? Can anyone start their own business?

I think that anyone who wants to start their own business can, but not any type of business. Owning your own business encompasses a lot of possibilities.  Like the wonderful Mommy-bloggers who are pushing this book for me.  You can decide in what scale and what pace you want to do it. Though I think you have to be very careful in your business to distinguish between a hobby and a business.  A business is something that makes you money.  If you're not making money, it's a hobby.

The second level is that it's making money, but you never make any more than you would have if you were employed by someone else--yet you've got all the pressures of having a business.  That's owning your job, and a lot of small businesses do that.

The third level is where you're working on your business instead of in your business.

Any of them is okay, but you have to understand what it is you're doing.  

Can you explain a little more what that third level looks like?

If you want to build something that lasts, and something that takes less day-to-day input from you to run, then you need to take it to the next level.  I think there's more joy in that--I'm having a lot more fun than I was when I was running around with the books in the trunk of my car, delivering them to bookstores.