Most People Don’t Have the Stomach for This

Introduction:

This week, Paul Downs tells Shawn Busse and Jay Goltz why he isn’t sleeping and why he has stopped paying himself. After having his best year ever in 2024, Paul has seen his inquiries fall precipitously. His backlog of work is dwindling, and he’s concluded he needs to take some painful steps. “I’m coming to the realization,” he tells us, “that I need to do something that involves reducing staff.” Paul’s not sure why his business is off, but he suspects it may have something to do with the chaos in Washington. He also tells us that the big marketing initiative he undertook a couple of years ago, when he decided to try to reach a slightly different target market, has yet to pay off the way he’d hoped. But he hasn’t given up on it. Plus: We also address an increasingly common issue for business owners: What do you do when employees come to work high?

— Loren Feldman

Guests:

Paul Downs is CEO of Paul Downs Cabinetmakers.

Jay Goltz is CEO of The Goltz Group.

Shawn Busse is CEO of Kinesis.

Producer:

Jess Thoubboron is founder of Blank Word.

Full Episode Transcript:

Loren Feldman:
Welcome, Shawn, Paul, and Jay. It’s great to have you here. I want to start with you, Paul. Last year, at the beginning of the year, I asked you if you’d made any New Year’s resolutions, and you had a quick answer. You said your resolution was to make more money—and you did! You had a great year. Did you make any resolutions this year?

Paul Downs:
Yeah, wind the clock back to January 1, 2024. [Laughter] Because it is a startling, startling change in what’s happening in my business. The air started to come out of the balloon, coincidentally, in early November, last fall, but we had already exceeded all of our sales targets and had a healthy backlog. So I wasn’t really focusing on the complete collapse in sales in November and December, because there’s always a slowdown in those months, but the magnitude of it was different. And then when January rolled around and nobody was calling us, and we had a fast disappearing backlog, I’m like, “Hmm.”

And now at the end of January, we’ve just racked up our worst sales total since 2015 and the number of calls is down 22.4 percent so far. And last year, we ended up selling $5.7 million, and our projected sales this year, based on one month, are $2.6 million. That is a 53-percent decline.

So I made some money last year. I have not paid myself yet this year, and I don’t think I’m going to be. And we’re contemplating a trimming of our capacity—our production capacity—to match something more like a $4 million year, which I think we’d be kind of lucky to get to at this point. And of course, when you say “trim production capacity,” what you’re talking about is, you don’t just take the machines and put them in the parking lot. You’ve got to get rid of the people. And so it’s a very, very distressing place to be. I feel like I’ve been in this business so long. I’m old. Coming off the best year we ever had and the most money I ever made is just brutal. So, “Why?,” you’re asking.

Loren Feldman:
First, Paul, I think it’s worth pointing out, you’ve told us numerous times that one thing you’ve learned is that the way you start a year tends to be the way the whole year goes. That continues to be your assumption, I assume.

Paul Downs:
Well, you can make a better guess by the end of March. I would say the first two months give you an indication. Now, there have been many years when January did not attain the average we ended up with over the year. But this is way worse. So, there. Those are facts. Now we could start pulling out the opinions. Does anybody want to hazard a guess as to what it is?

Jay Goltz:
I mean, is there something that could be wrong with the website, with the links or something? Everything seems to be working fine?

Paul Downs:
No. Everything else—believe me, that’s the first thing I looked at.

Jay Goltz:
I know. I hate to ask. I figured you checked that, but it just makes no sense to me.

Paul Downs:
Well, yeah, I checked the website. We’re getting pretty much as much traffic as we ever do, and the number of calls in the first two weeks was down by about 60 percent. But this last week and this week so far have been okay, in terms of the number of calls. But what we’re missing is: Are the quality of calls good? And it’s hard to know until you’ve either closed or not closed a deal. But I’ll give you another anec-data point here, which is, I just got off the phone with a client who we’ve been working for since last May, who is contemplating a complete new boardroom for a historic hotel and then called me and said, “You know, we’ve been thinking about it, and all we’re going to do is change out one feature on the existing tables we have, so if you can send a quote for that.” So that turns a $50,000 job into a $5,000 job.

And I will jump in and say that my feeling is that in all the other recessions I’ve been through—and I guess the first one was 1987—there was always a precipitating event, like some bad thing happened. In 1987, it was a flash stock market crash, and then there’ve been others since then. You know, 2008, Lehman goes broke. And it’s not so much the thing that happens, it’s the reaction of everybody to what happens. So if people are confident that they can ride out whatever blip it is, then things tend to go okay. And if people are rattled, and everybody’s like, “Clutch, I gotta pull back. I’m not going to do this thing that I was thinking of,” then it becomes a disaster.

So, that’s what it’s looking like to me. But it’s possible that there’s some large group of people who are absolutely delighted with all of the craziness coming out of Washington who are just like, “Damn, Trump’s finally kicking ass and taking names, and I’m going to go out and buy a conference table.” So we’ll see, but I’m not happy with it. I’m not happy with how it started. Let’s say that.

Jay Goltz:
Listen, half the population voted for him, half didn’t. It’s possible the half that didn’t, between tariffs and the immigration stuff, people are freaking out about what’s going to happen with business, because the tariff thing, anyone who understands business at all knows that if these tariffs went through, all it’s going to do is drive tremendous inflation and just all kinds of issues. Maybe people are just freaking out and waiting to see if the dust settles.

Paul Downs:
I’m pretty sure that half the country is freaking out. Now, we do business with everybody. And the thing that made me clutch my heart most last week was that idea of stopping all the federal money until you can figure out whether you want to do the DEI or whatever they’re planning to do with it. Like the idea of simply stopping the flow of federal dollars? That got everybody’s attention, I hope, because it’s so outlandishly stupid that no matter which side of the divide you were on, you were probably like, “Hold it.”

We do a lot of business with small municipalities, school boards, police stations, military units, people all over the country. And behind a lot of those projects, we know for a fact there’s federal dollars, that someone says, “Oh yeah, we got a grant to upgrade our emergency center or whatever, and now we need a new table for it.” So when he did that, I was like, “Oh my god, are you kidding me?” And because it’s not just, you know, like, “Okay, conference tables. Do you really need them?” No.

But that’s just stopping the flow of money for millions and millions of people, and in a way that seemed to be calculated to cause the maximum amount of disruption and fear. In other words, saying, “We’ll stop it and then we’ll sort it out”—as opposed to, “We’re going to take a look at this, and we may stop some of it.” So I’m pretty unhappy with the way things are going, but I’m hoping that we can just ride it out. I’ve been through some bad years before, and I’m in a much better position going into this than I have been in previous years. So we’ll see. I don’t know, what else do you guys think?

Loren Feldman:
I mean, what you just described is kind of an indirect impact of the cut off of federal dollars, but you’ve done federal government contract work as well, haven’t you?

Paul Downs:
Yeah, absolutely.

Loren Feldman:
Do you have anything going right now? Was a project stopped of yours?

Paul Downs:
No, because that’s not sort of how—well, it’s possible. We’re always dealing with various federal entities that will be like, “Hey, we want a quote.” And then at the last minute, they say, “Oh, we’re not gonna be able to do this. We’ll push it into the next budget year.” Or it just disappears. So it’s possible that my sales people have projects that they’ve heard of that got pulled back. Once we get a contract, it’s a contract. They’re not gonna cancel it once we start doing work, so I’m hopeful that we get paid for all that stuff, that they don’t stop actually paying their bills. But the projects we have on the shop floor are continuing.

Jay Goltz:
I mean, it is possible that things will calm down. And like you said, January usually predicts the year. Maybe not this year. Maybe things will calm down in a few months. And it’s not like you’re a restaurant where you lose the meal, and that’s gone. I mean, people still need or want their conference table, so it was put off. But it might get better in a few months.

Paul Downs:
Well, I hope so. That would be wonderful. I’m kind of preventing myself from being too crazed about it. Because it is just the end of January, and the number of calls is actually starting to pick up. So we’ll see whether people are actually willing to follow through and place orders.

Jay Goltz:
And as far as navigating a downturn, which I certainly have done numerous times, you do have to deal with the reality of: Okay, you could lay a couple people off. Well, by the time you pay unemployment—you end up paying the unemployment ultimately, so it’s not like you’re saving money there. And then it’s hard to find and keep good people. So I totally understand and respect your reluctance to go and lay people off right away. Because you might have an immediate cash thing from it, but you’re going to pay for it in unemployment rates for the next three years. So it’s not like you can turn the spigot on and off that easily.

Loren Feldman:
Where do you stand with that, Paul?

Paul Downs:
I think that paying for the unemployment over three years beats the hell out of running out of cash and going broke. When I think about that, I’m not so focused on the amount of money we save. What we’re doing is, yes, you’re saving some money in the salaries, but the main thing is you’re slowing down the rate at which the machine eats through all of your resources. And if you’re selling at a $4 million a year pace, ideally, you have a factory that’s set up to produce $4 million profitably. And last year, for much of the year, we were running at a $7 million pace, and so I had to add people. I had to add capacity. And so now we’ve got all this capacity. And now that the sales are not there, we’re eating our seed corn super fast. In other words, we’re eating through the backlog.

So what I would prefer to do would be to dial back on the number of people, and it’ll be the same number of people we had four years ago. So it’s not like it’s the end of the world, but what happens then is we slow down our production rate, and we have a little more runway to ride through a couple of weeks of lower, slower sales. And the tough thing is, you have to do it as soon as you can see it, because otherwise, if you get to the point where you’ve run out of work, then that’s a really, really bad thing. And you run through all your cash almost immediately then.

Loren Feldman:
Have you started that process, Paul?

Paul Downs:
I’m starting it now, yeah. I mean, by the time this gets out and is broadcast, I will have made some trimming already, because we have a process, too, where the jobs go through several different steps. And so think of it as like the hopper at the top, and then it feeds down and feeds down. The hopper is emptying out at the top, but the shop floor can still be busy because we have work to do. But I need to trim down the capacity at the earlier steps, because that just doesn’t help anybody to have excess capacity there.

Loren Feldman:
Do you think your employees see it coming?

Paul Downs:
No, because we finished last year on a high note. It was the best year ever, best sales ever, profits, big bonuses, and cool projects, and everybody was great. And I was kind of lulled into, what could go wrong? And then the change after the new year is so startling. It started with just many, many fewer people calling us in the first two weeks than they normally would.

And we keep track of every week of every year for the past 10 years. Like, how many calls did we get that week? And we’re back down, as I said, to below 2015 levels, and for the first two weeks, it was the lowest number of calls we ever got. Now, we had a resurgence in calls to being sort of a normal number last week, and it looks like we’re on our way to a decent number this week. But the whole process of designing and selling from phone call to whenever takes months. So I need more than two good weeks of calls in order to refill our production hopper. It’s going to take several months to do it.

Jay Goltz:
You’ve just described what being in business is. You’ve got one foot on the gas, and you’ve got one foot on the brake, and you’re trying to balance out. I feel your pain because I’ve been there. It’s difficult to navigate that. And I do think this is an unusual year, so I won’t be surprised if, in a month, you say things are much better.

Paul Downs:
So that could certainly happen. But it’s not so much me. You know, like I’m old, I’ve been through it. I just feel bad for the people I’m going to have to lay off, honestly. That’s just a terrible, terrible thing to do to somebody, and they will be blindsided by it.

Shawn Busse:
I’m really interested in the question: In the past, could you correlate your traffic to revenue?

Paul Downs:
Yeah.

Shawn Busse:
And so those two things have diverged?

Paul Downs:
Well, I can correlate my traffic to revenue, to a certain extent. The problem is that the top three large jobs in my year—we did something like 170 contracts last year. And the three biggest ones account for 15 percent of the business. So if you lose smaller ones, it’s kind of a drag, but it’s not the end of the world. But if you don’t have a couple of big ones, then that’s really bad.

In the last three years, we’ve gotten somewhere between 1,200 and 1,300 calls. In 2022, it was $5.1 million in sales; 2023, it was $4.1 million in sales; and 2024, it was $5.7 million in sales. Same number of calls. So it’s not just the amount of traffic. It’s like, well, what were some of those calls? And if somebody’s feeling spendy at Lockheed Martin or at Southern Command, that can really move our needle. And that’s the difference between a $4 million year and a $5.7, given the same number of incoming traffic.

Shawn Busse:
So what about the B2B efforts that you’ve been engaged in? Have you seen any sort of impact of that? Or is that influencing the situation at all?

Paul Downs:
The short answer is no. And the medium answer is that the target market we were going after—the architects and interior designers—was never going to be something that produced immediate results, because we’re selling a product that, basically, you need to be delivered three days before the building opens. And the architects and designers are doing their work two and a half to four years before that. So that was always a long-term play. And I’ve gotta say, I’m not blown away by the results so far—

Loren Feldman:
Paul, can I stop you there? I really want to dig into that, but I want to set it up for people who don’t remember the conversations we had when you were going through that. But before you do that, I just want to check on one thing, which is, I’m curious what kind of year it’s starting out as for both Shawn and Jay. Are you having a tough time as well? What are you guys seeing?

Jay Goltz:
Mine is not great—not off 50 percent, but a little slower. I looked at my numbers from last year. The election clearly was disruptive to business. November was way down, and I’m still waiting to get to the end of the month, but it’s not great. All I can say is that it’s not great. It’s not horrendous, but it’s not great.

Loren Feldman:
Shawn?

Shawn Busse:
Yeah, kind of like Jay. I think that the election year was really disruptive for us. Just a lot of people hesitating until the election happened. And then after the election happened, we had actually a pretty decent uptick in inquiries and people taking action. And then, I would say it’s off to an okay start. Not super strong, but okay. You know, the jury’s still out.

Jay Goltz:
I’ve been through seven recessions. This is not a recession. It’s like, you listen to the news, everything’s great, all these computer companies making gazillions of dollars. And like, you talk to small business people, I don’t think it’s party time. So I’m not sure that any of us fully understand the dynamics of what’s going on with stuff.

Shawn Busse:
And the thing I noticed the other day is that even though the unemployment rate is low, the hiring velocity has slowed down dramatically. And that has some real consequences. I think the market has really shifted from being an employee market to more of an employer market. And you’re seeing that really in the tech sector. I mean, they’re just crushing their employee base. And that has downstream consequences, for sure.

Loren Feldman:
Let’s go back to what Paul was talking about before. A couple years ago, Paul, you spent a good bit of time telling us about a big marketing initiative you had that was designed specifically to reach out to architects and designers who you hadn’t really targeted before. In part, it was the hope that you would develop some repeat customers, which you traditionally haven’t had a lot of. And you spent a lot of money. You built a whole second website for it. And I think that’s what Shawn was asking about. You were about to tell us your thoughts on that.

Paul Downs:
Yeah, I think that, just for context, in case anybody doesn’t remember, we get most of our business from Google searches. And so my first thing was: Did Google somehow change their algorithm and isolate us? And we just don’t see that. So if you get business from Google searches, it’s a blessing and a curse. The good thing is, you get a chance to interact with everybody who does a Google search for a conference table, in our case, and so we’re able to access clients in places that the normal distribution channels for furniture would be very difficult for us to to reach them. The downside is that you’re really at the mercy of that traffic.

And so, knowing that many of the people we could be selling to use an architect or an interior designer to help choose their furniture, we made a conscious effort to try to reach into that community and develop relationships that would hopefully bring us an ongoing series of projects, whatever that architect was working on. And so that was the plan. The cost of it has been, I would say, moderate compared to other marketing things I’ve done. I mean, I’ve spent up to $12,000 a month on AdWords, and this cost nothing like that. So I’ve spent maybe 100 grand total on the whole thing so far.

Loren Feldman:
Including the new website?

Paul Downs:
Including the new website. And I’m not at all sorry. I mean, that’s probably the best thing we did in that effort, was put up a really nice looking website that we do use to communicate to that segment of the market, because they have a different aesthetic sense, a different set of problems, than the people who are Google-searching us. So we have two websites, and I’m not sorry about that at all.

We reached out to get repeat business from architects and designers, and meanwhile, we started getting repeat business from a different segment of the market, which is private contractors who maintain relationships with military units. And that’s turned into our best repeat clientele, and they’re just harder to figure out how to market to, because there’s not an easy way to find them, even. But there’s a million ex-military people who go out and set up a little consultancy business, and then basically start selling things to their buddies who are still in the service. And that’s been very lucrative for us. We’ve gotten a lot of good projects from having relationships with—we’ve got four firms right now that we just do over and over.

Jay Goltz:
You know, when you came up with this plan—and I’m in a similar business. I sell to both. Most of my business is retail, but I’ve certainly sold a lot of designers. That whole thing made perfect sense to me. I think one thing that has changed is the office market is just in the toilet. I mean, there’s buildings in Chicago, it’s unbelievable. They’re selling buildings in Chicago for like 20 cents on the dollar. They don’t have enough tenants in there, so I’m sure that has affected—and then I keep getting from a surplus place that sells nice office furniture, every week I get another email from them. So I think there’s a glut of office furniture out there on the market, and there’s less people going to offices. And I’m sure that has hurt that whole segment.

Paul Downs:
It wouldn’t surprise me if such a thing could be proven, if that was it. It’s really hard to know. Again, five projects moved the needle for me by 25 percent of my yearly revenues. So it’s really about: When are the big ones coming? And usually, we start off a year, and I was like, “Well, we don’t know what the big ones are going to be, but there’s going to be four or five of them.” And we just know that.

Jay Goltz:
I would say this, though: I’m pretty confident that this year in particular, whatever you’ve done in the past, I don’t believe you can take January and extrapolate. I’m not saying it’ll be great this year. I’m guessing it’s going to get better.

Shawn Busse:
His problems started back in November, right Paul?

Jay Goltz:
But that’s when the election happened. It’s all election-related, is my point.

Paul Downs:
I mean, what are you going to do? I’m going to be in business next year. That’s my intention. I guess—to loop back all the way to the beginning—that’s my resolution this year. I’m going to be open next year, and I’m going to do what I need to to get across a difficult patch that’s coming up for us.

Shawn Busse:
Reid Hoffman put his finger on this before the election. He said, “Business owners ought to really think hard before they get behind Trump, because he’s an agent of chaos,” and this is what we’re seeing. I mean that removing the federal payments thing, even for one news cycle, was just madness. And I think it’s just going to be really tough to navigate the next couple of years because of the desire to be in the news cycle.

Paul Downs:
Well, that’s what I’m saying. It’s that if people lose confidence that the future is going to be okay, I mean, you add in all the other stuff. Like, “Hey, AI is going to take your job. And your kids don’t learn to read anymore because they’re on TikTok.” I’m old man shouting at the clouds here, but there’s actually a pretty large group of alarming things on the horizon that it’s hard to think, “You know, everything will be fine. None of this stuff’s going to matter.”

Jay Goltz:
Can we stop now? Because I’m starting to get depressed. [Laughter]

Paul Downs:
Yeah, sorry. Hate to be that guy.

Jay Goltz:
Have we ever lived in a time where people you know, say, “Yeah, I’m not watching the news anymore.” That’s never happened, ever. So we’re in an unusual time right now.

Loren Feldman:
Paul, I want to tie up the whole marketing initiative thing. Looking back on that, it’s not entirely clear to me: Do you think it was a mistake? Would you do it again? Did you learn anything from it?

Paul Downs:
Was it a mistake? No. Because you have to market, you have to try things, and they’re not all going to work. And so, no. It made sense. Jay told me that it made sense to him when I rolled it out. It made sense to me when it rolled out. I still think it made sense.

Shawn Busse:
I think it’s great. I think it’s great. Absolutely.

Jay Goltz:
I would call a mistake something that you should have known something different. That whole thing made perfect sense. So I can’t say it was a mistake.

Loren Feldman:
But are you saying—it sounds like you’re saying you’ve concluded it was a failure and that it was worth trying. Are you saying that?

Paul Downs:
I would say that there’s a difference between, “It’s not producing the results I hoped for,” and a failure. And I think that it’s way too early to call it a failure, because, as I said, the sales cycle in these kinds of projects is literally years. And so, if you’re going to take a run at this market, you’ve just got to grit your teeth one day with the understanding it may be years. Years or never, one or the other. And I haven’t really come to the conclusion that it’s going to be never. I mean, I’ve got to put maybe $35,000 or $40,000 into it this year, which is not a huge amount in the context of everything I spend. So I’m going to keep going, and we’ll see what happens.

Loren Feldman:
What has it meant for you that you’ve had to keep up two websites? I mean, the first one had the advantage of being early in the internet game, and you developed SEO. You’ve told us how you were discovered by Google many years ago. It’s a lot harder now to establish a website and develop that. How have you approached that?

Paul Downs:
Well, I’m not interested in trying to win the Google war at the second site, so that makes it much simpler. All I want to do is have basically a catalog online that’s more aimed at that particular target audience. We’re not doing ecommerce on either site, and so it’s a pretty good experiment, in a way, of what happens when you just roll out a site that’s got all the content and demonstrates a company that has a lot of experience. But we just put it up there without any expectation that there was going to be much traffic on it. I didn’t do it to try to win the web wars. And my other site has continued to be a steady producer.

And it’s something that I tell people when they ask me about, “Hey, I’m starting a business and I want to put up a website. And should I use AdWords? Or should I do this, or should I do that?” My answer is always: Most of the people who own those top positions for whatever search or business you’re in were two things: One, they were incredibly lucky, or two, they were there a long time ago, and they were incredibly lucky then. Because the secret of the web, as far as I understand, is that once you’re in those top positions, it’s very hard to dislodge you—unless you actively screw it up.

And so, Google now considers me to be the place to go for custom conference tables, and there’s other people who make a run at it. But why would they dislodge me if I’m actually delivering a good user experience and people seem to be on site? Why would you just shut it down for some newbie who’s 20 pages back? That doesn’t make any sense. So incumbency, I think, has a huge effect on success on the web. Now, we’ve never really put ourselves into any of the other platforms, like an Instagram or a TicTac or whatever, the new thing will be.

Loren Feldman:
TikTok. [Laughter]

Paul Downs:
TikTok. So people go onto these new platforms, and some of them are the early winners there. And so they’ve got a position to defend. But I think that those highly algorithmic things that are based on trying to entertain people are more open to new entrants and sort of wild-card successes than just straight out Google searches. Shawn, it’d be interesting to hear your opinion on that.

Shawn Busse:
They’ve been disrupted by TikTok, meaning that, for a while there, it was a legit strategy to build a platform on these social channels. And you became kind of a follower model, and you were rewarded for that. And then TikTok came along and said, “Actually, we’re gonna feed you constant interruption to keep you hooked under the system.” And so now all those social platforms are being disrupted, so it’s a real challenge for folks who relied on the social channels versus Google, which has been a little bit more stable, for sure.

Jay Goltz:
Paul, here’s why you should sleep at night, two reasons: One, companies still want beautifully made conference tables. That’s a fact. That’s going to continue to be that way. And two, as you know better than anyone, what you do is not easy. So I do believe you’ve got a solid footing and a great niche. And I’m in a similar situation. We’ve just got to get through this year.

Paul Downs:
Well, thank you for saying that, Jay. I mean, I believe that, too. And I think that part of the thing is, this is like one of those western wildfires that works the way they should, where it burns out all the underbrush and then the solid trees keep growing. And I’m hoping that if we are heading for a bad year in our industry, it kills all my competitors for good, first. [Laughter]

Jay Goltz:
We’re no socialists on this show.

Paul Downs:
No, that’s their problem. And so if we’re the last guys standing a year from now, that will be fantastic.

Jay Goltz:
I just came back from the national picture framing show, once a year. And I’ve got to tell you, I did two speeches there, and I tell everyone: There’s less people framing pictures, but at the end of the day, a beautifully framed, custom-framed picture is fabulous, and there’s still people who want to buy that. And I’m confident our industry might have shrunk for various reasons, but it’s stabilized, because there are people that want nice things. So whether it’s a conference table or a beautifully framed picture, they want it, and they’ll pay the price, whatever it costs, because it’s worth it.

Loren Feldman:
Jay, I think you also told them that some of them probably shouldn’t be in business. [Laughter]

Jay Goltz:
I had two classes and maybe 75 people in there, and one of them was called “Unleashing the Entrepreneur Within.” Now remember, these are people who own picture-frame shops, so they didn’t necessarily come from a business thing. So I listed out all the things you need to do to be successful in business: location, hiring, unhiring, standards, training, all the good stuff. So I did that for an hour and a quarter, and then at the end, I said, “I have to tell you, I happen to have taken a test. It’s called the DISC test.”

It’s a personality test of how you relate to others, especially in business. So here’s what DISC stands for: D is dominance, I is influence, S is steadiness, and C is compliance. And it tells you your personality type. So for those of you listening who feel like they have a little idea of what I’m about, the dominance one is driving, ambitious, pioneering, determined, competitive, decisive. Okay, what did I get in that? I got a 92. [Laughter]

Shawn Busse:
Shocking!

Jay Goltz:
Okay. All right. Influence: inspiring, magnetic, persuasive, enthusiastic, convincing, poise, optimistic, what did I get in that? Sixty-eight. Okay. Steadiness, relaxed, passive, patient, possession, predictable, possessive. What do you think I got in that?

Paul Downs:
Zero.

Jay Goltz:
Yeah, I figured that. No, I got a 22, okay. And then, lastly, compliance: cautious, careful, exacting, systematic, accurate, open-minded. I got an 18. Not bad. So the point of the story is, there are some people who have the opposite. As we all know, it’s not easy running a business. And some people, you have to have the head for it. Okay, I gave them that part. I gave them the 15 things you need to do. That was pretty simple. But you have to have the heart for it. You have to really want to do this. And I don’t know if I called it passion or having the heart for it, but you have to really want to do it. And the last one, which is the biggest one—which is a problem—you have to have the stomach for this. And most people do not have the stomach for this.

So I said to them: You might be better off running your one- or two-person frame shop and having a nice life, because if you try to grow this and you don’t have the DNA, the wiring, whatever—I suggested to all of them, you might want to take this test. It was very eye-opening. I got a guy that does it. He does some counseling. He explains to you what it all means and how to use it and know thyself.

There’s something to be said for knowing where your head’s at. They always say, as a throwaway, “What keeps you up at night?” That’s literally a problem. There are some things that people could get themselves—they will not sleep at night. I mean, you’ve got to have the stomach for this. So I know for a fact that most of the people in that room are not going to build, whatever, million-dollar-a-year businesses. They’ll be happy running their $250,000 business with no employees.

Loren Feldman:
Paul, are you sleeping at night?

Paul Downs:
I think I sleep for minutes at a time, [Laughter] less this week. No, I’ve not been sleeping. I mean, just picture it. I’m coming to the realization that I need to do something that involves reducing staff. And of course, that’s an incredibly unpleasant thing to do, and you have to, at some point, sit down with this person and say, “You’ve got to go.”

The terrible thing about it is that the impact of that on them is much worse than it’s going to be on me. I’m fixing my business so that it can survive, and I will survive. And I’m throwing them over the side of the boat, because that’s the only thing that can be done. But it doesn’t mean you like seeing them in the water there. It’s a horrible thing, and I’ve done it before. I’m gonna do it again. But it is awful.

Loren Feldman:
Does it get any easier?

Paul Downs:
No, it does not get any easier.

Loren Feldman:
Do you learn anything? Do you get any better at it?

Paul Downs:
Uh, I guess I’ll see in another week. But I think that as long as you have an explanation that actually makes sense, it’s a little bit easier.

Jay Goltz:
I’ll tell you one thing I’ve learned with that. The last thing you should do is tell them how sick you are about it and blah, blah, blah, because it’s almost insulting. They’re the ones who are out of a job now, and they don’t really want to hear about how upset you are, blah, blah, blah. So certainly, we should be sympathetic, empathetic, and say, “Listen, I’m really sorry this has come down to this, but, you know, I’ve got no choice.”

But on the other hand, I just have to tell you—because I am a little older than you are. We’re not killing anybody. I mean, you have to do what you have to do to keep the business afloat. And the point of the story is, you might not be sleeping at night, but you also paired that with, you’re not going out of business. Because that’s what we do.

Paul Downs:
Yeah, I think that that’s a good comment, and it’s definitely worth reminding everybody of that—particularly the saying, “Oh, this is going to hurt me, and more than it hurts you.” No. That’s not true. You don’t want to dwell on, “Oh, this is so hard for me.” No, it just has to happen. It’s just surgery that has to happen. And look at the clown in Washington, if you want someone to blame.

Jay Goltz:
Well, the reality is, though, we provide a nice workplace for people, as long as we can. And he’s got a nice reference. You’ll be happy to help him with that. We treat people nicely, and that’s worth something. So, yes, we have to lay off. In 46 years, very, very little have I had to lay people off. But I have, and the fact of the matter is—it also goes into the formula—while they were there, they had a nice job, and they learned some things, and they’re going to get a good reference. So it’s not like they’re not better off for working for you. That’s the point. They’re better off than they were when they got there. That’s all.

Paul Downs:
I agree. And the last time I had to do a big layoff was 2008, and I was struck by how many people came up afterwards and just thanked me for providing that good workplace experience. They knew that I didn’t do it lightly, and that I didn’t not care that I was taking someone’s job away.

Jay Goltz:
You’ve heard those stories where they email people to lay them off?

Paul Downs:
Oh, that’s awful.

Jay Goltz:
But it happens all the time. And you think: My god, are you such a coward? You can’t sit there with another human being and say, “Listen, I feel bad about this, but”—that’s just disgraceful.

Paul Downs:
Yeah, I mean, big business is terrible, but we’re not big business people. We’re small business owners, and we see our employees eye-to-eye every day. We know what’s going on in their lives. And so it’s more than just the dollars and cents, even though that has to drive the decision. You would have to be a horrible psychopath to not understand what you’re actually doing to somebody. And it’s not like I would have done it just on a whim tomorrow, if I had no reason. No, I want these people to be here. I just can’t support them. So that’s what it comes down to.

Loren Feldman:
We only have a few moments left. I’d like to run one more thing by you. There was an item on the small business subreddit recently, and I’d like to get your reactions to it. It’s from a business owner. I’ll quote: “I manage a team in a physically demanding, high risk job, and lately I’ve had a serious issue: employees coming to work high. This work involves heavy equipment, large machinery, and real safety risks. A mistake could seriously injure someone. The team is decent overall—not rock stars but they get the job done. The problem is, it’s already tough to find people willing to work in our area. So replacing them isn’t easy. I’ve been avoiding drug testing because I don’t want to police what people do after hours. I just need them to show up sober and ready to work. How have other employers tackled this? Zero tolerance policies? Warnings? Something else? What actually works?”

Paul Downs:
I think a lot of it has to do with, first of all, what is the prevailing practice in the industry? So my understanding is roofers, 100-percent are high. And if you work in a kitchen somewhere, chances are pretty good someone’s high right next to you. And then the other thing would be, what are they high on?

So I have two employees who both partake in different drugs. One smokes cigarettes. Perfectly legal, stops and has a smoke break a couple times a day. I’ve smoked cigarettes. They have an effect on you. You’re high, but it’s an effect that is not incompatible with doing work. Another one I happen to know goes out in his truck at lunchtime and gets high on marijuana. And I have noticed this a few times, and I’ve sort of been like, “Hmm.” We have a policy of instant discharge if someone is caught being high, but that is actually discretionary on my part. Like, I know this guy gets high at lunch, but the nature of his job and of his performance, it doesn’t seem to be detrimental to it. So I haven’t made an issue of it, because I don’t necessarily want to fire him.

Jay Goltz:
So he’s not working with a saw or anything?

Paul Downs:
No. But you know, it’s a tough one. But I think a lot of it has to do with what message—I mean, what do you want to accomplish by disciplining somebody for that? I think that, in a way, if employees are hard to find, and they’re doing something particular, that the right move might be to actually acknowledge it—particularly if you’re in a state where it’s legal for people to smoke dope. And so it’s like, well, you can’t hardly blame them for doing it if it’s perfectly legal. It would be more about training around it. That would be my approach.

If I knew that my people were coming in high, that it was legal for them to buy it and do it at home, and we had to accomplish a task, I would be like, “Let’s figure out how to make sure that you’re as safe as you can possibly be, even if you’re high.” Like, what is it that being high does to your judgment? If you were drunk, you would have no judgment anymore, and you’d lose your physical coordination, and we’d know what a problem that is. And no, you don’t want to be doing heavy machinery.

With marijuana, it’s not so obvious to me what the negative effects are. And so I think that maybe the next revolution for industrial training is working while high. You know, let’s figure out how to do it. And because, again, with cigarettes, it’s pretty much the same thing. People can smoke cigarettes all day, and they’re in an altered state. And we’ve decided that that’s fine. Nobody really cares about it.

Jay Goltz:
Wow, that’s all I can say. I’m taking the guy at what he said: dangerous stuff. Yeah, I gotta think about killing people. I really don’t want to be responsible for killing somebody. So the rest of this, “It’s hard to find”—yeah, I don’t want to kill anybody. So if this person is truly operating machinery and could kill someone—this could be far beyond hurting them—then I think drug testing is probably appropriate. The problem with the drug testing is that if they get high at home on the weekends, it’s still in their bloodstream, whereas liquor isn’t like that. So that’s a problem. I don’t know how to work around that one.

Loren Feldman:
Have you ever tried drug testing, Jay?

Jay Goltz:
No, we don’t do it for people unless we think—and it’s almost never happened. But pre-employment drug testing we’ve done. We’re not doing it once they’re here, unless we think there’s a problem, which has almost never happened. And trust me, I’ve had to have conversations. Should we still be doing the pre-drug testing? And you know what, to be honest, I’m not sure we are still doing it, because it is a problem—because it’s in their system.

And according to one of my people, “Oh, everybody gets high.” Okay, that’s an exaggeration, but lots of people are getting high. I got that. But if they’re operating a forklift, a piece of equipment that kills somebody? Boy, I think you gotta worry about killing somebody and stop worrying about, “Oh, it’s hard to find people.” Okay, well, let’s keep someone who might kill someone. That makes sense.

Paul Downs:
Well, people might kill somebody in any state of intoxication: none to complete. What I was trying to say is that the guy should probably just double down on safety training at all times, like really make it a safe culture and acknowledge what the problem is so that he can get some buy-in from his employees.

Jay Goltz:
I don’t know enough—you tell me—how does safety training make up for the fact that someone’s high?

Paul Downs:
I don’t know. But this is the world we’re in. I think someone’s going to have to come up with some. I don’t know the answer to that.

Loren Feldman:
Shawn, I know you don’t have heavy machinery, but it could make a difference if someone were routinely coming to work high. Do you have any kind of policy?

Shawn Busse:
Not really. I mean, you know, the policy is: Are they able to do their job successfully? And if so, I don’t really care what they’re doing off hours. But they’re also not operating forklifts. So I think the world changes once you get equipment involved that is dangerous to either fellow workers, the person themselves, or the public. So I would have a different approach if I ran—I mean, this guy’s saying, “I have a business where people are put in danger.” It seems pretty clear to me, he’s got a problem that he has to deal with.

Jay Goltz:
I mean, Shawn, what’s the worst that can happen with you? Someone comes up with some bad ad copy? [Laughter]

Shawn Busse:
Yeah. I mean, there’s this very low consequence. But if it starts to impact their work product, I’d have to deal with it. But it doesn’t. So I don’t worry about it on my end. But I’m in a lucky position in the type of business I have. It’s not a life safety issue.

Jay Goltz:
I got people driving trucks.

Loren Feldman:
Paul, have you tried drug testing?

Paul Downs:
No, I would not routinely do it.

Jay Goltz:
When you say routinely, does that mean pre-employment or while they’re working there?

Paul Downs:
Either. In our manual, what it says is: If you’re visibly high when you show up, you will be fired on the spot. And if there’s an accident, and we suspect you’re high, we’re going to drug test you at that point. And we just passed 2,198 days without a lost time accident. So whatever I’m doing seems to be working reasonably well. And I also have some hesitation to come down completely draconian when I get high myself. Because I do, usually with edibles, but I don’t show up at work high. But I use.

Jay Goltz:
Do you show up to this podcast high? I want to know. [Laughter]

Shawn Busse:
Depends who else is on the show.

Paul Downs:
I’ll tell you what. You guys tell me, I might be. I might not be. What do you think? [Laughter]

Jay Goltz:
I’m gonna have to gauge that per session. I’m not sure. [Laughter]

Loren Feldman:
I want to thank Shawn Busse, Jay Goltz, and especially Paul Downs. Thanks for sharing, everybody. I appreciate it.

Jay Goltz:
Cool, man.