Dave Says: The partnership, not the family, is the problem

Dear Dave,

My two brothers-in-law and I have been thinking about going into business together as a side project in the real estate world. One of them is an architect and licensed general contractor, one has a successful painting business, and I’m a chief financial officer with a CPA background. Plus, I had a lot of construction experience as a young man. I know you’re not a big fan of business partnerships, but how do you feel about a family business like this?

Dan

Dear Dan,

Going into business with family isn’t my big concern here. I’ve said many times that partnerships are the only ships that won’t sail, and I’m a firm believer in that philosophy. I would encourage you guys to set up a situation where one of you is the owner, then figure out a plan where the other guys get paid off the bottom line—as if they were owners. Trust me, anything with three heads is going to end up being a monster at some point.

Here’s the thing about family businesses. When everyone understands their role and has the best interest of the company in mind, family businesses can be a lot more fun and more successful than non-family businesses. Statistics show the average family business lasts 60 years, while the average publicly-traded company lasts about 15 years.

So, there’s nothing inherently wrong with the family part of the equation. It’s the partnership aspect I’d stay away from.

—Dave

 

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money MakeoverThe Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

Blogs

Regaining Momentum to Finish the Year Strong

Regaining Momentum to Finish the Year Strong

Regaining Momentum to Finish the Year Strong By Christy Wright Can you believe there are only three months left in 2019? It feels like just yesterday I was picking up my boys from their last day of school before summer break. Now, suddenly, we’re in the middle of holidays-are-just-around-the-corner craziness! I think the hardest part…

Dave Says: How much emergency fund?

Dave Says: How much emergency fund?

Dear Dave, I know you talk about having an emergency fund of three to six months of expenses set aside. My husband and I are having a difficult time agreeing on exactly how much we should set aside for emergencies. How do you determine the exact amount? Erin   Dear Erin, The exact you amount…

Dave Says: Understand your investments completely

Dave Says: Understand your investments completely

Dear Dave, I’m new to investing, and recently I began putting money into growth stock mutual funds inside a Roth IRA. On my last statement, it said that my investment had grown. Can you explain how it grew? Matt   Dear Matt, In most cases, you’ll have anywhere from 90 to 200 different company’s stocks…

Here’s why you need a will, and how to get one

Here’s why you need a will, and how to get one

Here’s why you need a will, and how to get one By Chris Hogan We all want to do nice things for our loved ones. We go on family trips and celebrate life’s wins together. It’s sometimes difficult for us to consider the bad things that can happen in life, but we still have to…