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?
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 Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The 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.