Dave Ramsey says: Fund your new business with cash or don’t open at all

Dear Dave,

We’re completely debt-free with a fully-funded emergency fund, and we have $350,000 sitting in the bank from a land sale a couple of months ago. My wife and I would like to buy a chicken farm with two houses and upgrade it to contract standards.

This — plus the stock — would cost around $290,000. I would keep my regular job, and my wife would run the farm. An investor friend of mine said I should finance the entire business purchase. What do you think about this scenario?

— Darryl

Dear Darryl,

Either do the deal with cash, or don’t do it at all. Your investor friend is full of crap, and there’s a good chance he doesn’t have nearly as much money as you do. He’s probably got more bad opinions than dollars.

Now, the pro formas on the kind of thing you’re talking about are incredible. They can make a ton of money, but they’re a lot of work — I mean real, hard work. Some are more high-tech than others, and that can mean a little less work, but someone’s got to be out there every day with their hands on this thing or you’re going to be in trouble.

I don’t know the ideas you have for divvying up the work, but I’m afraid it would just be too much for one-and-a-half people.

I don’t mind you doing the deal, as long as you pay cash for it. But if you’re looking to invest, there’s always real estate — it seems like you’ve done pretty good there — or maybe another small business idea.

Whatever you do, you need to stop listening to your friend about borrowing money. You’re liable to turn what was a blessing into a curse if the two of you go borrow money on a chicken farm.

— Dave

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