Dave Ramsey says: Side project with family is OK, but skip partnership
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 nonfamily 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.
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