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 Iâm a chief financial officer with a CPA background. Plus, I had a lot of construction experience as a young man. I know youâre not a big fan of business partnerships, but how do you feel about a family business like this?
Going into business with family isnât my big concern here. Iâve said many times that partnerships are the only ships that wonât sail and Iâm 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.
Hereâs 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, thereâs nothing inherently wrong with the family part of the equation. Itâs the partnership aspect Iâd stay away from.
We just helped move our son into a cheap, off-campus apartment a few blocks from where he is attending college. We signed the agreement and are paying the rent, because he makes very good grades. Do you think renterâs insurance is a smart buy? Itâs less than a month, but the minimum coverage I can get is ,000, and he probably has less than ,000 worth of belongings there.
Iâd get renterâs insurance . My guess is it also comes with five or six figures in personal liability coverage, as well. Thatâs in case heâs out on the patio with his buddies, someone slips and falls, and they decide to sue because daddyâs on the lease.
In a case like this, because thereâs so little to start with, itâs not theft or fire taking the contents of the apartment that youâre worried about. Itâs the liability portion of the coverage that makes it worth every penny of what youâd be paying. That alone makes it worth to a month just to make sure a slip-and-fall doesnât mess with your life.
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 14 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 .