On Business, Dave Says Don't Go All In

Townhall.com ^ | February 2, 2012 | Dave Ramsey

[Altariel]

Dear Dave,

My husband hates his dead-end job and is talking about cashing out his 401(k) to open a franchise of his own. Does this sound like a wise move to you?

Tiffany

Dear Tiffany,

Everyone wants to live their dream, but you never want that dream to become a nightmare. One definition of a nightmare in business is “going all in.” Playing cards, this means you bet everything on a single hand. You never go “all in,” especially when it comes to small business. The right question is this: How can he live his dream without going all in?

This entire situation is a trap. If it doesn’t work, you guys have lost your savings, and bankruptcy becomes a real possibility. Opening a business just because you’re angry at “the man” and want your own business is not a good plan. He needs to find something he truly loves doing with all his heart and soul, because to have any chance of success he’ll need to live and breathe that business day and night.

Help him think about the things he could do every day that would make him smile. Once he figures that out, the next step is how to open that business without putting your entire financial world in danger. In other words, how can we start small with the money we have, instead of blowing our savings or taking out an SBA loan. If you have some cash other than your emergency fund or retirement fund, it’s okay to use some of that. But never, ever, go into debt to start a business or pledge every dime you have to something that could be a total screw-up.

It’s not an either/or proposition, Tiffany. He doesn’t have to risk it all to get away from a job he hates or to live his dream!

—Dave

Dear Dave,

I own a small company in San Antonio, and some of my employees have to go out on the road. I’d rather not give them company credit cards or debit cards. How should I handle this?

Brian

Dear Brian,

If traveling is rare for your team, I’d just send them out with petty cash. Have them check with accounting for enough money to cover their expenses, then turn in the balance—with receipts to explain how the rest of the cash was spent—when they get back. If there’s a discrepancy, they should make up the difference out of their own pockets.

Sometimes, like when we put on a live event and have several team members traveling, the total amount of petty cash we send out can be pretty wild. Still, I’m perfectly comfortable with the situation. If you can’t trust someone with a few hundred dollars, then you shouldn’t send them out representing your name or your company.

Now, if someone on your team is a real road warrior, I can see giving them a company debit card for the sake of convenience. But otherwise, I wouldn’t want all those numbers and all that exposure floating around. Just use petty cash, and receipt it back.

—Dave

Dear Dave,

My father-in-law owns a fairly successful dental practice. After reading EntreLeadership, though, I see that he could stand to implement some of your principles. What’s your advice for approaching him about this?

Alan

Dear Alan,

I think the first thing is to make sure you don’t point out what you feel is wrong with his business. That will put him on the defensive, for sure. Maybe you could tell him that you just read this great business book, and you think he’d love it too.

If my son-in-law brought me a book and told me that it rocked his world and he thought I’d really like it, chances are I’d pick up a copy and check it out. He wouldn’t need to take a chance of making me angry by telling me I’m terrible at business and some book would suddenly make me a wonderful businessman.

My advice is to keep it light and simple. There’s no guarantee he’ll read it, no matter what you say. But whether it’s a book or even a movie, there’s probably a better chance someone will listen to you if you talk about how great it is rather than beating them up or trying to force it down their throat.

—Dave

* For more financial help, please visit daveramsey.com.

[humblegunner]

Dave says.. were you ignorant before he “told” you something?