Dave Says: Funding a new business

Funding a new business

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

Micro investing apps?

Dear Dave,

What is your opinion on micro investing apps?

— Tammy

Dear Tammy,

Honestly, I’m not a big fan of micro investing apps. As you probably know, the word “micro” means small. So why would you want to mess with something like that? Are you going to have a micro retirement? Do you want to be micro wealthy? I don’t. I want to be really wealthy with a big retirement and a big life full of outrageous giving.

It’s fine if you want to give micro investing apps a try. I’m not going to be mad at you or anything like that. But these things function kind of like deals where the marketers say you get 1 percent back. It’s like credit cards, where silly people spend $100,000 in order to get $1,000 in brownie points.

You’ve got to do more than micro, because micro means what it says — small. I guess you could argue that at least you’re doing something, but if that’s your only plan you should prepare to be pretty hungry during retirement.

When it comes to investing, why not go big? Go big or go home!

— Dave

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 12 million listeners each week on 575 radio stations and multiple digital platforms.


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