Should I Go Into This Partnership?

Summary

Podcast Summary: The Ramsey Show Highlights
Episode: Should I Go Into This Partnership?
Release Date: January 11, 2025

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Introduction

In this episode of The Ramsey Show Highlights, hosted by the Ramsey Network, Tyler, a realtor and property management business owner, seeks advice on whether to enter a 50/50 partnership proposed by his attorney. The discussion delves into the risks and benefits of business partnerships, drawing insights from Dave Ramsey and Ken Coleman, both seasoned experts in business and financial management.

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1. Tyler’s Business and the Partnership Proposal

Timestamp: 00:06

Tyler introduces himself as the head of a realtor business with five agents and a property management division. He explains that his attorney has approached him with a proposition to form a 50/50 partnership. Tyler expresses his hesitation and seeks the listeners' perspectives on the matter.

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2. Concerns About Entering a Partnership

Timestamp: 00:28

When prompted by Ken Coleman, Tyler outlines his primary reservations about the partnership:

“Just risky. You never truly know who you're working with. They could change their mind, you know, down the road or get greedy, get sick. I mean, many different options that could cause hassles in the future.”
– Tyler [00:28]

Tyler fears potential future issues such as changes in the partner's commitment, greed, illness, or other unforeseeable complications that could disrupt the business.

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3. Dave Ramsey’s Stance on Business Partnerships

Timestamp: 00:40

Dave Ramsey shares his firm policy regarding partnerships:

“Our rule is the only ship on sale is a partnership.”
– Dave Ramsey [00:40]

He elaborates that, based on coaching tens of thousands of small businesses, nearly all such partnerships fail to last a decade. Ramsey cites various reasons, both negative and occasionally positive, but maintains that partnerships of this nature are generally unstable.

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4. Understanding the Attorney’s Intentions

Timestamp: 01:18

Tyler provides context about his attorney's background and motivations:

“He's been doing law for 10 years now, and he's just kind of looking to grow another realm, I guess. Kind of the same way I am just kind of wanting to pick things up and do something a little different than we've been doing.”
– Tyler [01:18]

Both Tyler and his attorney seek growth and diversification, prompting the partnership discussion.

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5. Tyler’s Business Strategy and Past Experiences

Timestamp: 02:06

Tyler describes the proposed changes the partnership would bring, including merging businesses, establishing a standalone firm, and opening a new office using the attorney’s existing space. However, he remains focused on growing his main business rather than branching out, emphasizing consistency and stability.

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6. Dave Ramsey Advises Against Ongoing Partnerships

Timestamp: 03:23

Dave Ramsey reiterates his opposition to long-term partnerships:

“I find with the exception of medical practices and law practices, we coach tens of thousands of small businesses through entrepreneurship leadership, and we find almost no partnerships of this type survive 10 years.”
– Dave Ramsey [03:23]

He differentiates between ongoing partnerships and one-off joint ventures with set terms, indicating a willingness to engage in the latter but not in perpetual partnerships.

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7. Ken Coleman on Trusting Principles Over Opportunities

Timestamp: 04:47

Ken Coleman supports Tyler’s cautious approach, emphasizing the importance of adhering to one's principles and values:

“You got to trust your gut. You got to trust your principles and your values. And you lead Tyler with principles and values. And I think you got to listen to those things.”
– Ken Coleman [04:47]

Coleman warns against being swayed by the allure of new opportunities that may not align with one’s core business values and long-term stability.

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8. The Value of Execution Over Ideas

Timestamp: 05:40

Dave Ramsey discusses the prevalence of ideas versus the scarcity of execution:

“Ideas are a dime a dozen. People who can actually get crap done. Those are hard to find.”
– Dave Ramsey [05:40]

He emphasizes that while ideas are plentiful, the real challenge lies in effectively executing them. Ramsey discourages entering partnerships solely based on attractive ideas without a solid execution plan.

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9. Final Thoughts and Recommendations

Throughout the conversation, both Dave Ramsey and Ken Coleman advocate for maintaining control over one’s business and avoiding the inherent risks of partnerships. They suggest focusing on strengthening existing operations instead of diversifying into uncertain ventures. Tyler is encouraged to trust his instincts and prioritize the stability and growth of his primary business.

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Conclusion

In "Should I Go Into This Partnership?", Tyler receives valuable advice underscoring the potential pitfalls of business partnerships. Dave Ramsey and Ken Coleman collectively advise against entering a 50/50 partnership without clear, binding terms, highlighting the importance of safeguarding one’s business through autonomy and principled decision-making. For entrepreneurs considering similar moves, this episode serves as a cautionary tale to weigh the risks carefully and prioritize long-term business health over immediate opportunities.

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Notable Quotes with Timestamps

• Tyler on Partnership Risks:
  “Just risky. You never truly know who you're working with. They could change their mind, you know, down the road or get greedy, get sick. I mean, many different options that could cause hassles in the future.”
  – Tyler [00:28]

• Dave Ramsey’s Partnership Rule:
  “Our rule is the only ship on sale is a partnership.”
  – Dave Ramsey [00:40]

• Ken Coleman on Trusting Principles:
  “You got to trust your gut. You got to trust your principles and your values. And you lead Tyler with principles and values. And I think you got to listen to those things.”
  – Ken Coleman [04:47]

• Dave Ramsey on Ideas vs. Execution:
  “Ideas are a dime a dozen. People who can actually get crap done. Those are hard to find.”
  – Dave Ramsey [05:40]

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This detailed summary captures the essence of the episode, providing listeners with comprehensive insights into the discussion on business partnerships and the prudent considerations entrepreneurs should make before entering such agreements.

Transcript

[Dave Ramsey]

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[Tyler]

So I run a realtor business with five agents and property management as well. And my attorney approached me about potentially partnering 50, 50 on it, and I've been against that since I've got started for many reasons, but just kind of wanted to run it by y'all and see what y'all thought.

[Ken Coleman]

Give us your top couple of reasons why you didn't want to do it.

[Tyler]

Just risky. You never truly know who you're working with. They could change their mind, you know, down the road or get greedy, get sick. I mean, many different options that could cause hassles in the future.

[Dave Ramsey]

Our rule is the only ship on sale is a partnership.

[Tyler]

Yeah.

[Dave Ramsey]

So I find with the exception of medical practices and law practices, we coach tens of thousands of small businesses through entree leadership, and we find almost no partnerships of this type survive 10 years. They don't make it 10 years because of a lot of different things that you just described. Sometimes it's not negative things, even. Sometimes it's a positive thing. But why would your attorney Want to buy 50% of your business?

[Tyler]

He's been doing law for 10 years now, and he's just kind of looking to grow another realm, I guess, Kind of the same way I am just kind of wanting to pick things up and do something a little different than we've been doing.

[Dave Ramsey]

I'm sorry. Same thing. You're. You're wanting to do something different.

[Tyler]

Well, I've just. Yeah. Every. Every couple years, I kind of get bored, is the best way I can say it. And I look to start something else. And I've done that last couple years and has been a great decision. So I thought this time I'd just kind of try to grow my main business instead of trying to branch out into other things.

[Dave Ramsey]

Yeah. Staying in your lane is a good thing. Yeah. Okay.

[Ken Coleman]

How would it change? Is he. How would it change? Have you guys talked about the details of what it would look like if he came in?

[Tyler]

Yeah, I've been. I've been working with it for about four years, but he's got a lot of, you know, obviously, contacts, other. Other lawyers and stuff like that in the area that he's merged his business with. And my main business is investors, and he knows a lot of them. He closes business deals and everything, as well as regular real estate. So we would. We'd be looking to separate ourselves from the overhead brokerage, kind of make the firm. It's, you know, a standalone thing, get an office going Because I don't have a brick and mortar office yet. And he has one kind of available and then just kind of merge into that. He would help with the laws.

[Dave Ramsey]

I mean, you don't have a brick and mortar for this other thing. You have one for your real estate office?

[Tyler]

No, I don't have one because I.

[Dave Ramsey]

Thought you said you had nine agents or five agents.

[Tyler]

I have five. Yeah, we. I opened an office one time and it never really benefited us and. Because I kind of started during COVID is when I got started, and we've just never ran out of a. Out of an office. We've all.

[Dave Ramsey]

In Tennessee. The principal broker has to have a location.

[Tyler]

Well, it's a. Brokered by business, so I have my firm. I'm brokered by an overhead brokerage.

[Dave Ramsey]

Oh, you're not the principal broker.

[Tyler]

I'm a broker in charge of this firm for property management. Yeah, yeah, yeah.

[Dave Ramsey]

Principal broker in most states has to have a physical location. Okay. Hey, hey. Okay. All that doesn't to me is simple. I know I would not go in partnership. I don't do partnerships. I don't mind doing a deal with someone, a singular deal, a one off that has a set into it that's more of a joint venture. And I don't do hardly any of those, but I would do that. But something that is an ongoing thing that does not have a set calendar to its expiration, a term to it, I would not do that. No. If he's got some investors and y'all want to work out some deals, you know, where, you know, he gets a certain amount of legal work, if he keeps spoon feeding you investors and that kind of thing, a legal way to do the transfer on that, that's fine. But no, I don't. You don't need a wife. I mean, that's. That's an attorney. No, no, no. I wouldn't. I wouldn't do it. No, I. I'm. I think you're. You guys are just bored. You need it. You need to back up and say, gosh, how. What can I do to make this thing exciting and go push something out there that's different and that gives you some energy again. But no, I. It's a compliment that he came to you and said it'd be fun to do business with you. I think I like the way you do stuff. But that compliment does not substitute for good sense.

[Ken Coleman]

You just nailed it. I cannot tell you how many times I've taken calls on the Ken Coleman show like this where someone feels like they are Less than. If they don't take some opportunity that in their heart they don't want to take. But because it's an opportunity, what happens is the brain feels great. There's an endorphin release from being wanted. Right. Or from being approached on this. And so you feel like, oh, common sense says I'd be an idiot to walk away from this. And in all reality, you got to trust your gut. You got to trust your principles and your values. And you led Tyler with principles and values. And I think you got to listen to those things. Those are bedrock things that keep us grounded and keep us from making big, big mistakes. And I think, Dave, you nailed it. I think there's something weird, right, about the psyche when. When somebody wants you to be a part of them or they come to you with an attractive offer.

[Dave Ramsey]

I want you in this deal. And one of the things that has happened to me over the years running Ramsey is people come in with ideas.

[Ken Coleman]

Sure.

[Dave Ramsey]

Hey, I want to share this idea with you and see if you want to work on this idea. And you know, I don't. I just don't. You know, one guy was, you know, he's like, well, this is the best idea since sliced bread. You need to sign an NDA so I can tell you about it. You sign a non disclosure agreement so I can expose this wonderful idea to you. And I said, please don't tell me anymore because, dude, I get ideas in here like shovelfuls every day. Ideas are a dime a dozen. People who can actually get crap done. Those are hard to find ideas. Not hard to find. They're everywhere. People that execute and follow through with excellence and energy and enthusiasm. And that, those are. Those are a rare gem. You bring me one of those, I'll sign an NDA. But. But I don't need. Because please don't tell me your idea because we might have already had the idea. And then you'll think I stole it from you. Because they're that easy. The ideas are just everywhere. When you're entrepreneurial. I mean, I'm somewhat add. I guess it's undiagnosed. When I was a child, they called it hyperactive. But yeah, Dave talks too much on all my report cards now I make a living doing it. But there you go. So my. Much to grade school teacher chagrin. But the. But yeah. So ideas are everywhere. I mean, squirrel, there's another idea. You know, you. Boom, they're everywhere. So. But people that can do them or not. And that's the same. It's the same category here of the affirmation of. Oh, I brought you an idea. Oh, thank you. I'm worthy of your idea. Thank you. But then I quickly figured out, no, no, I don't need to add. No, no, no. That's a nightmare.

[Ken Coleman]

So true. You know, it's because of the law.

[Dave Ramsey]

I tell people to eat beans and rice. Rice and beans?

[Tyler]

Yeah.

[Dave Ramsey]

Would you believe that to date we've had over 1,000. Over 1,000 people propose that I co author a book with them, of course, of beans and rice. Rice and beans recipes.

[Ken Coleman]

Yeah. It's a great idea.

[Dave Ramsey]

Because they didn't understand it was a metaphor. Yeah. I didn't literally mean everyone should actually eat.

[Ken Coleman]

I thought you were going to tell me people pitched you on having your own rice brand or beans.

[Dave Ramsey]

Oh, that too.

[Ken Coleman]

I'm sure that's that too.

[Dave Ramsey]

Yeah. Uncle Ben's got the market. He's got the market. Create your free every dollar budget today. The simplest way to budget for your life.