Financial radio host Dave Ramsey regularly discusses finances on his show. He frequently helps people navigate debt, offers suggestions on how to save and invest money, and provides personalized insights.
However, he also gets calls from business owners who need help with turning their dreams into realities. One of those callers came on "The Ramsey Show." He's ready to get into debt with a fishing lodge business despite having zero experience, and Ramsey gave him the hard truth.
"You have no freaking idea what you're getting into," Ramsey said.
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Ramsey proceeded to explain why it's not a good idea for the 28-year-old Chicagoan to start a fishing lodge in Canada.
Analyzing The Finances
The 28-year-old is married with three little children and earns $90,000 per year at a construction job that he doesn't like. He mentioned that he can probably gather up to $100,000 for the down payment between him, his wife, and his parents if he borrows money that he promises to pay back later.
The cheapest fishing lodge costs $250,000, but some of these lodges cost millions of dollars. A $100,000 down payment won't give him much mileage, and that's assuming he can actually raise the entire $100,000.
A $90,000 income in Chicago with a family of three kids suggests that he's living paycheck to paycheck. If that's the case, a Canadian fishing lodge is not financially viable at this stage, especially with a low down payment. The caller may benefit more from finding a higher-paying construction job or getting into a different industry that offers better pay and work conditions.
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Zero Business Knowledge Is A Red Flag
Ramsey has done a lot of these types of calls where a person in their late 20s thinks about starting a business without any business experience. He mentioned that in the call, while guessing the caller's age and coming pretty close.
He proceeded to explain that starting a fishing lodge is 90% business and 10% fishing. The caller rationalized that he's good at fishing, hunting, and construction, but that doesn't mean he will be a good business owner.
Ramsey suggested that the Chicagoan work at a fishing lodge before starting a fishing lodge business. He even mentioned that the 28-year-old can try to reach an agreement where he works at a fishing lodge for a year to understand the numbers and how the business works.
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Ramsey's Three Business Rules
Ramsey also mentioned that there are three business rules that are important for the caller to keep in mind. Projects take twice as long as you think, cost twice as much as you think, and you are not the exception.
Ramsey mentioned that those three business rules still apply to him despite his experience. It's a hard truth, but acknowledging these three business rules can shift someone away from fantasy language and get them back to reality language.
While it's good to be entrepreneurial, you don't want to go into an industry without doing your research, knowing how a business works, and calculating the risk. Ramsey opted to provide valuable advice instead of just shooting down the idea.
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