Wednesday, August 5, 2015

The family business

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Author and radio talk show host Dave Ramsey.
Author and radio talk show host Dave Ramsey.

Dear Dave,

My brothers and I will soon be taking over a 30-year-old company that belongs to our dad. Do you have any advice for us?

-Dennis

Dear Dennis,

I could give you lots more advice than would ever fit in a column, or even in an answer on my radio show. So, for now let's stick with some basics.

The first thing I'd suggest is to separate the ownership role from your operational roles. In other words, you need to decide ahead of time, and have a consensus, on who's going to do what job. If you and your brothers are all going to be owners of the company when you "take it over," but one of your brothers would function well in the role of CEO, then he's in charge and everyone needs to know and respect that position. As a group, the owners should give the CEO direction, but they don't make all the day-to-day decisions. In addition, someone needs to be in charge of finances, and you also need individuals overseeing sales and production.

The second thing is you need to decide together how to handle things if someone wants out. If one of you misbehaves or incurs a disability, or if someone simply wants out of the business completely, you have to decide on a fair and equitable way to handle possibilities such as these. So, you'll also need good ownership documents and a top-notch attorney to help put it all together.

-Dave

Dave Ramsey is America's trusted voice on money and business. He's authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. His newest book, written with his daughter Rachel Cruze, is titled Smart Money Smart Kids. It will be released April 22nd. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

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