Million dollar discussion
Question: James' grandfather died and left him a paid-for house and $300,000 in cash. James admits he has no business sense, but might be interested in buying his buddy's karate school for $30,000. The business nets between $125,000 and $145,000 a year. Dave thinks this could be a recipe for disaster if James doesn't do the right thing.
Dave Ramsey's advice: That $300,000 invested for the next 40 years will be worth $35 million! This is a HUGE discussion we are having here. Before this happened, you were doing bad with money, but this is like hitting the jackpot. If you don't stop the stupid behavior, you'll destroy your grandfather's legacy and the chance to do something great with this money.
Set up an emergency fund of 3-6 months of expenses in a money market account that you never touch for anything but emergencies. Take a small amount and have some fun with it, and invest the rest in mutual fund and paid-for real estate.
As far as the karate school goes, the numbers and deal sound good. You can write him a check and buy the business. You need to get a hold of an accountant and make them part of your business coach team.
why is the owner selling it for just $30,000. The potential buyer, who says he has no business sense, better get the accountant first and
have him check the numbers to make sure the business is a solid investment.
and the numbers would change if he had to hire his buddy or anyone else to help run it and teach the classes.
hire an accountant to check this out.