Dave Ramsey Crushes 27-Year-Old Atlanta Man's Dream: Why Some Opportunities Can Actually Be a 'Catch'

Most Americans would agree that your 20s should be a time of new experiences, growth, and discovering your career path.

And while this may be a great time to take risks and big changes, jumping without a safety net goes beyond just risking – it’s reckless territory. At least that’s what personal finance celebrity Dave Ramsey recently warned Michael, 27.

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Michael, from Atlanta, Georgia, finds himself at a crossroads and he called Ramsey’s show for advice. He can either continue working for someone else or start a small business by purchasing an ice cream company.

But as Ramsey tells him, he needs to make sure his financial foundations are solid before he thinks about starting a business. Here’s what Michael (and other young Americans in his position) need to do before even thinking about taking this big step. .

Small Business Is Work

Michael told Ramsey that he was seeking advice on the best way to obtain the funds needed to buy out the owner of an ice cream company he currently works for. But as he explained, the owner has indicated a desire to sell the business within two years, which includes a building with existing tenants, for an asking price of $1 million. that he is considering taking out a million dollar loan to buy a small business.

Michael wants to take over the business but needs the capital to buy it himself.

The hosts were skeptical of Michael’s dedication to the ice cream business, but he told them he was glad to have been exposed to it so young because he sees great opportunities in the field.

It is also not technically in a bad financial situation – Michael and his wife have worked diligently to settle their debts and improve their overall financial situation. But he’s also a 27-year-old who still lives in his parents’ house without any significant assets, and so Ramsey doesn’t think he’s ready to take that step. He then talked some sense into Michael, with co-host John Delony supporting him, warning Michael that this was not an opportunity, but rather a “trap”.

“No bank will lend you that,” Ramsey said bluntly. “You don’t have assets, you don’t have income – you’re not bankable. Buying and running a small business will take the marrow out of your bone marrow. It’s going to wear you out, it’s going to squeeze you like yesterday’s rag, man.”

Ramsey’s overall opinion is that it is absolutely crucial to be financially stable and debt-free before deciding to buy and own a small business. It’s the same advice he would give to his own son.

“I would say you need a better and stronger personal financial foundation before you start talking about buying and running a small business,” Ramsey remarked. “You got a car payment and you live with your mom. You’re not ready to do it.

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Prioritize financial stability

The United States Chamber of Commerce reported that there are 33.2 million small businesses in the United States. Together, these small businesses accounted for 99.9% of all U.S. businesses in 2023 (that’s a pretty impressive number!)

At the same time, about half (an astonishing 49%) of American adults admit they wouldn’t be able to cover a $1,000 cash emergency by 2023.

One way to finance the purchase of a small business is to obtain an SBA (Small Business Association) loan. They generally range between $500 and $5.5 million. However, they have certain disadvantages and risks:

Borrowers are usually required to make a deposit
Borrowers with low credit scores will generally not qualify
The provision of guarantees may be necessary
The approval process is generally slow
You may be personally liable if the business fails

If you want to join the tens of millions of Americans who have launched into entrepreneurship, make sure you’re not part of the 49% who can’t afford an emergency expense. Personal financial stability should be of paramount importance before embarking on any business venture.