Dave Ramsey's Investor Advice: Sustainable Growth

Warnings from Dave Ramsey in the Investor Role

Dave Ramsey recently highlighted the challenges faced by entrepreneurs while evaluating a funding need from a business owner in his program. Riley, a small business owner from North Carolina, was searching for financing for the product he developed. So far, $80,000 had been spent, and Riley intended to establish an LLC to launch his product.

Riley planned to sell his product for approximately $220 per unit, but stated that the costs were around $98. Dave Ramsey emphasized that Riley’s projections were insufficient, stating it is difficult to attract investors: “Right now, you’re just presenting a dream.”

Ramsey suggested that instead of seeking outside financing, Riley should conduct a small production run of the product and reach out to actual customers to test its performance. “Pay cash for your experiences,” he said. “Let people try the product and get their feedback.”

Ramsey also pointed out that outside funding often comes with strings attached. “When an entrepreneur takes outside capital, it’s like having a passenger in their vehicle, and that passenger may take over the vehicle. It’s important to protect your project and idea,” he added.

“Aim to sell 1,000 units, then 10,000 units, and eventually 800,000 units, but always keep 100% control in your hands,” encouraging Riley to be patient and grow over time.

Rachel Cruze agreed with Ramsey’s words, highlighting stories of entrepreneurs who have succeeded by growing slowly at first. Ramsey also shared examples from his own experiences, stating that he was never someone who was “undiscovered.”

Lastly, Ramsey reminded of three basic rules regarding business: “Everything takes twice as long as you think, costs twice as much, and you’re not the exception.” He emphasized the importance of being patient and not losing control for entrepreneurs chasing high dreams.