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Entrepreneurial advice from Dave Ramsey

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Josh Anderson / AP / File

(Read caption) This July 29, 2009 file photo shows financial guru Dave Ramsey in his broadcasting studio in Brentwood, Tenn. While best known for his advice on personal finances, he recently addressed entrepreneurs on how to start a business in the current economy.

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I had the pleasure and honor of interviewing Dave Ramsey for Insider's View, a show that runs on Tennessee Public Television, in front of an audience of about 600 students. We talked about his own entrepreneurial experiences and his advice for others on their entrepreneurial journeys.

Here are a few summary highlights:

  • Pursue only opportunities you have a passion for, as "entrepreneurship is a tough boss."
  • Don't give up. The most successful entrepreneurs are those who work hard, learn from their mistakes, overcome adversity, and adapt to change.
  • Goal should be to have six months worth operating cash on hand in your business.
  • Grow your business without debt. Period.
  • When you are able, take some money out of the business to make sure to diversify your personal finances. Don't let it all of your personal wealth ride on just your business. I teach my students the 1/3, 1/3, 1/3 rule of net business cash flow. Set aside 1/3 for taxes, put 1/3 back into the business to grow, and use the final 1/3 to first pay down debt (if you have any) and then to give to yourself once debt is taken care of. That last third should be used to diversify your personal wealth, and not just to spend on stuff.

Dave said that there has never been a better time than now to be an entrepreneur. Out of the disruptions in the economy comes opportunity.

He is worried about the push toward socialism in this country, but confident that the American entrepreneurial spirit will persevere.

(Thanks to the Curb College of Entertainment and Music Business at Belmont University for inviting me to conduct the interview).

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