STAGE
Legacy Builder
The first time I looked through the glass from outside our studio and watched someone else take calls on The Dave Ramsey Show, the earth shifted under my feet. It shouldn’t have been a shock. My leadership team and I had been talking about the company’s succession plan for years, and a big part of that plan was to raise up new Ramsey Personalities—people who could join me in reaching new audiences and continue our mission to change lives when I wasn’t around anymore. And here was the evidence that our plan was working. Our Ramsey Personalities were handling calls and helping people, giving them the same advice I would. That was great news for the company. But what did it mean for me?
I was still wrestling with that reality when one day, just a couple of years ago now, The Dave Ramsey Show disappeared forever with one small—intentional—change. Instead of saying, “Welcome to The Dave Ramsey Show,” as I had for almost thirty years to begin the show, I said, “Welcome to The Ramsey Show.” That’s all. There was no announcement. No fanfare on social media. Just no more Dave. We wondered if anyone would notice. You know who noticed? I did.
It was really distressing and much more emotional than I was prepared for. I got off the air and didn’t know what to think. I had built huge brand equity with my name—I was the guy who went bankrupt and had scratched and clawed to fight my way out of it. I’d worked my tail off for decades to build a company to help people with their money. I started all of this. My name is all over the building and everything we do. This is who I am.
My friend John Maxwell says, “Where there is no succession, there is no success.” The truth is, Ramsey Solutions and its legacy are not about me. The business belongs to God. I’m just the manager. If I let my emotions get in the way of the succession plan my leadership team and I have laid out, all the blood, sweat, and tears we poured into building it would disappear with me.
As a Legacy Builder, your goal is to work yourself out of a job, and in this chapter, we’ll talk about the tactical and strategic steps you’ll take as part of this stage of business. If you don’t execute a good succession plan, you will kill the thing you love just to protect your ego. But I need to warn you, watching your succession plan work will be more emotional than you think. None of the changes we’ve made as part of our succession plan have been accidental. They have worked exactly as intended. And yes, I was in on all of the planning. It’s both depressing and awesome at the same time. Why? Because I planned to be less important, and damned if it didn’t work.
I’m constantly asked if I’m ever going to retire, and my answer is always the same: “I’ll retire when I quit making sense on the radio.” That’s because I still enjoy what I do. So I’ll keep doing the radio show and podcasts and conference teaching as long as I can. But the CEO part requires that I step away before I “want” to for my son, Daniel’s, sake as president of the company—and for the sake of the business as a whole.
LEAVING A LEGACY
No matter what you’ve done up to this point in your life and business, you are going to leave a legacy. The only question is whether it’s going to be a good one. Too many owners wait until the last possible moment to hand off their businesses—and even then, their plan is to simply toss the keys to the next guy as they fall into the grave. You can guess how that turns out: Confusion causes morale to tank throughout the company. Key team members leave in droves, customers and vendors lose confidence, and revenue plummets. Inexperienced new leaders make financial mistakes while hefty estate taxes force the sale of valuable assets. The family squabbles over leadership roles, disrupting operations and dividing the team. The outgoing leader takes vital corporate knowledge with him, leaving the new leader struggling to figure things out on their own. New leadership fails to align with the company’s core values, and the original mission becomes a fuzzy memory. Legal battles over ownership drain resources and tarnish the company’s reputation.
That’s a really bleak picture that one too many businesses will face. In his personal research on leadership, Dr. J. Robert Clinton found that less than 30 percent of leaders finish well. I want to be a leader who finishes well. You can think I’m being morbid if you want to, but we’ve done detailed research on this subject, and it turns out, none of us is getting out of this alive. Your feelings about your mortality don’t outweigh that fact that you have an expiration date. And if you don’t have a succession plan, your business’s expiration will occur soon after your own. If you want to leave a legacy you can be proud of, you need to decide on a strategy and a succession plan long before you exit your company.
SIGNS YOU MAY BE IN THE
LEGACY BUILDER STAGE
You have leveled up through all the other stages.
You are mentally, emotionally, and financially prepared to step away from the business.
You have a clear plan in place to make a successful succession to the new owners of the business.
FRUSTRATIONS YOU FACE IN THE LEGACY BUILDER STAGE
You want your business to live long past you but don’t know how to hand it off well.
You know if you don’t do something, the business is going to end when you’re done.
You realize you’re not ready to hand off the business.
The next generation doesn’t seem ready to lead the business.
You don’t have children to pass the business to when you’re done.
You’re going to have to sell the business to your kids to fund your retirement.
To be clear, the Legacy Builder stage is not the stage where you create your succession plan. That work should happen long before. This is the stage where you start to implement your succession plan. Our handoff at Ramsey Solutions became a topic of serious discussion in 2014, but we actually began talking about what we were going to do with our succession plan five years before that as a matter of stewardship. Today, we’re 100 percent in the Legacy Builder stage. That said, succession plans are like trees. The best time to plant a tree is twenty years ago. The second-best time to plant a tree is today. In our case, we’re handing the business off to family. That handoff is almost already done—I’m just hanging around to spread hate and dissension.
All kidding aside, I’m passionate about my daily work, so I’ll continue doing it. However, I’ve been focusing less on the key details and tactical aspects of the company lately. That doesn’t mean I’m not doing anything. And I’m not planning to quit tomorrow. I’m just not doing as much as I used to. Today, I’m much more focused on new things, big things, broken things, and a lot of creative, content-related projects—like this book. I stay plugged in to those things because I enjoy them and I’m good at them, but the business can run without me.
KEYS TO A SOLID HANDOFF
The truth is, you have lots of options for how you’ll exit the company. You could hand the company over to a family member in the next generation like we are at Ramsey. And one day, I’ll write a book about the challenges and blessings of running a family business. But you could also hand your business to your team, sell it, or take it public. You could even shut the company down. I’m not recommending a certain plan, but your plan does need to be certain. And it will need to cover these three areas we’ll dig into throughout the rest of this chapter:
- The legal and financial transfer
- The leadership transfer
- The reputation transfer
THE LEGAL AND FINANCIAL TRANSFER
The legal and financial transfer of your business requires a lot of thought, planning, and time to execute. The wrong choices in this area can cost you a ton of money—especially in estate taxes—and can even put the future of the business at risk. I am a big fan of not paying more taxes than I have to. Some people have qualms about that, but there’s nothing morally wrong with doing all you can to legally avoid paying taxes. Too many businesses are ruined because they don’t handle taxes properly. Don’t let that happen to your legacy. Different ownership structures like trusts, family limited partnerships, or limited liability companies have different tax advantages. Other strategies like a phased ownership transfer and using your annual gift tax exclusions and/or the unified estate tax credit can help gradually transfer business ownership and spread out that tax burden over several years.
Do yourself a favor and gather a team of professionals you can lean on to plan a transfer of ownership that will benefit your business. That begins with outside legal counsel with extensive experience in estate planning and business law. You want someone who has a track record of handling complex transfers, knows current tax law backward and forward, and takes a strategic approach to help your business avoid potential legal and financial pitfalls. You should feel like you’re their only client because their advice is specific to your family and your business and they’re constantly looking out for you by keeping up with changes in the law that might affect your plans.
At Ramsey, we decided on the unusual route of handing the business over to family rather than selling it to them, and we’ve reached the point in our plan where ownership of Ramsey Solutions has transferred to the Ramsey Family Trust. This was a strategic decision that will give us long-term tax benefits—the trust won’t get taxed generationally. If we hadn’t gone this route, the estate tax could have ruined Ramsey because we don’t have hundreds of millions of dollars in cash lying around.
Another interesting option is to transfer ownership to your employees through an Employee Stock Option Plan (ESOP) where your employees become owners of some or all of the business. You can get some tax advantages this way, but what I like about it is that the business stays with the people who are the most invested in its success. Depending on the size of your company, an ESOP transfer can be a long process—it’s definitely not something you can knock out in a week or so. That’s why you need to start thinking about it now, so you can make sure it’s done the right way. I’ve seen ESOPs go bad, so make sure you know all the risks and work with real pros to put one in place.
Early on, you’ll need to determine the value of your business. This can be tricky, so you’ll need to get a professional accountant on your team who can help you figure out the true worth of your business by looking at your assets, earnings, and market conditions. If you have a high-value business that’s worth more than $20 million, talk with your accountant about using minority interests to devalue certain aspects of your business. For example, in an LLC, a minority interest isn’t worth as much pro rata as a majority interest, and recognizing this can lower the overall valuation, providing a realistic and fair assessment of your business’s worth. That will make the transfer more manageable and tax efficient and set a solid foundation for the next phase of the business. This kind of stuff is fun for me, so it may seem like I’m getting into the weeds here. The good thing is, you don’t have to know all the rules and regulations if you work with a professional to help you navigate it all.
When it comes to the actual sale or transfer of the business, the terms of the deal are key, beginning with a sale price that matches the financial health of the business and the future plans of the new owners. Generally, the sale price would not exceed five times the net profit of the business. If you aim for four times the net profit, you’ll not only make the business more attractive to potential buyers, but you’ll also ensure a sustainable financial future for the business itself. Overpricing just makes it harder for the new owners to manage and grow the business—which is not great if you want to have a lasting legacy. I’ve seen financial transfers have a lot of success when both parties agree on a lower initial sale price with owner financing terms that the seller will receive a large percentage of the profits as payment until the agreed sale price is met. This kind of percentage-of-profit-financing agreement means the buyer isn’t facing a huge financial strain if the business doesn’t generate immediate high profits, and the seller (you) has the security of knowing you’ll get the agreed amount. Win-win.
Yes, there’s a lot of pressure to get your business’s legal and financial transfer just right, but the process doesn’t have to be overwhelming if you approach it methodically. Start by putting together your team of professionals. I can’t stress enough how important that is. Then, by taking strategic steps, you can plot out an ownership transfer that will secure your legacy of years of hard work and dedication while setting up the business and its new owners for future success. That’s how you transfer ownership of a business that will outlive you.
THE LEADERSHIP TRANSFER
Your leadership transfer has two important components: your leadership team and, even more critical, your successor. Ever since you were a Trailblazer, you’ve been building and pouring into your leadership team. Now, in the Legacy Builder stage, your leadership team has to be at a level where they can run the company in your absence. They know the decisions you would make and why you would make them. They guide the team based on the company’s core values and take as much ownership of the mission and vision as you do. They represent all areas of the business, bring different strengths and perspectives, and have established radical levels of honesty and trust over time. If you think that’s impossible, let me tell you, Ramsey Solutions has had a leadership team like this for many years now, and it’s been a tremendous blessing. Most importantly for this stage of our business, the people on my leadership team are full partners with me in our company’s succession plan.
In the same way it takes time to build a leadership team that can continue your legacy, the person you choose as your successor needs time to grow and step into that role. You need time to train them to be the right kind of owner. They need time to build a reputation in the business and be recognized for their capabilities in everyday interactions. Your goal is for them to be the obvious choice in the eyes of the team long before formal decisions are made in the boardroom.
This is particularly true for family-owned businesses. My son, Daniel, became president of Ramsey Solutions early in 2023. While he’s been in other leadership roles for a long time now, he was never guaranteed the president’s role. In fact, when Daniel first joined the team over ten years ago, we didn’t even talk about him one day leading Ramsey Solutions. The pressure of that expectation was too much for a young guy in his early twenties just starting his career. He just wanted to be part of the team and learn to be a good salesperson. As time went on and Daniel continued to excel in every role we put him in, we moved him into a vice president leadership position and began to turn up the heat on the conversations about his long-term role with the company.
Those conversations, of course, included our leadership team who were the first to know about the plan to eventually move Daniel into the presidency. We talked to our team about it, too, so they all had an understanding of the changes that were coming and the goal behind them. We also shared the relevant parts of our succession plan with our vendors. The Legacy Builder has to commit to an open, ongoing dialogue about the future of the business. Otherwise, people will fill in the gaps with doubt and rumors, and neither are helpful for the legacy you want to leave.
Another part of our plan to set Daniel up for success in his role was long-term mentoring. I had three of my operating board members meet with Daniel every Friday morning. I excluded myself from that mentoring group on purpose. I wanted these three top leaders to pour their knowledge, experience, and insight into Daniel and help him prepare for the responsibilities he’d take on as president. Once he officially became president, Daniel and I started having one-on-one meetings every Thursday morning to focus on the business and accountability. As his leader, I’m looking for any way that I can assist him and push things forward as needed. We’ve had a blast as father and son working together as the CEO and president, and we aren’t done yet. In the future, I will begin to peel away from my current leadership responsibilities while Daniel takes on more and more of the company leadership. Eventually, I’ll be just another Personality, hosting the show, speaking at events, and writing books, and I’ll keep doing that as long as I can.
One more note about passing your business on to a family member—and it’s a tough one: You’ll need to make it clear to both family and non-family leadership that the succession plan is contingent on your successor’s future conduct and your relationship with them. It is not a guarantee. In other words, if they fail to live up to the expectations you set for them in terms of conduct, personal growth, and commitment to the mission, you have the right to remove them from the succession plan.
Gradual succession plans are the most successful succession plans. That becomes really clear in the leadership transfer because it takes time to build your leadership team, identify the person you’ll trust to take the lead in your place, and then empower them to actually do that. It also takes time for your team and other businesses you work with to understand and get comfortable with the changes that are coming, and you’ll have to keep those lines of communication open for as long as it takes to see your plan through.
THE REPUTATION TRANSFER
Rush Limbaugh was known as the voice of American conservatism and had the number one talk show on radio in America. He was number one, Sean Hannity was number two, and we were number three. I was blessed to spend time with Rush on several different occasions, and whether you liked him or not, there was no denying Rush was an icon—a bigger-than-life personality. He single-handedly brought AM radio back to life and pretty much invented the radio talk show genre. Not only did he become the industry standard, but he also had unbelievable influence and power with the top levels of our country’s political leadership. But he had absolutely zero succession plan when he died at age seventy in 2021. His brand recognition and influence were completely lost much too quickly when he died.
His story, and way too many like it, was a warning sign to me. I decided we were going to approach the awkward succession planning process and fight through it so we wouldn’t lose everything we’ve built. Ramsey Solutions is on a mission to change the toxic culture, and we can’t afford to lose ground by making the mistake of having no plan. So a huge part of our succession plan is making sure the brand—our reputation in the marketplace—can stand without me.
Now, I’ll admit, there’s a good chance this part of your succession plan will look different from ours. It all depends on how much of the brand is built solely on you personally. Back in 2012, we created this weird metric we called “non-Dave revenue” so we could track how much the business made on products and initiatives that didn’t involve me. It was only 7 percent when we first measured it, meaning if something were to happen to me, 93 percent of the business revenue would essentially disappear.
To fix this, we came up with what we now call our Survivability Index that measures the percentage of the business that will survive when I am no longer a part of it. Then we began making strategic moves to increase that rating. One of those moves was changing the name of The Dave Ramsey Show to The Ramsey Show. We’d been working toward the change for a while, and by the time we pulled the trigger, our Personalities were old pros at co-hosting the show—with me and without me. They were handling calls just like I would, and the change was having little to no impact on our ratings. We didn’t make a formal announcement about the name change because we wanted to minimize any disruption with our six hundred-plus affiliates. But several attentive YouTube viewers spotted the change, and that was enough to spark rumors that I was about to leave the show.
Our next move was to change the name of our website from daveramsey.com to ramseysolutions.com. It wasn’t just a marketing move. Removing my name from our web address was a major step in ensuring the future of the company. However, it did have short-term consequences. Our website traffic took a big hit, and it took longer than we liked to regain trust and credibility with the search engines. The good thing about these steps at this stage is that we call the shots on the timing, and instead of weathering these storms all at once after something happens to me, we could deal with them one at a time—while I was still around, being very active within the company. And it’s a strategy that’s paying off. Our Survivability Index has soared into the ninetieth percentile, which means Ramsey Solutions is much less dependent on me and is in a much better position for long-term success.
Your business’s brand may not be as dependent on you as founder and owner, but your business does have a reputation to transfer from you to your successor. In the same way we took small steps with our audience to build trust with our Personalities over time, your customers, vendors, and team need to see you working with and training up your successor and see your overall succession plan. Then, when you step away, there will be a healthy level of trust that things will continue to work after you’re gone. Otherwise, your customers, vendors, and team will have no choice but to assume that when the old guy dies, the whole business will fall apart. As with all the other aspects of this stage, time is your friend. The more time you have to pour into your plan and the more time your customers, vendors, and team have to adjust to your business’s new leadership, the better your chances of a successful reputation handoff.
WHAT WINNING LOOKS LIKE
When you get to the Legacy Builder stage, you’ve put in the work it takes for your business to thrive. That by itself is a huge achievement! Now your focus is on how your business will continue to thrive after you’re gone, and a solid succession plan is the key to making that happen. Here are the succession plan elements we covered:
- The legal and financial transfer
- The leadership transfer
- The reputation transfer
Right now, the financial and legal transfer might feel like the biggest and most complex part of your succession plan. And you’re not wrong. As I said, mistakes in this area could limit your business’s future, if not destroy it. But once you have your team of experts to help you with the accounting and legal issues, you should feel some of that weight come off your shoulders. At that point, your biggest concern is checking progress and making sure your successor and leadership team are fully invested in making the plan work.
What will likely come as a shock—and it was for me too—is the roller coaster of emotions you’ll deal with as you walk through your succession plan. You can be as business minded as you want to about it. You can discuss every aspect of your plan a million times from a hundred different angles and with as many people as you want. You can develop your plan over decades if you want to, but when you finally pull the trigger and start to see your plan fall into place, your ego will take a hit. You’re going to have that moment when you wonder what it means for you and your identity now that your business no longer needs you the way it used to. And the irony is that this disturbing realization is the best indicator you have that your succession plan is working—that you’re winning as a Legacy Builder!
Maybe that’s really why so many business owners don’t create a succession plan. They’re afraid to figure out who they are separate from the business they’ve put so much of themselves into over the years. For this reason, it’s very difficult to hand off a business that’s all about you. We have found the succession plan has a much higher probability of working when the owner has a higher calling than simply being in charge. When the current generation views the business as something bigger than themselves, they will nobly rise above their own emotions and self-interest for the good of the business and possibly their family. As people of faith, we view Ramsey Solutions as owned by God, and I am just the manager.
Good managers plan for their handoff where a selfish owner might not. Business is noble, and if you believe in what you’re doing, you will want it to live on after you leave. The Legacy Builder stage of business is not about you or your ego. It’s about managing your business for God and setting it up to be successful and sustainable after you’re done.
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