Can You Successfully Run A Business From Another State? Dave Ramsey Explains Why This Business Owner Needs To Let Go

Running a business remotely can be challenging, especially when it's located in a different state. Business owners often struggle with maintaining efficiency, overseeing employees, and ensuring profitability from a distance. 

Dave Ramsey recently addressed this dilemma on his "EntreLeadership" podcast, advising one business owner on whether he should continue running his Tennessee-based electrical contracting business while living and working in Houston.

The Dilemma: Managing a Business From Afar

Daniel, a residential division leader for an electrical contractor in Houston, also owns a separate electrical contracting business in Tennessee. His Tennessee business generates $700,000 in revenue and employs five people, including himself. While he initially hoped to manage it remotely, he found that doing so was far more difficult than he had anticipated.

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Adding to the complexity, Daniel's wife has a stable, high-paying job as a petroleum engineer in Houston, making relocation unlikely. Meanwhile, his full-time job in Houston demands a lot of his time, leaving him unable to effectively manage his Tennessee business. He now faces a tough decision: Should he continue trying to run the business from afar, or should he sell it and focus on opportunities in Houston?

Ramsey's Advice: Sell the Business

Ramsey approached Daniel's situation by reversing the scenario. He asked Daniel if he would start a new electrical contracting business in Tennessee while living in Houston. The answer was an immediate no. Ramsey used this logic to make a strong case for selling the business.

"You're in Houston," Ramsey said. "So whatever you do, you're gonna do it in Houston." He explained that trying to run a business in another state was like swimming with an anchor tied around your ankle—it's possible, but unnecessarily difficult.

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Ramsey's recommendation was clear: sell the business to a competitor. Even though Daniel was unsure how to value his business, Ramsey pointed out that he had assets—vehicles, tools, an established customer base, and revenue. These could be attractive to a competitor looking to expand.

What to Do With the Proceeds

Ramsey advised Daniel to take whatever money he could get from the sale and reinvest it wisely. He suggested two main paths:

1. Use the funds to start a new business in Houston – Daniel could either begin a side hustle that doesn't conflict with his current employer or, if financially secure, quit his job and start a full-fledged business.
2. Continue working while building financial stability – Ramsey suggested Daniel focus on his job in Houston for the next 18 to 24 months, allowing him time to save money and evaluate future business opportunities in his new home state.

See Also: How do billionaires pay less in income tax than you? Tax deferring is their number one strategy.

The Bigger Lesson: Business Should Be Intentional

Ramsey compared Daniel's situation to landlords who end up owning rental properties in cities where they no longer live. Just as managing a long-distance rental can be inefficient, running a business from another state often results in unnecessary stress and financial strain. 

The key takeaway? Business ownership should be intentional, not the result of past decisions that no longer serve your goals.

For Daniel, the choice was clear: it was time to let go of his Tennessee business and focus on building a future in Houston.

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