BLACK JACK ANTIQUES

If you were Kevin, how would you initiate a conversation with Jeremy? What

would you want to learn? What would you say?

As we consider this to be a personal and not just a business situation, we

would like Kevin to cool down and calmly gather all his thoughts together before

talking to Jeremy. It would be best if it were just the two of them in a casual setting.

He could start off engaging in a lightly and friendly mood then calmly ask Jeremy

what his plans are and that he heard from an anonymous source that Jeremy was

applying for a job at a furniture design firm. Perhaps ask him how he feels about it

and how he sees himself in that new environment.

As a friend, he should show his support with Jeremy’s decision but also be

able to air his own fears and apprehensions. To ask Jeremy how his financial

situation is, will having this job help him financially? What made him decide to take

on this job? Is their friendship steady and how can they approach this from a

business stand point and not compromising their friendship?

What does this case illustrate about the risk of starting a business with a

partner? How might those risks be minimized? Explain.

As with anything in business, there are always risks. But with regards to a

partnership, the risks are as such as abandoning a steady source of income. Now

considering where you are in your life financially, this is the first big step to consider.

If currently employed, it is best to properly plan and save accordingly. Leaving a

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steady job for a start-up, one has to take it in stride. As some would say, “Don’t bite

the hand that feeds you”, if indeed you are not financially there yet.

In a partnership, both will have to decide how much each one should put in.

Looking for additional financing will also help. Considering angel investors,

government grants and loans and some crowdfunding activities are now a thing.

Even with a considerable line of credit, securing a regular flow of cash will be

tedious. Properly planned and accounted for so that the investments will have the

returns as soon as possible. Not putting all your eggs in one basket is also a smart

consideration. If the business involves you putting in your life’s savings, this may not

be the right time as of yet.

As one successful businessman used to say, “Only invest what you are willing

to lose. Anything over than that is gambling and not business.”

Demand for your business will never be accounted for accurately. But it is

wise to do a market study along with a proper business plan. “Only the paranoid

survives” as Andrew S. Grove of Intel would say. One must not always assume one

perspective but must be ready for the worst-case scenario, not just the best. In this

case, with Kevin carrying most of the financial load, this becomes very risky because

instead of a duo, Kevin is the only one literally left standing and will take most of the

blow. Jeremy is just along for the ride but is already taking the back seat in this set-

up. He may not have as much as Kevin, but he won’t lose as much either.

Allocating business and personal time separately should be accounted for.

So many partnerships and even corporations are mainly based on friendships. So,

there should be a clear divide of time and energy.

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The rewards of owning your own business together will involve a lot of time

working on projects and the day-to-day flow. But it can also take its toll. So, there

should be priorities set aside before anything is done so that when the time does

come, there is a clear direction and time to set back and reset.

Health physically, mentally and emotionally should be a priority. Families are

also an important factor.

Considering the risks of having a business partner, both are jointly and

individually liable for anything that happens in the business. If a partner decides to

abandon ship, the other partner will be bearing the blow.

Unlimited liabilities and disagreements that occur very often is a reality.

Based on studies, the statistics for partnerships usually last around 5 years.

With shared profits, there is unclear control over the business. This includes

financial burdens, responsibilities and the like.

Getting into a partnership does not mean in just a financial sense. In this

case, Jeremy was able to compute his skills in restoration and design. Something

that Kevin is not able to do, while he sticks with the financial and antique side of the

business. So, there was a clear division of their work. But they were not able to

clearly justify their business agreement and prepare for an eventuality such as a

dissolution of the partnership.

“A friendship founded on business is a good deal better than a business

founded on friendship” as John D. Rockefeller would say.

To avoid misunderstanding and further complications, proper paperwork

should have been established just to make things more professional.

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The agreement should also be able to state their contributions and expertise

in a more concise and easily quantifiable manner, like establishing legal partnership

structures.

Do you think Kevin could make a go of the business alone? Should he try?

Discuss.

Kevin should try but not alone. He can consider several options such as

looking for another business partner or partners. It is still, after all, an improving

business.

There is that option of diversifying his antique line. Since Kevin really does

not have the skills to restore, but he can do more with the line that he does control.

Another consideration would also be to invite the furniture design firm where

Jeremy wants to work in and offer them a joint venture wherein Kevin’s business

would help distribute their furniture and take advantage of the existing network.

Kevin is known to be the brains of their operations so there is more that he

can do. It won’t be the end for him. He now has the opportunity to expand his

horizons while continuing the antique side.