Poor Man's' Watch Forum

Business proposition. Long, but you Biz types, please read!

Posted By: Ricky Lee McBroom
Date: Friday, 1 December 2006, at 11:55 p.m.

OK, I'm about to enter into a business partnership with a family member. Yeah, yeah, I know. Seldom a good idea. But here's why it is, in this case...

My (step)son's a mechanic. I saw him start 3-1/2 years ago, at a muffler shop. After I'd taught him a few things about his own Camaro. Me an' his Mamma wa'nt even married then. Anyway, he's gotten good. He's got a knack for troubleshooting and solving drivability problems, a rare thing in itself. But he's also extremely focused on details, and a pit-bull about getting it right, when the project interests him. And therein lies his Achilles heel, as well.

For when the project does not interest him, he screws up and cuts corners. He can't hold a job for more than 6 months, for that reason.. basically. Conventional wisdom says I'd never go inta business with him. But I love him, and I got to do my level-best to fix this problem.

So what I'm gonna do is front him the nut on a building lease for 90 days. That'll be his auto-repair buisiness, and the place we got an eye on is a sweet location. The lease will run in the neighborhood of $1K/month. Insurance about $250/month. A top Hunter alignment machine and 2 lifts will run about 6 to 7K on a 1-year lease. Call it $600/month. $1850/month total, and after 90 days he takes over.

I'm also fronting him $12K on an interest-free 3-year loan for the installation of equipment. To buy things like compressors, parts-washers, etc. An most importantly, GOOD specialty tools from Mac or Snap-On. He'll actually pay $350 a month, so I guess it ain't interest free a'all. I'll make a princely $600 in interest. Does that make me a usurer?

Ennyway, here's the genius of the deal. I'm gonna make his Mamma his boss.

Now think about that. Pam will be the CEO, CFO, book-keeper and, most importantly (doh!), Mamma.

If a guy's Mamma cain't straighten him out, then he's beyond hope anyway. I'm betting $20K Dustin ain't.

OK, so vote button one - or ? Am I missing anything? I'm serious, Business Tycoon is definitely a new role for me, and I'd like y'alls honest advice.

Now, part deaux.

This building will have a small corner reserved for me. That's where I'm going to install the CNC machines which I'm going to buy via a seperate (unrelated to the Dustin's Nasty Autos© [DNA©] loan) Home Equity Loan. I'll have a CNC Turning Center (3-axis/Live tooling minimum) and a CNC Machining Center (4-axis minimum).

The eventual goal of this equipment is to land a lucrative "There's gold in them ther CNC Machines!" type contract.

But sometimes.. well, Sometimes, of course, on Contract Machining, you lose your a$$.

So I'm not gonna gamble on my side of the business. No indeed. If I'm goin' inta the Machining business, then I'm machinin' an artifact of me own design. I'll start a combo Direct and Online Storefront, then flog t'hell outta said artifact.. it don't have to set any records, just pay the nut on my Equity loan. I've already identified a handful of precision Miata parts (and, I gotta be honest wi' ye here, mates. Mazda Miatas, not watches, are my main obsession of late.

But - and here's the sole reason I di'nt put an icon in the header - it also occurs to me that I might be able to incorporate my Machining Vocation and my WIS Avocation, after all.

I do know how to machine custom watch cases:

Now, is there a market for such a baroque thing?

I could offer something like this (and I'm talkin' to the Retos and Matts and Duartes and Kents here, but..

$5K for one custom-designed case. You gimme the CAD model, I make it in the metal of your choice.

$5,000.99, you get 99 more of the same. $50/per, for a lot of 100. Prices will vary according to the chosen case metal, of course, but should be insignificant compared to labor costs.. provided you don't specify platinum!

The cases would NOT be finish-polished. No indeed, that's up to the skills of the buyer!

Viable? Come on, you WIS Bizness Types! Talk to me!

-Ricky

Messages In This Thread

Business proposition. Long, but you Biz types, please read! (views: 156)
Ricky Lee McBroom -- Friday, 1 December 2006, at 11:55 p.m.

My sincere thanks for all the good advice! >> (views: 1)
Ricky Lee McBroom -- Saturday, 2 December 2006, at 1:45 p.m.

It's almost owewhelming.. I'd like to answer each post individually.. but I'd be here all day. (My new Biz Mode, right? "Times a wastin'", [checks watch] Let's get crackin'!"

Anywho, I'll try an interspersed reply a la the old Fidonet days...

} mlaw230 writes: 1) You buy the equipment and lease it to the kid

Naw, one of his big things is he wants to own the equipment. Everything except the alignment machine and lifts, which are simply beyond what Pa can loan him, comfortably. Kudos to him, as I want to own my CNC machines, too! A machinist and his tools are like a farmer and the land.. there's something sacred in the relationship.

} mlaw230 writes: 4) 90 days is too short,

I don't think so. I think once the word gets around in the tuner set, he'll be busier'n a one-armed paperhanger!. [crosses fingers, throws salt over shoulder]

} mlaw230 writes: 5) What's the kid going to live on during the start up?

His wife works, so they'll make their house note. They get hungry.. well, shoot, they ain't gonna get hungry with Mama havin' her own wee kitchen in the shop.

} mlaw230 writes: 6) Make him do the books with momma

Great idea! Yes indeed. I'll just say to all who've expressed apprehension about Pam being boss; You don't know, Pam, or you'd understand. Pam is the kind that, in a family situation, is in total control, anyway. In a good way! The fact that she's worked as a legal aid, and can keep books too.. well, that makes her the key to the success of the business, in large part.

Also.. look, think about this. What is very worst thing that could happen, me bein' in business wit Dustin? Right! If we had a fallin' out of such proportions that it came to fisticuffs! Well, this way, that's practically guaranteed not to happen. Pam will be something like CFO. Dustin's 'OWNER' and I'm 'SILENT PARTNER AND MACHINING GURU WHO DWELLS IN HIS OWN CORNER AND COMMUNES WITH CNC MACHINES'.

} Watchstuff writes: Be willing to make whatever you give financially
} a gift, no strings, no repayment required.
} [...] If you can plan your involvement so
} that if this happens, if you never get a
} penny back, you can handle it both financially
} and from a family standpoint, then you are in
} a win-win.

Exactly! I'm not committing so much that, if it all goes down in flames, I lose the farm, too! That's key.

} Seamus O'Connor writes: Giving him the money makes his back-of-brain impetus "Dad believes in me and I need to make him proud"

Wise words indeed, my BFAM! Yes, perhaps I'll go the note on the building lease for the first year after all.. I mean, if it wasn't for this, I'd likely be doing it anyway, for a place to start my machine shop.

} Seamus O'Connor writes: Now the 20 large is too big of a
} gift even if you were Ricky Lee Trump.

Right! No one seems to understand about Scotmen and their purses.. except maybe you, you cheap Mick!

} Seamus O'Connor writes: Same goes for whilst at work, try to stay
awau from talking "family" matters.

Insightful, that.. and we'd do that, I think. But not the other.. well, maybe. I dunno, you got to realize that Dustin is very project-focused. And as an Italian, he loves to talk! But, hey, it's fun working with Dustin! We spent quite a lot of time working on the Miata, and that's what finally conviced me this could work.

} Seamus O'Connor writes: Mom as Boss depends [..] If she has always been a
} "Momma Bird" type and he has never balked at that,
} then this is not a problem.

That's it exactly, my brother! Now ye ken. Pam's.. I'd've called it a "Mother Hen" style of parenting means that, long as she handles the books and money, and we handle the auto work and machining, we'll have a great working relationship.

} Lamsing writes: a skilled mechanic should be able to generate
} at least $1k in billing per day without breaking
} a sweat.

It's not that easy.. first you have to attact enough clientele. But, yeah, it's certainly quite possible!

} mlaw230 writes once again:
3) Incorporate, it will cost you about $500 to do
} it right but it will provide a lot of insulation
} and tax benefits.

Great advice! Yes, rest assured that this is not going to be a hand-shake kind of company. It will be fully chartered with Pam being 51% and Dustin 49%. There will, however, be an 'exit clause' for Dustin that, assuming the business prospers, will let him buy out Mama in as little as 3 years. And on very attractive terms, too.

Again, my heart-felt thanks to all who've offered advise!

-Ricky

Re: Business proposition. Long, but you Biz types, please read! (views: 14)
mlaw230 -- Saturday, 2 December 2006, at 4:08 a.m.
A couple of thoughts:

1) You buy the equipment and lease it to the kid, that way he can deduct all of the rent and you can sell the stuff if the business fails.

2) Don't sign the lease yourself, it will be a lot longer than 90 days and if the kid is penniless they are coming after you first anyway.

3) Incorporate, it will cost you about $500 to do it right but it will provide a lot of insulation and tax benefits.

4) 90 days is too short, unless he has a reliable source of work, plan on 6-9 months easy.

5) What's the kid going to live on during the start up? He has to be able to live, so I would suggest authorizing a very minimum hourly wage, and distribute "profits" every quarter or so.

6) Make him do the books with momma, and show him a dollar wasted on expenses costs 3-4 dollars in gross income. He also needs to know what the monthly "nut" is to break even.

7) Landlords get liens on contents in most places, so your equipment is at risk if he defaults on the lease, take a lien (or lease to him as described above) so you can get your stuff out.

8) I like the cases, often wondered how hard it would be to have cases made, import some movements and assemble watches to be sold on Ebay.

9) Good luck; and yes, family, friends and business often don't work, but MOST of the old watch companies were family businesses as were all family farms, the New York Times, and lots of construction companies. If he works hard at it and it still fails, you have to be able to declare that victory.

Couple thoughts... (warning, won't fit in subject line... ) (views: 10)
Watchstuff -- Saturday, 2 December 2006, at 3:56 a.m.
First - big kudos to you for taking your family so seriously, particularly the "step" part - sounds like you are treating this kid truly like your own, which is great to see these days - great job!

Second - I love the idea of putting mama in the CEO job - not sure if it is the best or worst idea ever, but should certainly keep it in the family!

And finally - and I read this in Ann Landers once and have never forgotten it...

Be willing to make whatever you give financially a gift, no strings, no repayment required.

I don't mean tell the kid that, don't make it a gift up front - I totally agree with setting it up as loans, front money to be repaid, etc so this kid gets to experience all aspects of being his own boss, including repaying his investors. Expect him to do so, and make that part of the business bargain.

...But at the end of the day, (or the quarter or whatever) know that in a worst case scenario, the whole thing goes down in flames and you never recover a penny for a million possible reasons.

If you can plan your involvement so that if this happens, if you never get a penny back, you can handle it both financially and from a family standpoint, then you are in a win-win.

If you get it back, fantastic.

If not, you were prepared to lose it for the kids' sake and there will be no ongoing issues or arguments hanging over your family in the event of a failure.

Because if it fails, the last thing your family will need is arguing and problems over missed payments, losing houses, second mortgates to cover losses, leaving town in shame, whatever..

Take this for what it's worth and do what you want to do - either way I salute what you are trying to do, and I hope it succeeds wildly for all your sakes! Thanks again for being that kind of Dad!

Hello my friend, a couple of quickies... (views: 26)
Seamus O'Connor -- Saturday, 2 December 2006, at 3:11 a.m.
Loaning him the 20k is okay. But the smaller amount, don't loan it, give it. A smart book says that those who we owe money to we feel enslaved to. It is only human nature. Loaning him the smaller amount makes his back-of-brain impetus to not screw up be "I owe my Dad the money". Giving him the money makes his back-of-brain impetus "Dad believes in me and I need to make him proud". We always are willing to go harder and stretch further when we are "showing off" than when we are "having to make it work".

Now the 20 large is too big of a gift even if you were Ricky Lee Trump. So on that, don't set out telling him what his payments are going to be, instead let him operate a month, figure out what kind of coin will be coming in, and then ask him to "suggest" to you what he thinks he can afford. Then the two of you have a "business discussion" about whether you can live with that payment or need more. This keeps it on the level of "business" and not "family".

Oh, and when not at the shop, never, NEVER, talk about work. Thanksgiving Day, talk the football game and beer, but never work. When you get together outside the job, keep it away from work. It helps draw the very important separation. Same goes for whilst at work, try to stay awau from talking "family" matters.

And finally, Mom as Boss depends on a lot of factors that speak to their relationship as it is and as it has been. If she has always been a "Momma Bird" type and he has never balked at that, then this is not a problem. There is a neat trick for finding out from him: ask him. Go out for a brew and just ask him. We as a civilization do so much verbal tap dancing today that it's a wonder we are able to function at all. Burying what we really mean in layers of politically correct, hyper-sensitive buffers is really just being deceitful, which is a synonym for lying.

You are a good man. You love your family. Your motives are pure. But you're a little scared of it all. Face it, you put (step) in parenthesis, but you still put it there. It may not factor into your decision, but it factors into your thinking. Protect yourself but fatherly let him build himself up. My grandfather said, "don't drive your kids...steer them". A little correction of the till here, a suggested re-direct there.

I know one thing, whatever you decide, it will work out...'cause you'll make it work out, am I right?

Peace and laughter, my friend.

One of the wisest posts ive read in a long time!!! (views: 8)
Jeffc -- Saturday, 2 December 2006, at 3:55 a.m.
 Thats what happened with my business. Me, my best friend and a female friend.

Business was good... but we lived together, worked together and played together.

well, they played together a little more than me. LOL... Love and marriages were crushed. LOL... ahh as the world turns!

No prob. My only suggestion (views: 15)
Lamsing -- Saturday, 2 December 2006, at 2:13 a.m.
is to look at revenues on the auto shop side. It seems to me that a skilled mechanic should be able to generate at least $1k in billing per day without breaking a sweat. Otherwise it is not much of a business.

I'm no WIS business type, but sometimes in life you gotta take some chances, so I say and good luck Ricky! (views: 5)
Mike D -- Saturday, 2 December 2006, at 12:45 a.m.

Sounds to me like you have thought it through pretty well. Hope it works out. (views: 6)
JohnIzy -- Saturday, 2 December 2006, at 12:35 a.m.

IMHO People Change in Small Increments...Over a Long Period of Time >>> (views: 25)
Paul December -- Saturday, 2 December 2006, at 12:29 a.m.
...Evolution, Not Revolution. I sincerely hope it works out for you...Especially your project!

Re: Business proposition. Long, but you Biz types, please read! (views: 33)
SARO -- Saturday, 2 December 2006, at 12:21 a.m.
I think it's a great thing that you are helping your son out like this. As long as he takes it serious and he doesnt get bored of the hours and the commitment it takes to own a business. The only negative is that your wife will be his BOSS. Mom being boss @ home is enough i would go nuts if my mom was behind me all day telling me honey you should clean that machine its a bit greasy or son why did you get grease on your shirt. LOL you know what i mean, you need to give her a better title like assistant or something so he thinks he is still the main go to guy...

Well this is from a guy who started his own business when i was 28.

THats the only thing that got me... (views: 14)
Jeffc -- Saturday, 2 December 2006, at 1:47 a.m.
Owning your own business takes LOTS of long hours and hard work. Like you i started a business right out of college. 12-14 hour days were not at all uncommon.

My business ended when the 3 partners had a MAJOR falling out. Now, compound that with family issues... oof...

Ricky, it sounds like you have thought this through... Its a big investment on another person. Im not sure I could do it. Family is everythign but this is just MY opinion. I got burned on business dealings with 2 friends. I will never talk to either again.

Just think it through long and hard. If you go for it... BEST OF LUCK!!!!!

Re: Business proposition. Long, but you Biz types, please read! (views: 32)
Bill Jakobsen -- Saturday, 2 December 2006, at 12:13 a.m.
You're a great stepdad....my dad didn't let me run the biz till he was 63....i moved back to nyc when he wanted to retire and two weeks later he had a massive stroke...i was old enough (41) to realize i had to make it work or sell the business so I chose the former and have no regrets. In your instance it's a 20k gamble and I figure if the kid's good, let him prove it to himself as well as you!

You've got (views: 12)
BillF -- Saturday, 2 December 2006, at 12:07 a.m.

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