Tireless. Kim Lorenz
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wanted to settle the case. We both knew the basis for the suit was weak by this time, and Bandag had poor odds, but we would not know the real reason for the fast settlement until a few years later.
Regardless of what was to come, the real victory was this: that morning, the attorneys for Bandag dropped the suit for a very small sum, which was to be paid over the next year. Suddenly, it was as if the anvils we were carrying on our shoulders were gone. We were finally free to grow and build our business further while shedding the awful burden of a federal lawsuit and possible demise. Though we are now thankful for the opportunity to learn and grow through that painstaking process, it was certainly an expensive lesson to learn! We were grateful for the hard-working employees who stayed with us through the whole ordeal, as well as many customers.
On the other hand, we had run up over $100,000 in attorney’s fees, and Pete knew we did not have the resources to pay him at that time. He had held most all his fees over that whole year, never billing us. He generously offered that we could have the next couple of years to pay him in installments, with no interest. I still get a little choked up by his generosity. Not only did Pete save our business, but he was a true friend to us. I can’t say I know many attorneys who would be so kind.
Thankfully, we eventually gained back the customers we had lost and continued to take larger percentages of the market. We were back in full-charge mode and growing again, gaining back what we lost and more.
During the lawsuit process, the world had seemingly stopped around us. It felt as if there were an eerie, dark cloud that rendered any thought or focus on the future an impossible task. Every day we woke up thinking, “This could be the day we get shut down for good.” But the light at the end of the tunnel finally came, and it was not the train! The sun instantly pierced through the clouds, exposing hope for the future once again. Just think, I had gotten the gift of a brand-new baby and a settled lawsuit on the same day! The future was certainly looking bright.
The company that was suing us, Bandag, called ten years later, asking that we start doing business with them. There were some interesting negotiations regarding that step in our business. We eventually became one of their largest dealers in North America, operating four large Bandag manufacturing plants! How that all happened is an example of why it’s important to be open-minded, professional, and able to look at mutually beneficial opportunities all the time. This book will focus on decisions and choices, self-discipline, and how we deal with the 35,000 or so choices we are confronted with every day. Some of them carry long-lasting consequences that can affect the rest of our lives, so we always want to choose wisely. In our case, becoming a Franchise Dealer for Bandag was a great decision for both companies.
Chapter 5
Potential Pitfalls of Partnership
A business partnership is defined as the following: a closely held corporation with two or more managing shareholders.
Any business with two or more owners can be a Limited Liability Company (LLC), a fully incorporated entity, a simple partnership, or any relationship where two or more share responsibility to manage the entity. As the managing shareholders, each assumes the financial risk, and it is important to ensure they have a way to agree when making decisions. There is much more to this, but these are the key points: keep in mind, if you own anything less than 50% of the entity, you do not have the ability to make the decisions. You can add your input, but if there are only two individuals and you own 49.9%, you might as well only have 1%. The controlling shareholder has the final say on all decisions.
If you are considering entering into a partnership, it is very important to keep in mind that many people do not make great business partners, even if you have a great relationship with them. It takes hard work to keep a partnership successful, much like investing in a marriage. Due to possible differences in skill sets, one partner might need to do much more work than the other. The workloads and time spent can be defined by the skills of each partner, as well as what is required to keep the business moving forward.
For some people, the imbalance of workload bothers them. Of course, if one partner is lazy and does not do their share of the work, that is most certainly cause for concern. But, if each person’s skill set dictates the amount of time required to do the work, and the work each partner does meets those expectations, then you expect each person will fulfill their respective responsibilities.
Think this through, if the partnership is successful, growing, and making money for both partners, it should not matter that one partner might be required to work longer hours or travel for the company more. That is simply the result of that partner’s skills and contribution to the overall success of the entity. Both partners benefit. The main point to understand here is that every person is different. They have different skills and talents, as well as unique strengths and weaknesses. Everyone has a specific way of doing things, and often, these differences are what make up a great partnership—their weakness is your strength, and vice versa. However, sometimes these differences, if not understood or handled properly, can cause dissension and irreparable damage to the relationship.
It has been said that one of the main reasons for a partnership failure, aside from financial reasons, is because of one of the partner’s spouses. To be successful, it is important for you to maintain a separation between your business partner and your personal relationships. You will need to have conversations and open discussions with your partner(s) about difficult business decisions, goals, finances, etc. Your spouse could never have the knowledge of all the issues from all the perspectives to make wise decisions. It is simply best to keep business conversations among the partners. Think about this: whenever someone shares a frustration or conflict with another person (such as a spouse), that person only hears one side of the story. It is impossible to understand or make a reasonable suggestion if you do not know all the facts or hear both sides of any issue. The person who hears only one side tends to support and reinforce the person giving them that one-sided story. That’s just a natural human tendency. The other party then makes a decision lacking the complete information.
And who do you think hears these stories most often? That’s right, our spouses or significant others.
Again, stories like this are not the normal case studies one will encounter in business school, nor read in a textbook. Most professors and business book authors do not have the real world, hands-on experience of starting or running a business, especially a partnership. They may have book smarts, and the statistics but often do not have the practical hands-on experience, or what might be called street smarts. Street smarts come from life experience. That is why you won’t be able to learn everything you need to know about running a successful business—or be successful at anything you do, for that matter—by only reading a book, watching a video, or searching the internet.
However, you can learn some important lessons from our real-life experiences (and hopefully learn even more from our mistakes).
John and I both agreed during that first all-nighter planning session when we decided to launch this business that we should never bring work home. What we meant by this is that we would leave our business between us. Even when it was difficult to not say anything, we both knew it could make matters worse to come home and vent to our spouses. Looking back, there was a situation that turned out to be the perfect example of why this agreement was important for the health of both our business and our marriages. We might be laughing now, but it wasn’t so funny when it happened!
One night, my wife was livid as I drove into the driveway at 2:00 AM in a company truck. I’ll never forget her words piercing through the cold, winter night, “What is John doing?!”
Let me paint a backstory for you before we get there.
As you may remember, John was the one with the manufacturing skills. He purchased the retread plant equipment and was responsible for the construction and buildout of the plant as well as the ongoing retread operations. He was a generally quiet person and spoke very little. I, on the other hand, had the interpersonal skills. I was responsible for bringing in the customers—the “rainmaker” if you will. I was definitely the more outgoing of the two of us, but this was not the only difference in our skillsets, thankfully. Both of us were well-versed in operational management,