By on Jul 09, 2010 with Comments 0
The dilemma that many people face, on two opposite sides of the coin, are buying in and getting out. Why would anyone do either you may ask yourself? Let’s talk about the problem with each situation.
For some odd reason, most people trying to get into this industry have this notion that they know it all! It still amazes me after all these years. Their desire to enter into an industry that they know nothing about is not only foolish, but has no common sense attached. Just the absolute desire to do something and never looking at the consequences blows my mind.
But some people will risk everything for a desire of theirs. It makes no sense. And the best part is, the internet offers a lot of information on this subject, and it’s pitfalls, but no one reads them, or they think these articles are written for “the other guy”.
Like anything in life, you have to be trained to do a job. Simple, right? You have to have the education to perform any task. But, it seems people ignore these articles, or maybe don’t even search for information, which makes them get what they deserve.
So we will begin the buying in and getting out drama that affects most people. It starts with the desire, of course. But generally the desire is the excitement of it all. It is seducing. And then their is the seduction of power. You want to be “the boss”. And every customer that comes into a nightclub wants to know the boss. And as most owners and managers are men, they are seduced by the women who love powerful people.
The problem is they know nothing about the nightclub business. Nothing. Oh ya, some of them might have tended bar at some point, but that does not give them the experience to be buying in to a nightclub. But some how they think it does.
Not only do you have to know about these operations in order to manage them correctly and profitably, but unless you are single, this is going to reek havoc on your personal life, not to mention that the nightclub you want to buy into is probably losing money because why else would they need you!
So, as you insist that you know what you are doing, you are getting yourself into the buying in and getting out situation. These types of deals are meant for the experienced person. They know what to look for, the finances, the taxes, the law suits, the management, the bartenders, the insurance, The losses the nightclub already owes for, corporation understanding, the marketability, the cash on hand, and the list goes on and on.
But you know nothing! And you choose to buy in to a nightclub. Does this make any sense? I had a gut write me the other day for doing this. He bought in and now he is possibly going to lose his family for this. So, was it worth it? People like this, like maybe even you, just jump into something without considering the consequences. Why? You need to use your head and think about what you are doing. No one is selling off a part of their nightclub unless they are broke. Period! So you want to buy into a nightclub under financial duress?
When you are buying in, did you know that you are also responsible for debts on the books, law suits, back taxes, and that list goes on and on also. Did you also think that when going into business that not everyone makes it? Daah! Being self employed is a gamble. Can you afford the gamble financially? Can you afford the gamble emotionally? Is losing your romantic partner or your family worth it? I don’t think so!
You can’t have everything in your life. You can’t. And you have to realize that and go on with your life and do something that works for you. Don’t let the seduction of the business cloud your judgement.
Now we will talk about the getting out of the buying in and getting out drama.
Getting out is not as easy as it may seem. After all, you didn’t educate yourself to begin with, or you wouldn’t be in this mess. So I am sure you thought they would just give you back all the money you put in? What’s the big deal, right? You just changed your mind. WRONG!
Your partners, or I should say fellow stock holders as I am sure they are incorporated, have a business that is not making any money or thy wouldn’t have needed you. And they money you invested in the purchase of the stock, is gone to pay bills, whatever they may be, hopefully.
Now you want out. But they are not obligated to buy you out. However, before you attempt to sell your piece, you have to offer it to the corporation first. And with them not having any money to begin with will do one of three things.
They will tell you that they do not want to buy it back. Or, they will buy it back for substantially less then what you paid for it. And last, you can get out with no money. Did you think you were going to get all your money back? You are kidding!
Now your fellow stockholders don’t even have to do those three things. They don’t have to do anything really. And you will be responsible of all they debt and responsibilities of that corporation, including law suits and taxes. And we haven’t even spoke of what will occur in the future.
So you tried to make a deal that they were not interested in. Now what? You have to try and market you piece, or your stock to someone else. You have to find a buyer. Not so easy. Most people already know how volatile this business is. And banks sure do. So you have to try and find someone as inexperienced as you. They say a sucker is born every day.
You are in a pickle, as most people will not even consider it unless you have fifty one percent of ownership, which I am sure you don’t. No one wants to invest money into something that they have no say in what goes on, or control.
So unless you find someone to buy your piece, or stock, you are in trouble. You have only one recourse. Approach the nightclubs competitor. The partners you have now don’t want their competitor as their partner, believe me. Now chances are, and they are very good mind you, you are going to lose money here.
Approach your competitor and tell them you will sell your piece, or stock to them for very little money. They may have an interest as then they can hold you club accountable for everything, which may be very uncomfortable for your partners. If the competitor goes for it, you will have to offer the same deal to your partners. If they take it, great, as they won’t want the competitor to be a part of what’s going in in their nightclub, and holding them accountable.
There is really no good in all this. You lost money when you bought in. At that very moment you signed your name. Now you need to save as much money as you can, and hope this hasn’t affected any other thing in your life.
They say, “live and learn”.
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