1. How You Will Split the $15,000 Left in the Investment? Essay

1487 Words Oct 21st, 2012 6 Pages
You are Chris and Pat Smith, entrepreneurs with five years of experience investing in small businesses. Eighteen months ago you decided to invest in a catering venture with two chefs, J. P. Martin and L. L. Miller, who have culinary science degrees and five years of work experience, which includes winning a prestigious prize in a gourmet food competition. Following some extended discussions, the four of you decided to set up a business catering to parties and weddings under the name of At Your Service.
The arrangement between you was quite informal. Essentially you put up $25,000 and the chefs put up $10,000 in capital to get the operation started. You were to manage the advertising, and the bookkeeping. The chefs' contribution was to
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You found out before the menus were printed and raised the prices by 10%. You have also put them on a strict ingredients budget.
Of course, all of this has not pleased them, but the $35,000 investment is rapidly disappearing. You are down to $15,000 in working capital, and you and your partner have no more money to put into the business. You are quite sure that Martin and Miller have no more money either.
Last week, you all briefly discussed dissolving the business. You are very interested in doing so; you find it hard to believe you had such bad business judgment to form a partnership with two chefs. It is possible that with higher prices and more discipline on their part profitability will improve, although you doubt that your relationship will. Alternatively, profitability may not improve and you will have to use the last of the reserves to terminate the leases on the space, the van, and the kitchen equipment.
The issues that have to be resolved are as follows:
How you will split the $15,000 left in the investment?
How to handle the lease on the kitchen space, which has 18 months more to run?
How to handle the lease on the van, which has 18 months more to run?
How to handle the lease on the kitchen equipment, which as six months more to run?
What have you learned this week that would ensure that ech of the above outcomes would be a win/win situation?
There are a variety of

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