Page 147 - Business Principles and Management

C HAPTER 5 A SSESSMENT

CASE 5-2: To Partner or Not to Partner
John Willis, who is 27 and single, had just completed his fifth year of
employment as a carpenter for a very small homebuilder. His boss, the
sole owner of the company, is Tyrone Young. A few days ago, Tyrone
asked John if he would like to become a partner, which he could do by
contributing $70,000. In turn, John would receive 40 percent of all prof-
its earned by the business. John had saved $30,000 and could borrow
the balance from his grandmother at a low interest rate, but he would
have to pay her back within 15 years.
John was undecided about becoming a partner. He liked the idea but
he also knew there were risks and concerns. He decided to talk to Tyrone
at lunch. Here is how the conversation went.
John: I’ve been giving your offer a lot of thought, Tyrone. It’s a tough
decision, and I don’t want to make the wrong one. So I’d like to
chat with you about some of the problems involved in running a
business.
Tyrone: Sure. I struggled with these issues about 15 years ago. When you
own your own business, you’re the boss. No one can tell you
what to do or push you around. You can set up your own hours
and make all the decisions. I enjoy the feeling of ownership.
John: I don’t know if I’m ready to become part owner of a business.
I’m still young and single, and I like working for you. I’m not
sure I want all those responsibilities—getting customers, paying
bills, and buying tools and lumber. You say you set your own
hours, but I know you’re already working when I arrive each
morning, and you’re still here when I leave in the evening. I
know you spend some nights in the office, because I see the
lights on when I drive by.
Tyrone: Well, I do put in many hours. That goes with the territory. But I
don’t mind all those hours because I like making decisions. And
when you join me as a partner, we’ll share the work.
John: Then I’ll be working longer hours. Both of us could go to work
for that big new contracting firm on the other side of town. Let
them struggle with all the problems and decisions. Then we
could work shorter hours and have more time to relax.

THINK CRITICALLY
1. Does John have the personality to be a sole proprietor?
2. Do you think John is seriously ready to become a partner? Explain
your answer.
3. If you were in John’s position, how would you decide? Explain.
4. If John decides to accept Tyrone’s offer, what action should be
taken next?
5. Why would Tyrone offer to make John a partner?
6. Find information from the library or the Internet that might help
John make a decision. One possible source is the Web site of the
Small Business Administration.

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