Good Bones: Saving a $3m Business in Decline

And now the partner that I had, I actually did raise the question with him. I'm like what, like, you know, what happens if we get in. And there's a lot of issues with this business.

But then I took the, you know, I made a decision on the spot to give a personal guarantee. And then I went back and I said, look, I'm giving a personal guarantee. I'm not going to take 30% on this deal.

And I remember him saying, oh, we just shut it down and that like, you know, I didn't say anything. But that did not sort of stick well with me. But then when I was, you know, sort of going, because I was the front man for the deal with the, with the operator who did not know that like, you know, behind me was the same investor that he had on the cap table before and also like, you know, was…

That's when the deal got closed. Okay.

I think originally it was maybe like 30, 70. I'm 30 and the other guy is 70. But there was supposed to be no personal guarantee.

I need to be basically like, I don't know, 50, 60, 70%. So we renegotiated finally. So I had 55% and my partner had 45% and the personal guarantee was on me.

And this personal guarantee, you're basically guaranteeing $500,000. In the absolute worst case scenario, the business collapses. Frankly, you could absorb that.

I mean, it would be painful, but you could and still have a balance sheet left over to go do your next thing.

That was my logic. That's exactly how I thought through. And I will say I generally think about the worst case scenario in life a lot. So if everything goes south, like, you know, what can I do? What am I left with?

Yeah, well, and I think that's appropriate, especially in the case of a personal guarantee, which is, is the worst case scenario. So, but I, you know, it's just, it, it's worth mentioning because personal guarantee means more to mean something different to everybody. What they, first of all, how much money you're guaranteeing and can you absorb it, obviously, and then what you stand to lose.

And so this would have been a chunk of your net worth, but not even half of your net worth were absolute worst case scenario. And of course that, that suggests that you couldn't somehow resell the business in some way, that you couldn't somehow recapture some of that $500,000 to, to pay back the original stock. Okay. You, you said something himad about your investor.