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My father's cousin, who will go by J, introduced him into a car flipping "business" that he has been involved in with one of his friends. All three of them are middle aged and have had past successful/failed businesses of their own. J is located in NYC and my father is located in south florida. Basically, J was an agent for someone who has a dealer's license. This person gives the authority for J to purchase vehicles as an agent with the license. Since who knows when, he has purchased up to about 20 vehicles prior to getting my father involved. Most of these vehicles are in running but have mechanical issues and with high mileage. J also began the process and is in the final stages of getting his own dealer's license. Since my father came in last year, they have purchased 4 BMWs together. 10 vehicles in NY were sent to florida and none of the 20 something vehicles have been sold thus far. Supposedly now, they are considering shipping the vehicles to the caribbean. However, most of the vehicles need repair and none of them can be moved or sold because J has the dealer plates in NY. So there are so many moving parts and without any business structure.
So, they requested that I come in as a consultant and possible investor because of my logistics experience. This was in October 2016. I told them that I would not invest until I saw some type of structure. I have proposed many calls to action in terms of conference calls and to establish rolls but to no avail. Since my involvement, none of the vehicles have been sold and 4 of them were purchased with no actual proper planning. To this day, they haven't even signed any legal documents binding them as either associates or active investors- as I have asked J to do. There is virtually nothing in place.
As of now, they decided to send 4 of the higher end vehicles to the caribbean. But as per J, the reason why the stall is because he hasn't received his dealer's license yet. So today, he called me and said he wanted to invest in 4 tow trucks before focusing on the caribbean- totally out of the place with these ideas.
And finally, J confessed that the reason for the dealer's plate delay is because he wasn't approved for the commercial lease on the property in Washington State. Apparently he has a negative remark on his credit that he was not aware of. SO... today he asked if I would be willing to put my name on the lease using my credit. I didn't want to blow him off right then and there so I told him I would call him back.
After consideration, and after today's phone call, I now want no part of this business venture- not even as a consultant. Even though I wish them the best of luck and I know that they can be very successful if they get their act together, I have this feeling that it would be best for me to step away totally- even though I know the great possibilities in a business like this. The problem is that there is no structure and I can't work under those conditions and with them stuck in their ways. But I still know of the great opportunities if done right because between the 3 of them, they have some major contacts high profile contacts in many countries. This is what makes me feel like I might miss out.
So my question is, not that I am asking for advice as to what I should do, I just want to know from others who have been part of or witnessed these type of dysfunctional ventures. How have they ended up in your experiences? Did you end up regretting not being part of it? Were you glad that you bailed when you had the chance? Secretly, I don't to because I know that a lot of money can be made but 1 year has gone by and nothing has happened.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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OK.... Count the red flags in your post (one is too many, you have a bunch!) Wait to witness the victory of your dad and other investors, otherwise, you will be taken for a ride. You will miss NOTHING except the head and heart-aches awaiting you.
BTDT with a very aggressive and enterprising parent (Bi-Polar +/-), but NEVER consistent and ALWAYS optimistic, sometimes successful. (at great cost to others)
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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The first problem is doing business with relatives. The second is doing business with someone that has bad credit. If anything, I would limit your participation to consulting for an hourly fee, and being prepared to stop when they cannot
afford to pay you.
"I just want to know from others who have been part of or witnessed these type of dysfunctional ventures. How have they ended up in your experiences? Did you end up regretting not being part of it? "
Most business start-ups fail, even if they are not dysfunctional. Like politics, people see what they want to see, then reality swats them and they wonder what happened. I've watched four different local families try to make a go of a meat and two restaurant in a tiny rural town near me. Just a cursory glance at the place and average customer base on good days and it was obvious to me that there was no way to make the nut - ever. I watched a retired couple start an independent dollar store, buying junk from China and India and adding thrift store pickups. The location was bad, the stock didn't rotate except as the place spiraled downhill. An elderly friend of my wife lost all her retirement money in a television scheme.
"Supposedly now, they are considering shipping the vehicles to the caribbean. " Having lived in south Florida and learning about what gets shipped to the Caribbean, the word "HOT" screams at me. There was a thriving trade in autos (in better condition) and especially bicycles. Bikes would disappear off the streets constantly, and then there would be a small freighter packed to the gills with bikes overflowing the decks, bound for Haiti.
What's the business model? Buy low, fix it up, ship to somewhere else with a much lower per-capita GDP in the Caribbean, sell for more than it costs to buy & ship plus administrative costs?
It sounds like the principals, while having small business experience, are not the guys. There's nothing to indicate they have automotive procurement expertise, repair/restoration expertise... nothing. It isn't even clear to me there is a viable market opportunity.
Doesn't sound like a winner to me.
Last edited by SportyandMisty; 02-09-2017 at 08:23 PM..
I would let them know that if they ever get organized and get their act together, that you would then be interested.
I have worked in the used car business flipping off and on and to be honest, lots of people who do this are a little flakey, not the most honest, very unorganized etc.... It is just the nature of the beast. Most are after the quick buck instead of building something for the long term like a real business.
There is money to be made though, but there is also a ton of competition.
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