Canadian Rental Service

Features Business Intelligence
Editorial: Perils of partnership

Our rental store profile this issue is a little different. Usually, Canadian Rental Service focuses on a going concern in the rental industry. This time, we are taking an in-depth look at the Absolute Group, a consortium of event and film location rental operations that ceased operations back in April.


September 18, 2015
By Patrick Flannery


Topics

As you will read on page 12, Absolute could not finalize deals to sell most of its member companies and was forced to liquidate its physical assets through auction. We are indebted to its former owner, Paul Kenyon, for his willingness to share his story at what must be a difficult time.

Some will complain that dedicating space to a “failed” company paints an unflattering picture of the rental industry in Canada and conflicts with this magazine’s mission to promote and support it. But that is only one of the aims of this publication. Our goal, first and foremost, is to give Canadian rental operators information that helps them succeed in business. Mistakes are almost always more educational than successes. Paul has been very forthcoming in discussing his mistakes, as well as his many successes, and
the result is a story I hope we can all learn from. And any perception that Absolute is a failed enterprise misses the fact that for 18 years it was a story of almost unmitigated success, growing swiftly into one of the largest rental operations of any kind in the Toronto area.

Having logged over 20 years now working closely with small businesses in such diverse sectors as machining, wood product manufacturing, flooring, window and door manufacturing, commercial glazing and, of course, rental, I feel confident in saying that the number one source of business closure has nothing to do with sales levels, expenses, red tape, market conditions or any of the other economic factors normally blamed. The most common reason Canadian small businesses involuntarily close their doors is because of breakdowns in partnership arrangements. Anyone contemplating entering into a business partnership needs to remember that no matter how strong and trusting their relationship is now, tying fortunes together and taking the myriad decisions that company ownership requires will create new strains that are difficult to imagine and plan for. As our legal columnist, Deryk Coward, constantly reminds us, “get it in writing.” Your partnership arrangement needs to be structured and specific, with clear processes for dispute resolution and the exit of one or more partners from the business. Do not fail to get a lawyer involved. I personally feel that 50/50 arrangements are a bad idea. Ships sail better when everyone knows who the captain is.

Since we are talking about things that threaten business, I might as well note that the R-word is floating around again. Statistics Canada says the Canadian economy contracted for the second straight quarter in the second quarter of this year. If you aren’t in the West, the news probably came as a surprise. Manufacturing is already strengthening in Ontario, even though the dollar spread has not had time to really affect exports yet. Employment numbers here are strong, and housing has resumed its apparently never-ending boom. Looking for a recession-proof niche to buffer sales in slow times? A recent report by realtor Re/Max says sales of multi-million-dollar luxury homes are at all-time highs in major metropolitan centres, and that most of the buyers are rich foreigners, especially in Vancouver. Time to look around your store and see if you have anything that a wealthy homeowner looking to renovate her new property might need.  

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