Marital and business disputes are never pretty. When the two are combined, it can get even more complicated.
On the latest episode of CNBC's new series "Money Court," O'Shares ETFs chairman Kevin O'Leary is tasked with finding a resolution for a couple who are fighting over the direction of their growing pet grooming empire.
Chris and Emily Elias run The Ruff Life, a popular mobile pet grooming service in Long Island, New York, that has seen business explode during the pandemic. With their fleet of vans busier than ever, the couple feel it's time to expand. Chris wants to buy three new vans and take the business national, while Emily wants to stay on their home turf and open a brick-and-mortar pet spa.
The business partners turned to O'Leary for advice, and because they signed a contract agreeing to follow his recommendation, his decision will be binding.
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The couple's business brought in $800,000 in sales, including $240,000 in profits, in 2020. Though both want to capitalize on their current popularity by continuing to expand, they have different ideas for the future of the business.
For Chris, the next step for The Ruff Life is a nationwide expansion. He wants to spend $100,000 that the couple has saved up to lease three new vans and place them in cities across the country.
"We own Long Island," Chris says. "I want to spend this $100,000 on a nationwide rollout because I believe we can take it further and really get this brand to be national."
Emily, meanwhile, believes that they should leverage their local success by opening a brick-and-mortar pet spa, which will allow them to create new revenue streams, including day care and dog training. She believes that expanding their operations to other cities will stretch them too thin and thinks they should continue to make their money close to home.
Kevin O'Leary's reaction
When weighing the couple's options, O'Leary says there is one primary factor that the Eliases need to take into account.
"The decision is: How much risk do you want to take?" he says. "What's the path of least resistance to a higher return on capital?"
He critiques both of their plans. For Emily, he is taken aback when he learns that she doesn't have a business plan for the brick-and-mortar pet spa and tells her that the business can't move forward until she puts in the work on her end.
And though O'Leary calls the business "incredible" and says most entrepreneurs "would die to have the problems you have," he tells Chris that his plans for expansion are the result of him "getting a little drunk with success."
"You want to go national? What are you, nuts? The path of least resistance is right at your feet," he says.
O'Leary decides to give both entrepreneurs a little bit of what they want. He tells Chris that he can get three more grooming vans, but they are to remain in Long Island to continue capitalizing on The Ruff Life's local popularity.
Emily, meanwhile, won't get her pet spa until she puts together a business plan.
"I'd like to see [projections for] month one, month two, month three, what your assumptions are about occupancy, how fast you'll scale," he says. "You should force yourself to put a spreadsheet together so people can understand what the risks are in terms of how that builds out."
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