Do I throw in the towel on my business?

alltoomuch · 21 June 2008 at 3:49PM

Hi

New to all this but hope someone can help.

I started a business with my sister 12 mths ago taking out a £15,000 loan to fund it. This loan has now increased to £17,000 having paid off credit card balances used to keep the business afloat. The good news is though that the timescale has reduced therefore the interest rate has come down but obviously the monthly payments have gone up.

We rent a unit to run the business from. Basically the business is just ticking over with no profit being made & now I'm starting to find it dificult to pay suppliers. I've spoken to a business advisor who has advised that we need to reduce our overheads ie stop running the business from the unit & possibly work from home, fold the business or get someone to buy me out (my sister works as a sub-contractor to the business, I have put up all the finance and have had to get a part time job as the business is not making enough to pay me a wage).

Basically I feel stuck between a rock and a hard place - the whole situation is ruining my relationship with my partner which is having negative effects on our 5 year old son.

Every month I worry that there will not be enough money coming in to pay the overheads, the supliers & the subcontractors. My gut feeling is to fold the business but then I'm stuck with the loan to pay which will mean getting a full time job in order to pay off the loan for the next five years & also the guilt of leaving my sister with no money.

As you can imagine this is putting enormous strain on an already over-stressed relationship (bearing in mind the other half didn't want me to start the business in the first place!).

If anyone has any advise I'd be most grateful - do I stick with it and ride the storm or do I get out now?

a11waysindebt · 21 June 2008 at 4:02PM

Are you a sole trader or Ltd company.What type of items do you sell.

alltoomuch · 21 June 2008 at 4:19PM

I am a sole trader. It's a soft furnishings business making made to measure curtains blinds etc & supplying made to measure vertical & venetian blinds.

As I said my sister is working as a sub contractor for me - she's the talented one who does all the sewing!

a11waysindebt · 21 June 2008 at 5:23PM

alltoomuch wrote: »

I am a sole trader. It's a soft furnishings business making made to measure curtains blinds etc & supplying made to measure vertical & venetian blinds.

As I said my sister is working as a sub contractor for me - she's the talented one who does all the sewing!

I can only advise that you also work from home to cut the overheads.

As for suppliers can you only purchase from them the amount you require and only carry samples.

Thanks.

alltoomuch · 21 June 2008 at 5:33PM

I'm beginning to think you may be right but comments from customers have been that they like to be able to go to retail premises to see for themselves rather than someone go to their house.

As for the suppliers most of the money from the loan went on purchasing sample books. We don't actually hold any stock, everything is ordered as required for the orders. The main problem we are finding is that the money we make on these items is all lost in paying the overheads! Vicious circle!!

a11waysindebt · 21 June 2008 at 6:00PM

What about free home vists....can you do 1 off pillow covers/cases with HappyBirthday.Its a boy/Girl or Mothers day,Pets etc on them.

Do a market with pillow covers but add some scented candles,Incense sticks and oils aswell,Anything really to make people interested.

Uhum:whistle: I do incense;)

You could put these on ebid or ebay.Ebid is free by the way;)

This is a bit of a grey area for me as I haven't traded in this type of thing....Yet:think:

Come to think of it Valentines day could be a big hit for you next year,supply to small corner shops as sale or return.Red heart shaped pillow with gold ribbon around the edge.

I'm yapping on now ain't I.:rotfl:

kazwookie · 21 June 2008 at 6:07PM

Why do you pay for sample items, if any of my suppliers did that I would tell them to take a hike!

1. Move out of the rental unit or talk to landlord to get a rental reduction.
2. What price are you selling your goods at, it sounds like you are selling them at a lost, maybe up your prices.
3. What are your competitors in the area offering??
4. How many other staff are there? and what do they do?

alltoomuch · 22 June 2008 at 2:10PM

Thanks, I like the ideas - will discuss them with the expert (sister!)

You said you do incense - tell me more, do you supply?!?

Also thanks for tip on Ebid, I hadn't heard of this - novice or what?

Pennywise · 22 June 2008 at 2:35PM

Sounds a little strange tbh. You are the sole trader, but your sister does the work and gets paid. You take the risks but don't get any rewards. Why was it set up like that? Why didn't your sister do it herself and leave you out of it? It sounds like she is the winner here - she's got you to go into debt to give her a job? Why can't she become a sole trader herself, buy the stock etc from you, hopefully enough to repay your debts, and then you can walk away and leave her to it. Would you have gone into this business had it not been your sister? Is it really a "business" or was it motivated by family ties?

motorguy · 22 June 2008 at 3:30PM

Pennywise wrote: »

Sounds a little strange tbh. You are the sole trader, but your sister does the work and gets paid. You take the risks but don't get any rewards. Why was it set up like that? Why didn't your sister do it herself and leave you out of it? It sounds like she is the winner here - she's got you to go into debt to give her a job? Why can't she become a sole trader herself, buy the stock etc from you, hopefully enough to repay your debts, and then you can walk away and leave her to it. Would you have gone into this business had it not been your sister? Is it really a "business" or was it motivated by family ties?

I was literally reading down and thinking the same things. The o/ps sister seems to get a wage ok, but the o/p is taking the risk?

I ran a business in a similar situation, whereby it was barely covering its overheads but our one employee got a wage, though i usually ended up getting nothing.

Basically what i learnt, and i think the o/p should take on board is that its very hard to get a small business off the ground as a sole trader if you need to employ someone to do the work AND rent a unit.

I would offer the sister the opportunity to buy the business out, or close the business. We did the same and our employee declined, so we closed down, before the loss really got out of hand.

brightonman123 · 22 June 2008 at 3:32PM

i would def look for a cheaper unit to rent, or if you have the space, do it from home, and sell on ebay / carbots only. ask suppliers if they can extend credit, to ease the cashflow.

butm if noit getting many orders to start with, might have to cut your losses.

Do I throw in the towel on my business?

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