Just started a new business six months ago - quick rant

motorguy

We have started a retail shop, going well six months in, all looking good. We have a £10K limit on our company credit card, which we use to buy stock, its paid in full every month by a direct debit from our current account.

As our average margin is around 17% its easy to see how quickly £10K of a credit card limit can become a bottleneck SO we asked the bank for at least a temporary increase in our limit to buy (for which we have orders for) and thus sell more stock each month. I am finding it hard not to swear here, but you'd think we'd asked to hold a black mass in the reception area of the bank the way its been received. Ok, we're a limited company, but we have clear figures to show that the 10K credit limit is a limiting factor on growth. I thought businesses could grow with the aid of their bank rather than in spite of!!!

Then on top of that, we had a one year lease on our premises, renewable yearly, and today our landlord has told us he has a £150K offer on the premises so we have to either match that or get out in five months!

AAARGGGHHH!!!!

Maybe i should just go on the dole - seems when you try to get somewhere in life there is always someone to beat you down.

Rant over!!

MORPH3US

Keep your chin up mate, I am sure there are loads more premises about that you could use, turn something bad like this into something good, you could end up somewhere much better for less money!!!

As for the CC, can you not just get another CC from another bank to use that??

M

motorguy

MORPH3US wrote:

Keep your chin up mate, I am sure there are loads more premises about that you could use, turn something bad like this into something good, you could end up somewhere much better for less money!!!

As for the CC, can you not just get another CC from another bank to use that??

M

yeah, starting to calm down now and we have come to the same conclusions as yourself.

we're a young limited company so this makes getting a credit card very tricky. thus we have opted to use one of our own personal credit cards and clear it every month thus avoiding interest charges.

definitely feel that we've had the rug (floor!) pulled out from under us BUT if starting your own business was easy everyone would be doing it!

Thanks for replying!

P

Seraphim

Banks....ahhh don't you just love 'em? So much fun
I've just spent three months trying to get my debit card. They ended up sending me six before one actually made it to the local branch in tact (and not cancelled!)

Good luck with getting the money you need

[Deleted User]

Not a lawyer, but if your tenancy agreement comes under the Landlord and Tenant act (and you would have had to make a sworn declaration if it does not) then it is my understanding that the landlord cannot evict you at the end of your lease. He must re-let it to you at a reasonable price. This is enforceable by law. The only exception to this is if the landlord is going to use the premises for his own trading.

Of course the landlord may sell the premises but then your agreement would be with the new landlord and the same would apply. The danger being that they would want to use the premises.

helen_vasey

we have just got ourselves a sainsbury's credit card for our initial stock outlay, it's interest free for 10 months. I can't understand the banks' attitude, especially when you have the orders, you just wait, when the money is rolling in they will be falling over themselves to lend you money. why do they want to lend you cash when you don't need it but when you are struggling, they don't want to know??? you have my sympathy on the shop front, we decided against one beacause the charges are soo high! we would need £500 per week in sales just to run a small, out of town-centre shop.

Murphy_The_Cat

haven't a clue.

chriz1000

I don't utilise company credit cards, but I just thought I'd make mention of your profit margin.

Unless your overheads are absolutely nonexistent, 17% seems to be very, very low to me.

It all depends on the product, if you are running a corner shop, you will most likely be using a cash and carry service, the average profit margin works out to be about 17%, its just the sheer number of products you manage to shift that can make it worth while.

Then on top of that, we had a one year lease on our premises, renewable yearly, and today our landlord has told us he has a £150K offer on the premises so we have to either match that or get out in five months!

I’m sorry to here about your situation, it does sound like very unfortunate circumstances.
Did you go through a solicitor when signing the lease? If so they should have brought certain clauses to your attention, a one year lease is very short. I expect my new business to be only just reaching its target potential after the first year. A solicitor should ensure that safe guards are in place. My solicitor insisted on a clause stating that rent reviews were every 5 years and the rent could only be increased by a maximum of 2.5% PA.
Perhaps if you do end up moving premises it would be worth getting a decent solicitor on side to ensure nothing like this happens again.

Murphy_The_Cat

chriz1000 wrote:

It all depends on the product, if you are running a corner shop, you will most likely be using a cash and carry service, the average profit margin works out to be about 17%, its just the sheer number of products you manage to shift that can make it worth while.

wouldn't know

chriz1000

Hence the reason why you seem to get mainly ethnic minorities running corner shops who are prepared to work hours most of us wouldn’t dream of working just to put food on the table! If you want to work for yourself its one way, but like you say convenience stores are a dieing breed

Murphy_The_Cat

if you say so