Employing staff - are there grants available?

cheesypop

Hi everyone

My mum and sister have been running a business (internet shop) now for 3 years and it has been going well, so much so that they really need another person to help with the day to day running of it. However they do not make enough money yet to be able to afford to take someone on. Are there any grants or schemes available that will help them?

My mum is so stressed with all the work (she is working really to just help my sister out and isn't taking any money) that I'm worried about her health.

I would appreciate any advice.

Thanks x

Annisele

I'm afraid I'd question the viability of the business.

If it's so busy that there's enough work for three people, but it's only making enough money to pay one person - then on the face of it that is not a business that is "going well". Do you base the "going well" on profit or on turnover?

The government has been talking about various schemes, but fundamentally if the business can't even afford to pay both of the people who work there now it looks like serious changes need to be made.

Sorry to be so negative, but I do think they need to take a very careful look at their books.

cheesypop

I do see your point. The business is doing well in that with the original plan it wasn't expecting to make any profit for the first 5 years, but it is now making profit at year 3, however it is all being invested back into the business which is needed (expanding warehouse, setting up outside office space - it is currently being run from inside my mums house).

Basically my mum is extremely unhappy helping my sister out and is finding it very stressful as she cannot get away from it. However she knows that if she doesn't help out that at the moment my sister cannot cope by herself. I think in another year there will be enough money to employ someone else, but not sure if my mum can cope that long.

I'm just trying to find out if there is anyway to get extra help.

Annisele

Is there an argument that your sister is taking advantage of your mother?

The business is being run from your mother's house (not your sister's), your mother doesn't particularly want to work for the business at all, and she isn't getting paid - even though you say the business is making a profit.

If your mother was to say "Right, that's it, this business is leaving my house and I'm not going to work for it anymore" - would that cause the business to fail? If so, then I think your sister needs to move it out of your mother's house asap; the risks to the business of leaving it there are too high - and I think that's likely to be an even bigger problem than the problem of paying a third member of staff.

cheesypop

It's a complicated situation, because of the amount of stock it is not possible to move it out of the house as my parents have a lot of land and have storage outside. My sister also lives at home and will be moving out in June next year. My sister has another career at the moment as well (classical musician) and the business is related to that. Unfortunately my sister has an illness that will cut this career short and this business is meant to be her future. My sister works extremely hard. My mum will not take any money as does not "need" it and cares about my sisters future.

The business is moving "outside" but will still be on my parents property, but will take about 2 months.

greyteam1959

You say this is a business ???????
Rubbish...........
Its currently as far as I can see pays NO
Wages
Rent
Business rates
Insurance
PAYE
National Insurance
Electricity
Gas
Water Rates
Etc
Etc
What about your VAT liability ???
Profit ?????
We can all make a profit WITHOUT any overheads !!!!!!

cheesypop

OK Mervynn11, that is a bit harsh. Lots of people run businesses from home when they start up. There are many overheads which they pay for. Just so happens that my parents have land, so it works out best to buy outside office space (which they are doing out of the profits) rather than pay a monthly rent to someone else. Why do you assume it pays no wages, business rent etc etc - that is not the case. My Mother may take no wages, doesn't mean my sister doesn't. And what about VAT? They are registered for VAT, what makes you think they don't? They have their own accountant which makes sure everything is legit.

All I was asking for was for a bit of advice on how to make things more pleasant for my Mother rather than have someone slag off the business.

glasgowdan

I think mervyn's truth hurts but is perfectly justified. Business is not cosy and cuddles, it's reality. If the numbers don't make sense there is no business.

The business may be making a profit but not a net profit if your mother is working for free. There are no drawings being taken on her part, and you need drawings to live. Once a wage has been taken out of this profit figure, is there still a profit? If no, then the business is still at a loss.

If the business was projected to make a loss until year 5 anyway, why can't she employ someone now and continue that loss for another 2 years? Hopefully by then, even with staff, things will be more profitable.

The best thing for your mother to do is leave the business now before debts mount up and the relationship between her and your sister gets bad. Your mother should have faith in your sister and let her make her own way, provide storage as a formality/favour only.

I don't think there is a pot of money that they can get for free to help, no.

Annisele

What does the accountant say about the ongoing viability of the business?

There are sources of funding available (generally not for free), but for all of the ones I can think of you're going to have to demonstrate that the business is viable. Based on what you've posted - which I appreciate is a small amount about a complex situation - demonstrating viability is going to be a problem.

cheesypop

The business if definitely viable and not in any debt at the moment. (I don't run a business myself so apologies if I don't get all the technical terms right). From my understanding, for the first 5 years any profit made was going on getting infrastructure up and running - website, increasing stock, offices and storage space etc plus an income for my sister. The business has just been more successful than predicted so at the moment it is too big for just the two of them to cope with without all this infrastructure fully in place yet.

In the future they will hire someone else, they just can't afford to at the moment as the money is going on other things. I guess I can suggest to them that they take out a business loan. They realise how hard running a business is and give it everything they can - they are not afraid of hard work.

I have just so much in the news recently about the high level of people unemployed and the government offering incentives to companies taking on the long term unemployed I was wondering if this was something they could take advantage of. By no means was I expecting a grant that would fully cover the wages of someone working full time.

jexygirl

cheesypop wrote: »

I think in another year there will be enough money to employ someone else, but not sure if my mum can cope that long.

Correct me if I am wrong - but your mum currently takes no wage as she doesnt "need" it, but is working all hours - and yet even if she wanted a wage (as a new employee would) she wouldn't be able to have one, as the business isn't making enough, hence you want to know about grants.
However, in another year, you think there may be enough to employ someone else... and what? your mum leaves... ? leaving 2 people... the same as now, and an employee will NEVER work as hard as your mum is.

The logistics /numbers on that, make as much sense as the current business plan to me.

Sorry to agree with the posts that you don't want to hear - but this does not sound viable in the slightest, and whilst I appreciate that your sisters health /circumstances are difficult, that still does not make this magically viable no matter how much you want it to be.

Turnover/being busy doesn't pay the wage bill - profit does. You can turn over a million, but if your outgoings are 999,999 then you need to re do those sums - which would be my first suggestion to her, and to reassess the original business plan, matching it up with the reality of how much things cost /take time to do/ hours they put in - all things that should be figured into the selling price to make sure it is viable.

Only once all the outgoings are properly worked out, and added onto the cost price of whatever you are selling, and you are selling the required amounts to break even /go into profit, are you a viable business, perhaps that is why they are so busy, because no competitor can afford to match the price - for a good reason...


Jex