Debt and renting a Shop

samkma

I am self employed and have about £32K debt now! (scary!!) I am planning to rent a shop that is on £20K rent p.a, my family is going to lend cash me with few months rents, cost for fitting the shop and some stock, I am a online seller and have about £18K worth stock, apart from the debt I have a joint mortgage on the house (4 years now). My credit history is fine 936/999 score on experian. No CCJs, No late payments, nothing like that.
Will my credit in anyway affect the process of renting the shop, the shop is owned pvt landlord has agreed on 1 month bond and 1 month rent in advance with a 1 month rent free period to help me start, (2 year agreement) when the contracts go to the solicitors they do a credit history check? and am afraid if this will affect the process.

I am doing Ok selling fulltime online, but ran into debts last couple of years as was not able to move my stock due to health reatled issues and the lack of sales mainly on eBay.


Any help much appreciated.

poppasmurf_bewdley

No mention in your costings of Business Rates. Maybe £5k. Maybe £10k. Do you know? With all the news in the last few days about them, are they going up or down in your area?

Why are you having a shop? If you have run debts up working online, having a shop can only increase your costs.

chris73

Are the health related issues likely to ever appear again in the near future?. Just bear in mind that if a situation arises again where you are unable to trade for a period, then the landlord will still need paying, along with all of the other expenses related to running retail premises.

January2015

What extra benefits will you have from having a physical, as a well as a virtual shop? Have you carried out a full cost/benefit analysis with realistic forecasts.

Sorry, but it's daft to take on more overheads until you clear down some / all of your debt unless, and only unless you are absolutely certain something in the physical shop will make such a difference to your income and massively outweigh the overheads of operating it.

-taff

How did you accrue the 32k debt?

FatVonD

I think you should also post this on the small business board though I expect they will all say the same thing.

I too think it is madness but if you are adamant on going ahead at least make sure you have an early break out clause so you don't end up owing even more money if it doesn't work out.

Owain_Moneysaver

Business rates, premises insurance, gas / electricity / phone / internet, till/computer/epos, maintenance and repairs (most commercial leases are the tenant is responsible for maintenance), staff (because if you are selling full time online you won't be able to staff the shop yourself as well) ...

What is your gross profit and average sale transaction value on your product? If your shop overheads are £36k p.a. and your gross profit is 10% then you will have to shift nearly £7k of stock per week, every week just to break even. With an average transaction of £25 you'll need 46 sales per day in the shop, 6 days a week every week. No time off for holidays etc. And this is just breaking even. With all this extra work you won't make a penny more profit than you do at the moment.

[Deleted User]

Is the lease renewable after the first 2 years?

sourcrates

I would agree with the others it would be madness to take on further financial liabilities in your current state of indebtedness.

The post two up from mine spells out with extraordinary clarity, the sales figures you must attain just in order to break even.

I don't think it's possible, in the current climate, and your current situation, to make this work.

If your online sales are good, stick with that.

gingerdad

It's ineresting I own a shop and our go is around 60%.

tallyhoh

The way I look at it is: if you are struggling trading on ebay with a world wide audience, how will it work if you only have local passing trade?