Advice on selling Ltd company in debt, or reducing hours.

topsy10

Hi all,

What I'm looking for is some ideas as to how to proceed really. 

I co-own a limited cleaning company with my girlfriend. We have 8 p/t staff. It started out 9 years ago as something to 'keep the wolf from the door' with me as a sole trader, which was never meant to last long, but it snowballed into a good local business with a catchy name that is well known in the area. It could really grow as we don't actively advertise and are just word of mouth, so it can become even more profitable with the right ownership. The business ticks over nicely from day to day but has never made a huge profit as we've never had the time to do more than we already do.

However, due to the pandemic it's making a loss as we had to take a £20K Covid interruption loan out to survive. We pay the repayments on time though and have no other debts. Business has picked up brilliantly since reopening in January too, and we have a small waiting list of clients.

The problem?

As well as being furloughed for 7 months (which gave me time to really think about things), my mum passed away suddenly in July 2020 and I've decided that I want to live life to its fullest, as much as possible at least, so I'm looking to either cut back my hours and maybe take on another job elsewhere (either instead of or as well as this) or step away altogether and sell the business.

It's just becoming too time consuming and stressful and I want to be able to get my evenings and weekends back, which I always seem to spend doing admin of one sort or another, like rotas, client visits, staff issues, bookings etc (I undertake cleaning during the day).

My heart isn't in it anymore and I'm just over it now, and am probably only doing it to keep my lovely staff from being unemployed. I'm ok with doing the cleaning side of things, but the running of the business is just too much now. I just want to be one of my team, whereby I get up, go to work and come home, with nice regular hours, and without having to deal with endless queries, emails, texts, calls etc etc, often right up until 10pm or later. I find myself getting up earlier and earlier to deal with queries for the day too before I leave. I'm in no way lazy, just bored of it all, and at almost 50, I don't want to get stuck in a rut where I'm still doing this when I retire. Ideally I want to open a little gift shop, but that's a 3-4 year away plan. 

I never planned to be a boss, it just sort of happened 7 years ago and to be totally honest I hate it. I'm not management material, but I thought I'd give it a try and for the past 5 years have just plodded along. My staff all love me (I'm a bit soft with them!) but my mental health has suffered (I've developed anxiety) and I'm constantly tired. 

My partner works full time elsewhere, but is in charge of wages and invoicing for the business, and she too is becoming overwhelmed with it all, due to recently getting a promotion at work, which requires more attention and time. She supports and agrees with my thoughts but says we've got to keep it going until the loan is paid off, and/or until we are in profit. I'm not sure I can wait that long tbh, but what I definitely DON'T want is to liquidate the business, I personally would hate that after all of the work we've put into it.

I guess that ideally we need to take on someone to cover our duties, but my partner says she doesn't think we can afford experienced admin staff as there isn't enough cash flow. Plus if we are totally honest, we both are cautious of others getting involved in the money side of things, as we haven't the time to regularly check they aren't ripping us off.

Any ideas or thoughts welcomed please (or advice on how to get my mojo back!) 

After reading this back I'd like to point out that I'm in no way depressed, just fed up and want something to change!

Thanks for reading  

Grumpy_chap

topsy10 said:

Hi all,

What I'm looking for is some ideas as to how to proceed really. 

I co-own a limited cleaning company with my girlfriend. We have 8 p/t staff. It started out 9 years ago as something to 'keep the wolf from the door' with me as a sole trader, which was never meant to last long, but it snowballed into a good local business with a catchy name that is well known in the area. It could really grow as we don't actively advertise and are just word of mouth, so it can become even more profitable with the right ownership. The business ticks over nicely from day to day but has never made a huge profit as we've never had the time to do more than we already do.

However, due to the pandemic it's making a loss as we had to take a £20K Covid interruption loan out to survive. We pay the repayments on time though and have no other debts. Business has picked up brilliantly since reopening in January too, and we have a small waiting list of clients.

The problem?

As well as being furloughed for 7 months (which gave me time to really think about things), my mum passed away suddenly in July 2020 and I've decided that I want to live life to its fullest, as much as possible at least, so I'm looking to either cut back my hours and maybe take on another job elsewhere (either instead of or as well as this) or step away altogether and sell the business.

It's just becoming too time consuming and stressful and I want to be able to get my evenings and weekends back, which I always seem to spend doing admin of one sort or another, like rotas, client visits, staff issues, bookings etc (I undertake cleaning during the day).

My heart isn't in it anymore and I'm just over it now, and am probably only doing it to keep my lovely staff from being unemployed. I'm ok with doing the cleaning side of things, but the running of the business is just too much now. I just want to be one of my team, whereby I get up, go to work and come home, with nice regular hours, and without having to deal with endless queries, emails, texts, calls etc etc, often right up until 10pm or later. I find myself getting up earlier and earlier to deal with queries for the day too before I leave. I'm in no way lazy, just bored of it all, and at almost 50, I don't want to get stuck in a rut where I'm still doing this when I retire. Ideally I want to open a little gift shop, but that's a 3-4 year away plan. 

I never planned to be a boss, it just sort of happened 7 years ago and to be totally honest I hate it. I'm not management material, but I thought I'd give it a try and for the past 5 years have just plodded along. My staff all love me (I'm a bit soft with them!) but my mental health has suffered (I've developed anxiety) and I'm constantly tired. 

My partner works full time elsewhere, but is in charge of wages and invoicing for the business, and she too is becoming overwhelmed with it all, due to recently getting a promotion at work, which requires more attention and time. She supports and agrees with my thoughts but says we've got to keep it going until the loan is paid off, and/or until we are in profit. I'm not sure I can wait that long tbh, but what I definitely DON'T want is to liquidate the business, I personally would hate that after all of the work we've put into it.

I guess that ideally we need to take on someone to cover our duties, but my partner says she doesn't think we can afford experienced admin staff as there isn't enough cash flow. Plus if we are totally honest, we both are cautious of others getting involved in the money side of things, as we haven't the time to regularly check they aren't ripping us off.

Any ideas or thoughts welcomed please (or advice on how to get my mojo back!) 

After reading this back I'd like to point out that I'm in no way depressed, just fed up and want something to change!

Thanks for reading  

Would the business be viable if you stopped cleaning during the day and simply managed the business (so employing another cleaner to do that work, and you get your evenings back)?  You may not want to do that, but any future business owner is likely to.

To sell the business, you will need to prepare the accounts, demonstrate that the loan was purely linked to COVID so the business is structurally sound, and then prepare a business plan for the next phase of growth.  Use your Accountant to assist.

You may need to sell on the basis that you continue to provide transitional support for a period of time.

topsy10

Thanks so much for this advice, all very helpful. I have tried doing that but the business does need me to do the actual cleaning to bring extra cash in, unfortunately.

I'll bear the other advice in mind though and possibly chat to the accountants if I do decide to sell.

Any other advice welcomed from others too! 

Thrugelmir

Perhaps you need to determine where your business does make a profit and restructure accordingly. Less work for a bigger return. 

Grumpy_chap

topsy10 said:

I have tried doing that but the business does need me to do the actual cleaning to bring extra cash in, unfortunately.

This could be off-putting to a prospective buyer.

The business has enough cleaning work for, say, 4 FTE each doing 40 hours per week.  Then the administration and management of the business takes *someone* to work before starting the day and in the evenings and weekends - this sounds like it could amount to another FTE 40 hours.  That *someone* is effectively working those extra hours for free.

Another manager may have different processes that allow the time to be reduced, but the effort still is going to be quite large.  Maybe, if the cleaning work is combined with another cleaning business, the financial burden of the administration effort can be spread more thinly which would mean a "non-revenue-generating" manager is a possibility, but at present the finances could look like this (made up figures for illustration):

4FTE cleaners, paid £10 per hour, 40 hours per week each = 4 * £10 * 40 = £1,600
Income to support those wages, say £15 per hour = 4 * £15 * 40 = £2,400

Actually, there are 4FTE cleaners plus 1FTE manager, so 5 * £10 * 40 = £2,000
To support those wages, need income to the business of 5 * £15 * 40 = £3,000
BUT only 4 revenue-generating cleaners, so need to charge an hourly rate of £3,000 / 40 / 4 = £18.75 per hour
That is quite possibly outside the market rate for cleaners.

The above figures are made up, and ignore the owner / manager earning more hourly rate than the employed cleaners, but hopefully you can start to see the type of approach an external prospective owner would look at the business as an acquisition prospect taking an entirely dispassionate business view.

There will be variance in the actual numbers and, even if the admin time if only 0.5 FTE rather than 1FTE, that makes a big impact.

topsy10

Thank you again, great advice!