Do I throw in the towel on my business?

alltoomuch

When the business was set up the original idea was that I went out to do the measures & quotes etc while my sis was at the unit working. It soon became clear though that I was unable to take any money & due to financial reasons i had to take on a part time job. I agree that I have prob been abit niave in putting my neck on the line but my sister has a bad credit rating (maybe alarm bells should have rung sooner) therefore she is unable to buy me out or make a cash injection into the business.

As for finding a cheaper unit the rent isn't as much as on a high street & we don't get charged vat. The problem with working from home is the ability to build a big clientele list as generally you are looked at as unprofessional.

We have got orders but they are not coming in quick enough to keep the sewing machines running to full capacity. I have thought about setting up a website to sell made to measure curtains & blinds but I think that this would cost too much to set up & there is alot of companies already doing it plus this takes away the personal service that we originally wanted to promote.

If it wasn't for the loan I think I would just cut my losses and walk away but while the business is paying for the load should I just stick with it & hopefully things will pick up.

My suppliers are not currently chasing for payment (I know which one's will be on the phone & which one's won't) but it won't be long before we get put on stop. We currently have 30 days credit with most of our suppliers, only one is on proforma.

My role in the business is mainly the admin & paperwork - unfortunately I'm no seamstress! Have to agree it seemed like a good idea at the time but the more I read your comments the more I put the whole thing into question.

baldelectrician

If your sister can not inject cash she could work for little (or nothing), and you half the profits between you.

Sounds like you are on a loser.
Do the sums (get some paid for external advice) and find out if things are really viable.
No point flogging a dead horse

Lazy_Ike

You say your gut feeling is to close the business down. From your own statements it seems you can service your loans and pay overheads, but not necessarily pay your suppliers and or sub-contractors in full. You mention keeping going to service the loan, but keeping going implies continued orders, requiring supplies, which cannot be paid for. So keeping the business going to service the loan would seem to be pointless as in fact you are just transfering debt from one place to another. What you actually need are facts. You have those facts.
You need to make a cash flow where you input all your known outgoings, and your (conservative) income from orders, remember to match cost of sales to orders in your outgoing on the cash flow. The cash flow will enable you to make that decision, and from your own description of how things are going I think you will be shocked when you see the outcome.
Also do not ignore your own home circumstances in the decision-making process.
If it helps you can PM me and I can send you a basic cash flow template. You will need to have Excel to use it.

motorguy

baldelectrician wrote: »

If your sister can not inject cash she could work for little (or nothing), and you half the profits between you.

Sounds like you are on a loser.
Do the sums (get some paid for external advice) and find out if things are really viable.
No point flogging a dead horse

Yeah, it seems odd that the o/p isnt taking any money out, but has the risk, yet the sister takes a wage?

I'd propose profit sharing going forward, IF its viable to keep the business going.

a11waysindebt

To be honest 12 months is nothing,I can't see the business making any money for the next 2 years.I have several businesses running from home all from the computer.

I took over a "12 year" old business 3 years ago as it was failing and even though it is now back on its feet with a £60,000 turn over the profits are only around £17,000.But it's on it feet.

I handed this back over last year and within 3 months its back the same with the current owner.He is a lazy barstewart.

Keep working hard and explore every avenue available to increase your sales.

As for the incense I will pm you.

I wish you every success in your business.

ps: I've sold Knitting needles to !!!!!! mags and every thing else in between.

If there is a pound to made I will try my hardest to make it.

Remember there are multimillion pound companies in debt.

motorguy

a11waysindebt wrote: »

To be honest 12 months is nothing,I can't see the business making any money for the next 2 years.I have several businesses running from home all from the computer.

I took over a "12 year" old business 3 years ago as it was failing and even though it is now back on its feet with a £60,000 turn over the profits are only around £17,000.But it's on it feet.

I handed this back over last year and within 3 months its back the same with the current owner.He is a lazy barstewart.

Keep working hard and explore every avenue available to increase your sales.

As for the incense I will pm you.

I wish you every success in your business.

ps: I've sold Knitting needles to !!!!!! mags and every thing else in between.

If there is a pound to made I will try my hardest to make it.

Remember there are multimillion pound companies in debt.

All fair comment, but the other side of that is that what the o/p has is effectively a machine for losing money, and no hard evidence that that is going to change.

Its very different running your own business from home, whereby if you have a bad month, then you just make less. Not so good if you have a wage to pay and a unit to rent and you make £1500 and your overheads are £2000 for that month. That means you have to make £2500 the next month, just to break even and claw back that £500 loss. £500 down every month doesnt sound like a big problem, but its £6K in a year, which is a lot if you dont have it and are borrowing to fund the loss.

Also, with respect, selling anything from knitting needles to !!!!!! mags (i've sold everything from cars to computers, from home, from premises and online) is very different than manufacturing something. At worse you can always sell off your stock if you're just selling, not so easy if you're actually manufacturing to order.

If we're distilling this business down to 'selling' curtains - which for the o/p thats what it is, then if

Profit = selling price - materials - cost to manufacture (his sisters wages) - rent + overheads

then if after a year its not bring him any money, and perhaps pushing further into debt, then he has a real problem. How many lines have you sold for a year not making any money? I suspect very few, and that you've drawn a line on them a lot sooner and moved on to something else.

COOLTRIKERCHICK

i personally think you have answered your own question... by saying your gutt feeling is to close....

i think sentiment and the emotional commitment to your sister's financial welfare is playing on you and it is clouding your judgement.. and realisation that the business can not at this moment in time substain its out going...

i started my business last year, and i am still not taking a wage.... but the profit is allowing the business to grow.... but it still only needs a few quiet weeks and it will be on rocky ground.... young businesses are like babies.... baby steps... and dont do to much financially..

i have learned from my hubby's business of 5 years... he tayed to long and just run up more and more debt.... we will be paying for it for a very long time..

with the credit crunch and price hikes.. your orders could potentially get less over the next few months.. so you got to consider that too..

good luck and what ever you decide.. you need to think of YOUR circumstances first..... not your sister....you might well have to work in anotehr job full time or find a way of getting extra money, but at least you know how much you will be getting in every week/month so you can work around that...

tomstickland

Work from home or bin it.

alltoomuch

COOLTRIKERCHICK wrote: »

i personally think you have answered your own question... by saying your gutt feeling is to close....

i think sentiment and the emotional commitment to your sister's financial welfare is playing on you and it is clouding your judgement.. and realisation that the business can not at this moment in time substain its out going...

i started my business last year, and i am still not taking a wage.... but the profit is allowing the business to grow.... but it still only needs a few quiet weeks and it will be on rocky ground.... young businesses are like babies.... baby steps... and dont do to much financially..

i have learned from my hubby's business of 5 years... he tayed to long and just run up more and more debt.... we will be paying for it for a very long time..

with the credit crunch and price hikes.. your orders could potentially get less over the next few months.. so you got to consider that too..

good luck and what ever you decide.. you need to think of YOUR circumstances first..... not your sister....you might well have to work in anotehr job full time or find a way of getting extra money, but at least you know how much you will be getting in every week/month so you can work around that...

Thanks for the advise - I think you've summed up the situation perfectly.

All the advice given has confirmed what I already felt - time to close before the debts spiral out of control. Thanks to everyone for help & advise.

COOLTRIKERCHICK

alltoomuch wrote: »

Thanks for the advise - I think you've summed up the situation perfectly.

All the advice given has confirmed what I already felt - time to close before the debts spiral out of control. Thanks to everyone for help & advise.

you never know you can take this experience and use it constructively....and maybe in the futre you can have your OWN business. where its you that's the focal point and not your sister....

it takes alot of gutts to let go... and that show a true business person, knowing the signs.. before its too late....

proud of you...:beer: