help with failing business options

[Manaquin]

hi all,

some of you may have seen my earlier posts RE my business, but now i feel that I am about to loose it entirely.
Mainly due I feel to a number of factors;

Location (sandwich bar) too much competition, in a very office district area
Ill health; I have been in hospital for over 1 month, and became ill 1 month prior to this
Not enough money coming in to pay overheads; now paying for stock on credit cards
Supplier chain for this franchise isnt good in England as it is in scotland.

OK now my question is this, I just want out of the situation im in, i have no assets i.e house, car etc. However as im stuck in hospital im limited to what i can do RE registering as bankrupted for example( i know this is last resort but i feel the situation calls for it).

At the minute im trying to make sure my staff are paid for fear of them walking out before i leave hospital, so i have been unable to pay some bills. Mainly business rates which is over due by 1 week i think? My question is if i dont pay the business rates what happens? Do i eventually get a court summons? But does it even matter if im accepted as bankcrupted?

[Indizine]

moved to accounting/financial forum

[Global Assistant]

Hi

Firstly I am sorry that you are in such a bad situation.

Are you still a sole trader? I noticed in an earlier post that you were asking about becoming Ltd.

With regards to the business rates, you said you are 1 week late. The best thing to do is to contact them, explain your situation and see if you can come to a payment arrangement - split over few weeks, whatever you think you can manage. If you do not talk to them, you should first get a payment reminder, if you still ignore them you will receive a court summons. This does happen quite fast, so please try and speak to them.

This goes for any other bills which you are struggling to pay, phone them and explain your situation. Do not ignore your bills, just talk to people, they will try to help you.

Do you lease your premises or own them? If you lease them what are the terms for getting out of the lease, another important thing to consider before you decide to close the business.

Is there anything you could offer in your sandwich bar to make you different to the others around and therefore attract more business?

I know you said you have no assets, but bancruptcy really will affect you for years to come.

Keep posting, I'm sure others can offer some advice.
xx

[Indizine]

I was wondering if the OP was thinking that by becoming limited then closing the Ltd Co down would limit their liability perhaps?

But as a sole trader, you are liable personally so again, bankruptcy would be the wors case scenario for you.

What I would be asking is, does the business stand a chance if 1 good person (you or another person) is running it and could turn it around or is it just a struggle to win business anyway, seeing as you mention the competion? Is there any marketing to attract custom? Is it offering a good product and service to win repeat custom? Stuff like that matters to every business so unless you are implementing what it needs to survive, it will fail even if you had no outstanding bills as of today, and were not ill, as of today. Are you fighting a lost cause, is what I am saying?

[Global Assistant]

If you do think that you are fighting a lost cause, as Sandra says, that even fully fit and back at work yourself you see no future for the business, you need to make a very difficult decision. Don't let your credit cards build up, stop trading. But please just make sure you have thought about everything, your lease if you have one if a biggy, you will have to carry it on until its end unless there is a get out clause.

[Manaquin]

hi all and thanks for the replies.

Yes i am a sole trader, and understand that i would be personally liable for teh business debt. I believe that the order may last a year and i may be discharged from this but obviously my credit file would be affected for years to come, and i would not be able to get a mortgage.

The business is a franchise and i am tied in for 5 years. The franchisors are my had to be the guarantors for the lease, so i sub let through them. I think the lease is for 5 years. Tho if im bankrupt i cant understand how i would still have to pay the lease as this sounds insane? Surely the purpose of bankruptcy is to start afresh (at a high cost).

We opened up in a very difficult time, and although we have a good product, i feel that there is too much choice around for customers, and i simply have ran out of money to keep the train going through the bad times, and to be honest, i dont feel self employment is for me.

[Indizine]

and I dont know, but all this stress could be making your illness worse or even contributing to it? I dont want to pry and ask, so you dont have to say whats wrong with you, but consider you physical and mental well being first and foremost. Better to be healthy and bankrupt than sick and solvent. One will eventually go away, the other may not.

[Manaquin]

and I dont know, but all this stress could be making your illness worse or even contributing to it? I dont want to pry and ask, so you dont have to say whats wrong with you, but consider you physical and mental well being first and foremost. Better to be healthy and bankrupt than sick and solvent. One will eventually go away, the other may not.

no its ok, i have ulcerative colitis, had it for years apparently but its flared now ( i wonder why?) its very debilitating, and i cant see myself working the hours i was working before, but its improving. i read up on the tenancy thing, i think basically the LL can put a claim for damages if i file, and would be with all the other unsecured creditors claims. I think for my health and peace of mind its the best way really. Like i say i have no major assets or savings so theres nothing they can take apart from whats in the business

[Global Assistant]

I agree with Sandra, your health is more important. With you not having a house etc. at least you do not have to worry about losing that. My husband and I downsized our kitchen business this year as things were becoming very tough, it was the best thing we ever did. Although we had to buy ourselves out of the lease, we are now so much happier, and do not have to worry about where to find money for employees wages and all the business bills. As sales dropped over the last 18 months, we were so stressed and felt that we were working just to keep the employees and pay the landlords money, barely anything for us.

My husband still sells kitchens on a smaller scale and I am loving being a VA, and everything we work for is just for ourselves, not other employees etc. We find that we work alot more, put more effort in and are happy to do it.

Look after your health, and start afresh, sometimes things become a bit of a monster and you have to let go.

Just find out as much as possible about the bankruptcy side of things, make sure if you do it that it clears all your debts and things can't come back to haunt you when you start again.

Good luck, and I hope you feel better soon.

[Manaquin]

I agree with Sandra, your health is more important. With you not having a house etc. at least you do not have to worry about losing that. My husband and I downsized our kitchen business this year as things were becoming very tough, it was the best thing we ever did. Although we had to buy ourselves out of the lease, we are now so much happier, and do not have to worry about where to find money for employees wages and all the business bills. As sales dropped over the last 18 months, we were so stressed and felt that we were working just to keep the employees and pay the landlords money, barely anything for us.

My husband still sells kitchens on a smaller scale and I am loving being a VA, and everything we work for is just for ourselves, not other employees etc. We find that we work alot more, put more effort in and are happy to do it.

Look after your health, and start afresh, sometimes things become a bit of a monster and you have to let go.

Just find out as much as possible about the bankruptcy side of things, make sure if you do it that it clears all your debts and things can't come back to haunt you when you start again.

Good luck, and I hope you feel better soon.

hi katherine.

yes i think its the only option available to me. Basically youve hit the nail on the head re working for nothing. Ive just checked my bank balance this morning and its not good.

in a twisted way im glad i still did it, as its a life experience, but i could have bought a house with the money i invested in the business so im a little raw about that.

High insight i guess is a wonderful thing, and i always new it would be a risk. Though I am totally wary of franchises now, and if any advice i would give is make sure you really want to be self employed in the first place, and dont be taken in by possible turnover you could make. Even though i did a lot of due diligience on the location, it was plagued with bad luck(they started renewing tram lines right out side the shop, school holidays affected us, and the franchise didnt submit building regularisation forms to council, which cost me more money in the longer term).

thankfully im only 29, and can bounce back from this, but i wont becoming self employed again soon!