Help, we are sinking

[Halloweeeeeeen]

My husband has a small business he's been running for a few years. It has at times been pretty successful but the last year or so it's been really hard. During the post covid he took out a 20k loan with intention to buy stock (was all going really well and made sense at the time) then sales have dropped really significantly and he's making no money and only paying himself a tiny wage, few hundred a month to cover some bills but it's been hard.

We both feel like it's time to get out. His mood is so low, it's a constant battle and barely scraping by each month.

My question is, how can we get out of this? I don't know much about business etc, I'm not involved in any of it.

It's a limited company, he's the company director, there's no staff any more except him but he does have this 20k debt that he's really struggling to pay. He has quite a bit of stock which probably has some value but selling in bulk will get very little for it.

Wwyd? He needs to get out and get a job for his mental health asap.

I don't have any advice, but we are in the same boat. We have a small business that has been successful but in the past 12 months, we have taken a 50% hit on sales. We aren't doing anything wrong, but the climate has changed and we are not getting customers through the door.

I don't know how to hatch an escape plan - we can't sell the business as it's not been profitable this year, we have a huge VAT bill looming as we've been selling from stock in the last few months and keeping our purchases at a minimum, then corporation tax in january. It's all feeling very bleak and disastrous. Hopefully this will bump your thread and we'll both get some advice.

It's been such a hard year. Sales just dropped through the floor. It's so hard. Sorry you're also in this position. Costs are so high too, postage bills are extortionate.

Hitting the brakes and dissolving the business before you accumulate even more cost or debt is definitely the right decision. See if you can get some advice from your accountants or if they can point you in the right direction.

Would gradually winding down and your husband picking up a part time role be an option? You’d have some guaranteed income whilst you sell the rest of your stock off to pay some of the debts?

I hope you can get sorted.

If the loan is to the company, and it's Ltd, is there a clause that says directors are liable? You could apply to strike off the co, any creditors could dispute it, if not liable they can't chase him but if he is they could come up with a repayment/settlement offer. Are there any debts to HMRC, they will definitely chase debts but are understanding if you keep communicating with them. This is cheaper than bringing in liquidators if the debts are fairly small.

NB IANAL

Get the stock sold. Even at reduced prices to consumers is going to bring in more money than bulk selling it. While it is sold off he could get a part time job. If he's bring some guaranteed money in it may make him feel better in himself. Does he have any business premises? Are there any cut backs he make, whether saving money or equally as important, working smarter to save time?
I sympathise, my business also isn't doing great either, but I'm lucky that I don't have any debts to pay and all the stock I own is owned outright.

First off, what are the terms of the loan? Is there a director’s personal guarantee?

Can you speak to your accountant for advise?

@Halloweeeeeeen what category of product is it or sector (if you don't want to mention) is the business in?

Does he sell it on his own store or any other marketplaces, e.g. Amazon, eBay etc?

How is he currently marketing his brand and products to get prospects into the funnel?

I'm asking these questions to try and get an idea of whether or not he's selling in a saturated market or not, and to see if I can provide any valuable advice.

It depends on what sort of stock it is. Is it a finished or almost finished product or is it the components to a finished product, or the equipment needed for a service (eg pipes that plumbers use).

Are you working full time or are you a SAHM? If you are at home, could you switch to you working and him being at home and running the business from home on a part time basis to fit in with child care?

Is there a chance that business could pick up or is it aimed at a market doing badly with the COL crisis? A lot of businesses in cities in Australia like coffee shops have never recovered post covid, even in the cities that weren't in lockdown, due to the high number of staff that now work from home. Eventually there will be a new balance but sadly that will require a number of these businesses to close their doors first.

But that has also meant that local businesses in the suburbs have had increased footfall. Perhaps it's a matter of redirecting the business to a more profitable type of business that is related but not the same as what he currently does?

Hard to advise without knowing the details, but understand that it isn't something you necessarily want to give too many details about.