Why Am I Still Trying to Make this work?

[WotchOotErAPolis]

Been running a business for 2 years, that does personalised gifts.

We now have £12 in the bank and I've just done a quick expenses tot-up of how much we've subsidised the business from our personal accounts over the last quarter [and this is only the ones I have recorded so far!] - £500+

I have just booked two xmas fair slots for which I will need to spend a further £150 for stock to show, which will have to come from personal monies.

We do half a dozen orders a month right now that nets us £120, after paying royalties etc. This effectively pays for the overdraft fees and payments to credit card machine use. That's all.

The advert so far has shown no ROI whatsoever. I have never sold at a fayre and have no reason to believe I will this time.

For all sorts of legal reasons, we have to keep going to try to make it work. We have 3 directors, but I am the only one who works F-T on this [the others are my DH who has a FT job in IT that he has just spent the last 7 days working virtually 24hrs a day on, and the other is a 'Non-exec' ie she does nothing]. We also have an ex-director, who is the majority shareholder, with whom we have no contact.

Please tell me why I'm doing this and why I should continue? More to say but got to take kids to school! Part 2 coming soon!

I personally wouldn't be honouring any more orders from the shop until they pay up what they owe - I'd be draughting a strong letter to the owners saying just that too - I would also be looking at renegotiating terms with them too - SOR should be 25 - 33%, no more & paid up at a set time every month - 50% is a more typical wholesale mark up & yet they still take the pee with paying up - is there not another competition shop you could take your goods too ?

I also wouldn't tell the share holders you intend to continue as a sole trader - just that the business is currently unsustainable & you have no more to give so are forced to pull the plug. No debate, stand your ground & just do it.

For future, do you also use sites like Etsy & Folksy ?? - if not you should look into that too & do you have a local market where you could sell one a week or month ??

The way this business has been set up sounds very arse about tits - starting as if its a big business, which makes it sound more like the others just like the idea of being company directors, rather than actually have any real business sense - but with only you at the helm in this way it is really unsustainable - you need to get angry, sod whether its your DHs birthday - he needs to be supporting you in this, not paying silly big I am games -

just pull the plug, take a break & start again - on your own & do what most businesses do, start small & grow from there as it allows

Good luck & a big (hug) you CAN do this & will feel a whole heap better when you are out of this mess

Well done OP, I really, really mean it. You've started to take control. You now have to stay strong and not be brow-beaten!

Good god, what a mess. Stand your ground and I agree, don't talk about keeping on as a sole trader, just shut the whole thing down and start afresh on your own. I can't see why you should have to pay so much overhead for a small business.

Rockinhippy

"The way this business has been set up ... - starting as if its a big business, ...with only you at the helm in this way it is really unsustainable - you need to get angry, sod whether its your DHs birthday - he needs to be supporting you in this..."

Yup - I'm angry. The way I see it, DH won't have a marriage to come home to at all if I just sit here and do nothing.

How did the conversation with DH go, OP?

I hope you are okay too - hoping he saw sense & realised how silly he is being once you really stood up to him xx

Hope you are OK. It's not sustainable for you to keep personally losing money and energy for other people's benefit - especially when in fact there is no overall benefit.

All gone pear-shaped - other directors want out but threatening to sue. Hubby telling me I'm clinically depressed, or mad!

Being prevented from talking to accountant to see what our options are.

Upshot is that it's going to cost us more to wind up and even more if we're sued as we have no money to pay for a court case. We now have to wind up as I've lost faith and so has everyone else [DH included], but either way it's going to cost us ££.

Now what! DH doesn't think he's the silly one. I feel so shell-shocked. I have brought a lot of this on myself by saying nothing for so long that I've ended up blowing my top. Sadly, the only one who didn't 'cover their tracks' in all the goings-on seems to be me!

What a mess!

The other directors would sue, or the company's creditors?

You are a director. You have a fiduciary duty. You can ring the accountant.

Oh hell. Speak to the accountant and possibly a solicitor too. They are also directors with responsibilities.

"Being prevented from talking to accountant to see what our options are."
In what way are you being prevented? Will the accountant only speak to you if all the directors have given permission or something??

Agree with advice to contact a solicitor too. Sounds like you might need it!

Oh dear.

I agree with another poster who said this would have been sustainable as a cottage industry with you doing craft fares etc. Not as zero to sixty miles an hour big limited company.

It needed to grow 'organically' by word of mouth and recommendations and being seen at craft fares. If you aren't selling anything at the current prices but can't afford to reduce the prices because of the drain £££ of website, directors etc etc, then sorry but its not a business.

Ignore them, talk to the directors but don't ask for options, just tell the accountant that selling these goods at the prices they are, with all the overheads of the business, is running permanently at a loss and YOU as the only one actually running the business, are now stepping away from it before you lose any more.
Tell them that you have been using personal money to shore up the business for some time, and that this is not sustainable.

If one of the other directors wants to sue you, they presumably want their investment money back. Well if you invest in a business the risk you take is that the business does not work out and you lose your money. Tell whoever it is that wants to sue you, that if the business is not wound up, you will all end up a lot more out of pocket.

A personalised gift business is so labour intensive and such a limited market, that I cannot see how it can be expected to support anyone apart from the person actually supplying that labour.

Sorry that your DH thought he was going to be a director of some multi-million pound business...

And,

I have been working freelance for the past 8 years since I was made redundant during maternity leave. I am not far short of your age.

I have also put a lot of effort into my business, but the difference is that I ignored 'advice' to be a Limited company and am a sole trader freelancer. Even so there are highs and lows, and recently I started to get very fed up of the highs and lows, after being messed about by a couple of clients in a short space of time.

3 weeks ago I decided to look for employment, and have been applying for any full time or part time job that I think I can do. If I get part time I can carry on with the freelancing as well, if full time then I make a fresh start. I thought it would be a big uphill battle having been out of regular employment so long. But no, on Friday I had a call about an interview for the first one I applied for, and yesterday I got an email about an interview for the 2nd. Fingers crossed. Working for yourself is great but not when the downsides outweigh the upsides.

Start applying for jobs and see if you can get something to make a fresh start, earning regular money to pay off the debts, and then next year start the gifts business as a sideline at craft fares with a facebook presence.

Everyone seems to have accepted that I want out. I just feel awful now that we are to be saddled with paying back the overdraft, on top of having lost everything else. I keep trying to assure myself that things would only have got worse from now, so we'd have ended up paying back the debts and then some!

Hope I've done the right thing - I've been job-hunting for a while, but will make a real effort once the company has wound up, which may take a few weeks, while I get all the others signed up / out.

Suffice it to say that if I do go into business again it will be sole trader the eway it should have been!

Thanks to everyone - you have been a real help and support.

That's a shame. Unfortunately sometimes its the only possible outcome.

I hope that you manage to get your own liabilities as low as possible, and then good luck with the job hunt!

Have you managed to speak to the accountant yet?

Latest update. We are now £80 off going over our overdraft again after we bailed it out again (this time to avoid further bounced standing order fines) and yet they still want us to carry on trading through Christmas to mitigate any losses! We have seen a teeny weeny boost in sales I.e. From 1pw to 3pw in the last couple of weeks.

I've had to cancel the Xmas fayres we were planning as we have no cash for display stock. Now our chip n pins have been closed by the bank due to inactivity (they didn't actually tell us this unto it was too late for us to stop the closure of the account, but then we weren't using them anyway.

In the meantime, one of the co-owners of our retail outlet sadly passed away and her sister, who is the other owner cannot access their bank account which means that our last invoice which is quite valuable, can't be paid, so we will end up going over our overdraft yet again. And guess who will have to bail it out??

How on earth do I get them to stop this and just close the bank account? The ace up my sleeve I guess is that I just resign and let the other 2 directors get on with it, but my DH (who is a director too) is about to have his end-of-probation interview for his f-t job which he's only been in for 6 months after a 18 month spell out of work, and may be out of a job again next week. He's stressed enough as it is, but I can't get through a day right now without bursting into tears at some point.

I've just had to send an email to friends to say we can't buy presents for anyone this year (we couldn't last year either) and we can't buy anything for our own kids. It's breaking my heart that I'm now 50 with nothing to look forward to. We heard yesterday that DHs oldest friend has been headhunter and is going to live in Dubai in February but we won't be able to go and see them without any ££s, so even friends are peeling off. My closest friend is studying full time and working so I never see her and my sisters live 450 miles away.

Talk about midlife crisis!! With all this going on and getting more into debt I don't know how much more I can take without packing a bag and leaving. Sorry for the rant but there is nothing going right in my life, personally or business wise and I have no support other than you lovely mums who are keeping me sane!

Sometimes Wotch, the best thing to do is to walk away. Hard as that is to do I know. Resign your directorship and sell your shares to DH for £5 until he's secure in his job then he should do the same.

I know, it's a pity. But you could make more money working in a bar part time than this

I feel for you I really do

If you are jointly liable for the overdraft why do you alone have to pay it off? The sooner you cease trading the sooner you can freeze the account and start making offers to your suppliers to settle your debts.

I expect the federation of small businesses will have advice on this on their website or contact the government's insolvency service.

Your co directors were happy to share in any profits so may have to accept they will take a small hit too

Re FSB - you can't talk to them unless you're a member.

We were fooled into joining some time ago, only to find we weren't entitled to any of their benefits as we were too small to count as a small business [yes the alarms bells were ringing even then! too small to be a small business?!]! we did get our money back!

DisAstrophe: the issue at stake here is that if I resign and we close, the other 2 shareholders [one is a current director and one is a ex-director] have already threatened DH and I with being sued as they feel they have a case for mismanagement of the business [even though the ex-director has not paid a penny cent into the business nor been involved other than providing artwork, and walked away 12 months ago with her own artwork, which was the original work we used to launch the business, which she now sells via a competitor] and I have even been told by the current Director [who also has nothing to do with the day to day business, but mans the phone lines when it suits her] that she has enough evidence against me to claim that i have mental health issues and she will use it as evidence to get away with not paying her share [mental health issues?! i wonder why?!].

Honestly Wotchoot it sounds so tough but I think you need to cut your losses for their sake as well as your own. Suing you would cost them loads with no guarantee they would succeed. I would call their bluff and threaten to counter sue them for not taking your earlier advice and for failure to support you by actually doing some work.

I would post in the legal section of mumsnet aboutyour situation and their threats to see if anyone can point you in the right direction.

I would also not mention to the directors again your plan to start up again on your own as it may be used against you in some way.

I don't think it works like that although I'm not a lawyer.

My understanding is that, if any if the creditors wanted to sue, they'd sue first the company and then the directors , it's not up to the directors to say "don't sue me, sue her."

In any event, creditors will probably not sue - it's expensive and doesn't give them any great chance of getting money back. If you close the business and try to make some sort of settlement with them, I think that will work better.

Keeping going is definitely costing you money, stopping has a risk of costing money but I think it's small. I know which is do.

Oh, and if one director thinks the business is being mismanaged but hasn't taken any practical steps eg helping out, she may find that backfires on her with creditors as she was aware of problems but didn't solve them.

Having mental health issues is neither a crime or a basis for suing someone.

Call their bluffs and walk.